Important Issues When Completing Your Bankruptcy Paperwork

The foundation of your bankruptcy starts with your paperwork.  We find it easier to gather all of your documents and then start to fill out your workbook.  When gathering all of your documents, make sure that they are all there.  We would rather receive too much information than not enough.  The documents themselves determine quite a few things in your bankruptcy- your pay determines whether you qualify for a Chapter 7 bankruptcy or not;  or how much you can pay back in a Chapter 13 bankruptcy.  Papers from the purchase of vehicles show whether or not to pay the car back in full or at the value of the vehicle.  These all have an impact on your bankruptcy plan.  Sometimes one piece of paper can save you several hundred dollars in your Chapter 13 plan  (well worth the effort of gathering them!).

Make sure that you list anything and everything that is in your possession, especially if there is a papertrail to it; we will try to protect everything that you have.  Leaving things out only hurts you in the future.  You definitely do not want to be called to court because you were trying to keep a possession hidden.   List all creditors’ account numbers and addresses; if they cannot locate your account, it may not be taken care of.  Above all, just make sure to fill out the workbook completely; if it is not filled out, we will ask for the answer either way,  it makes it less work for you if it is done correctly in the first place.

What is a Motion for Relief from Stay?

Regardless of whether you file a Chapter 7 bankruptcy or a Chapter 13 bankruptcy , the automatic stay immediately goes into effect when the bankruptcy is filed. The automatic stay is a court order that can stop a foreclosure on a house or a repossession of a vehicle and prohibits creditors from contacting you to collect a debt.

A creditor cannot proceed with a foreclosure or repossession unless the automatic stay is lifted; this is done by filing a Motion for Relief from Stay with the court. When a creditor files a Motion for Relief from Stay they are asking the court for permission to foreclose on a house or repossess property.

The two most common reasons a secured creditor files a Motion for Relief from Stay are as follows:

1. If you surrendered property in your bankruptcy, such as a house or a car, the creditor will file a Motion for Relief from Stay in order to get permission to proceed with foreclosure or to repossess the property.

2. A secured creditor may also file a Motion for Relief from Stay because you’re behind on your mortgage payments since filing bankruptcy. If you agree you’re behind on your payments, we may be able to work out a consent order with the creditor to allow you to resume making your regular payments plus an additional payment to catch up on the amount you’re behind.

The goal in a bankruptcy is to avoid a Motion for Relief from Stay if you are not already surrendering your property, because a Motion for Relief from Stay can create additional attorney’s fees and may cause you to have problems in your bankruptcy proceedings. In most bankruptcy cases, however, a Motion for Relief from Stay is not filed and the bankruptcy process goes smoothly.

What is the Means Test?

With major changes in the bankruptcy laws in 2005, you are required to undergo a “means test.” Simply put, your household’s income for the six months prior to filing bankruptcy (your income, your spouse’s income and any contribution to your household from others) is annualized and compared to the Census Bureau’s median income for the same size household within your state.

What is a Chapter 13 Bankruptcy?

For individuals, there are two common types of bankruptcy: Chapter 7 bankruptcy and Chapter 13 bankruptcy.  We discussed Chapter 7 bankruptcy in a previous post, but as a quick refresher, Chapter 7 bankruptcy is a liquidation bankruptcy that will allow a person to eliminate most of their unsecured debt such as credit cards, medical bills, and personal loans.

On the other hand, a Chapter 13 bankruptcy is a repayment plan.  People who file Chapter 13 bankruptcy are often behind on their house or car payments and want to keep their house or car.

As mentioned in the Chapter 7 bankruptcy post, some individuals may be required to file a Chapter 13 bankruptcy instead of a Chapter 7 bankruptcy if their income exceeds the amount allowed by federal bankruptcy laws.  You would need to visit our office for more detailed information on this bankruptcy law requirement.

In Chapter 13 bankruptcy, the repayment plan usually lasts 3-5 years, and monthly payments are made to the Bankruptcy Trustee.  In order to file a Chapter 13, however, you must show sufficient income to make your monthly payments to the Trustee as well as provide for your family as you normally would.

We encourage you to contact our offices for a free consultation to learn more about how bankruptcy can help you eliminate your debts.