For over 26 years I have helped businesses and consumers with their debt problems. I CAN HELP YOU TOO!
Bankruptcy is a POWERFUL tool that can be used to get relief from most of your debts. In many cases you can save your home from an imminent foreclosure or your car from repossession.
STOP LOSING SLEEP. STOP WORRYING ABOUT YOUR DEBT!
I AM HAPPY TO TALK WITH YOU OVER THE PHONE ABOUT YOUR OPTIONS. THE SOONER YOU CALL ME THE SOONER I CAN HELP YOU AND THE SOONER YOU CAN STOP WORRYING!
RAYMOND V. GESSEL, ATTORNEY AT LAW (253) 856-2745 (OFFICE) (206) 920-6166 (MOBILE) raymond@raymondgessel.com 1048 West James Street Suite 102 Kent, WA 98032
WE LISTEN. WE ADVISE. WE ACT.
BELOW IS SOME GENERAL BANKRUPTCY INFORMATION THAT MAY INTEREST YOU.
BANKRUPTCY - A FRESH START
I.
INTRODUCTION
Often, individuals find themselves facing insurmountable
financial obstacles through no fault of their own. Regardless of the
reason for your financial indebtedness, Bankruptcy can often bring the relief
from debt that you need. It is our hope that the explanation below can
assist you in deciding what course of action you should take.
II. OVERVIEW
OF BANKRUPTCY, ITS GOALS AND PHILOSOPHY
"Bankruptcy" is a procedure that was anticipated
by our Country's Founding Fathers and is included in the United States
Constitution. Rest assured, you are not the first person who has faced
with this prospect and will not be the last. However, Bankruptcy is a
court of "Equity" which seeks to have you do the best you can for
most of your creditors while affording you an opportunity to get a
"fresh start". The Bankruptcy Code seeks to give you a fresh
start in the following ways.
AUTOMATIC STAY. First, it seeks to keep Creditors
from suing you, foreclosing on your home, repossessing your car and
garnishing your wages. This is done by the imposition of a court
injunction that is called the "automatic stay" at the time your
bankruptcy case is commenced. This "automatic stay" prohibits
your creditors from taking action against you in the bankruptcy until your
discharge is granted except in instances where your creditors are able to get
permission from the bankruptcy court after notice to you and your attorney
and a hearing held by the court.
DISCHARGE. Second, it seeks to relieve you of most,
and in many instances all, of your debts. In Bankruptcy terminology
this is referred to as "discharge" or "discharge of
indebtedness" which simple means that after your bankruptcy you will no
longer have to pay the debts for which Bankruptcy will allow a
"discharge".
EXEMPTIONS. Third, it seeks to allow you to retain
certain possessions with which is felt you can get your fresh start.
Those possessions are referred to as "exempt assets" or
"exemptions". To facilitate a smooth process a
"Trustee" is appointed in Chapter 7, 12 and 13 Bankruptcies, and,
in rare instances, Chapter 11 Bankruptcies.
BANKRUPTCY ESTATE. The Trustee that is appointed has
certain responsibilities and obligations with respect to your
"non-exempt" possessions, you and your creditors. Your
non-exempt assets become part of the "Bankruptcy Estate".
Below, I have outlined Chapter 7, Chapter 11, Chapter 12, and Chapter 13 as
well as the general procedures and timelines for each. Please also read
below the information regarding "means testing" which is important
for you to know in connection with your Bankruptcy Filing.
GENERAL PROCESS. While the variations to the general
bankruptcy process are described in the various types of bankruptcies below, the
process is generally as follows.
PRE-FILING. Prior to filing a bankruptcy, every
consumer debtor must complete a consumer credit counseling course conducted
by a credit counseling agency approved by the United States
Trustee. Upon the completion of that course you will be issued a
certification which must be filed with your bankruptcy petition.
COMMENCEMENT. Individuals voluntarily submit
themselves to the jurisdiction of the bankruptcy court by filing a Bankruptcy
Petition. That petition includes a schedules of their assets,
exemptions, debts and creditors, your income, your expenses and a statement
of financial affairs which essentially sets out in somewhat general detail,
income you have earned, creditors you have paid, financial accounts you have
maintained, financial losses suffered by you and some of the causes,
financial transactions including significant gifts given to
others. You also complete a "means testing form",
discussed below. Your petition and the
accompanying schedules, statement of financial affairs and means testing
are sworn to by you under penalty of perjury. Lying on a bankruptcy
petition, failing to honestly disclose information regarding your
debts, creditors and assets is a federal crime. Despite popular belief
otherwise, ALL DEBTS AND ALL ASSETS MUST BE DISCLOSED. If you are
represented by an attorney, your petition will be electronically filed.
The United States Bankruptcy Court charges a filing fee. That fee
varies depending upon which chapter you file.
MEANS TESTING. In 2005, Congress concluded that
there were people with significant incomes who were improperly using Chapter
7 bankruptcies to discharge debts which, with some minimal effort, they could
pay. In an effort to curb what it felt was an abuse of the system, it
amended the Bankruptcy process to require debtors to complete what is
referred to as "means" testing. The purpose of means testing
is to get creditors paid to the extent possible. The means testing form
looks at your income and first determines whether you should be allowed,
based upon that income, to file a chapter 7 Bankruptcy. It does that by
looking at tables to determine whether your household income, based upon
where you live and the size of your family, is significant enough to require
the payment of some of your debts through a chapter 13 bankruptcy
proceeding. It should be emphasized that this does not mean that if you
were forced into a chapter 13 bankruptcy that you would pay even most of your
debts (as discussed below). At that point the means testing, using
regional tables, determines what your reasonable living expenses ought to
be. If the form determines that you could pay twenty-five percent (25%)
of your "unsecured" debts through the use of your paycheck after
paying your reasonable living expenses over a three to five year plan, you
will be required to file a Chapter 13 Bankruptcy if you wish to proceed with
a bankruptcy. There are exceptions for veterans and individuals with
significant health and medical expenses.
COURT PROCEEDINGS. Anyone filing a bankruptcy is
guaranteed at least one trip to the bankruptcy court to attend an initial
hearing. That hearing is known as "The First Meeting of
Creditors" or "341 Meeting" and is discussed below. In
rare instances, there may be other court proceedings that an individual may
have to attend.
FIRST MEETING OF CREDITORS. Upon filing your
bankruptcy petition a date will be set for an initial court appearance.
As noted above, this may be the only time that you have to show up for
bankruptcy court. That hearing or meeting is conducted by the Trustee
assigned to your case. You must attend. Your attorney will also
attend with you. Any of your creditors can attend, but, rarely do they
and even when they do, only one or two generally show up. Your First
Meeting of Creditors is scheduled along with a number of other individuals
who have filed for bankruptcy. Consequently, while your First Meeting
will be relatively short, you may have to wait a while for the meetings to be
concluded for the other meetings ahead of you. Again, this is usually
the only time you will have to appear in court.
Below is a discussion of the most commonly utilized
Consumer Bankruptcy Chapters.
III. Chapter
7 - The Straight Liquidation
Chapter 7 is the most common of the Bankruptcy
Proceedings. It is often referred to as the "straight
liquidation". The overall concept is that you will turn over all
of your non-exempt assets to the Bankruptcy Trustee who will then liquidate
the funds to pay a portion of your debts. However, as noted above, you
are entitled to "exemptions" which means that you will keep many of
your possessions. In fact, in most Chapter 7 Bankruptcies, the
individuals filing bankruptcy end up keeping all of their possessions.
CHAPTER 7 PROCESS.
In addition to the attorneys? fees charged for your
Chapter 7, the Bankruptcy Court charges a filing fee which is currently
$299.00. At the time your case is filed and the automatic stay
entered, a Chapter 7 Trustee will be assigned. The Chapter 7 Trustee is
charged with liquidating any non-exempt assets you own, which are now part of
the Chapter 7 Bankruptcy Estate.
At your first meeting of creditors, your trustee will ask
you questions regarding your debts, assets and financial affairs to
determine, in part, funds to pay to your creditors can be derived from the
sale of the estate assets. At the end of the First Meeting, as is
frequently the case, the Chapter 7 Trustee may file a report of
non-distribution which means that either all of your assets are exempt from
the estate or the equity in the non-exempt assets does not merit liquidation
because after the asset is sold, the costs of sale is paid and any exemption
amounts are paid, there won?t be any thing left to pay to your creditors.
A frequent question asked is whether a home, car or other
possessions that are subject to a loan can be kept by a Chapter 7
Debtor. In many instances the answer is ?yes?. However
there are several factors that will apply. If a Chapter 7 Debtor is
significantly behind in payments, unless that Debtor has a way to immediately
make up loan arrearages, that Debtor will probably not be able to retain
their home or car after the Bankruptcy. In the event that a Debtor has
such arrearages, a Chapter 13 Bankruptcy (discussed below) may prove to be a
better option.
If the Trustee determines that a home or car subject to a
loan can be sold and that there will be monies left over after paying the
Debtor?s exemption and the costs of sale, the Trustee is entitled to sell the
asset.
Where a home or car is subject to a loan, assuming that
the Trustee has no reason to sell the asset (as discussed above) the Debtor
must file, at the commencement of the Chapter 7 Case, a statement of
intention which sets forth whether the Debtor intends to ?re-affirm? the debt
which means that you agree to obligate yourself to the same terms and
conditions that existed prior to the Bankruptcy Filing. The court may
not approve a reaffirmation of a debt if it imposes a severe hardship on the
Debtor or a dependent of the Debtor.
The discharge in a Chapter 7 Bankruptcy is scheduled by
the Bankruptcy Code to be granted sixty days after the first meeting of
creditors. In a Chapter 7, creditors can object to the discharge of the
debt owed to them if certain conditions exist. For example, a debt
resulting from fraud is not dischargeable. Additionally, both creditors
and the Trustee can object to the Discharge if the Debtor has engaged in
certain wrongful activities in connection with the Chapter 7
Bankruptcy. This includes failing to disclose assets that the Debtor
owns and other fraudulent behavior in connection with the Bankruptcy.
Typically, Chapter 7 Bankruptcy cases are closed within a
six month period if they are no asset cases and if there are no other
proceedings affecting the Debtor?s receipt of a discharge.
IV. CHAPTER
13 ? WAGE EARNER PLAN
The chapter 13 differs from the Chapter 7 in
that liquidation of property and possessions is not the goal, but
rather Chapter 13 seeks to have the Debtor make monthly payments in attempt
to get some payment to the Debtor?s creditors. It should be noted that
rarely does a Chapter 13 result in all of a Debtor?s indebtedness being paid
and frequently credit card creditors receive nothing in a Chapter 13
Bankruptcy.
CHAPTER 13 PROCESS. The Court filing fee for a
Chapter 13 Bankruptcy case is currently $274.00. In addition to the
filing of Petition, Schedules, Statement of Financial Affairs and Means
Testing, a Chapter 13 Debtor is required to file a Chapter 13 plan which
outlines, in part, the amount of the periodic payments committed to the plan
and how those payments will be distributed. The Debtor is required, in part,
to commit all of the Debtor?s ?net disposable income? on a monthly basis to
the plan. ?Net Disposable Income? means the amount left over from the
Debtor?s take home pay after deducting the Debtor?s reasonable monthly living
expenses.
The Chapter 13 Trustee will conduct the First Meeting of
Creditors and will seek to determine whether the plan complies with the
Bankruptcy Code. Shortly after the First Meeting, a confirmation
hearing on the plan will be held at which time the Bankruptcy Judge assigned
to the case will consider the Chapter 13 plan filed by the Debtor along with
any objections filed by the Trustee and any Creditor. The plan
will be confirmed if it complies with the requirements of the Bankruptcy Code
despite objections that may be filed.
Upon the filing of the Chapter 13 case, the Debtor must
immediately begin making payments. Those payments are made to the
Chapter 13 Trustee. However, in most cases, the Trustee will insist
that the Debtor?s employer remit plan payments directly from the Debtor?s
paycheck.
As noted above, the Chapter 13 Bankruptcy may present the
best option for a Debtor who is significantly behind on home or car loan
payments. This is because those amounts can be scheduled and paid
separately in the plan over the three to five year period of the plan thus
making it more feasible for the Debtor to keep the mortgage current.
A chapter 13 Bankruptcy will last three to five
years. If a Debtor is unable to make payments under the plan, the
Debtor can choose to convert the bankruptcy to another Chapter or dismiss the
Bankruptcy altogether.
V. OTHER BANKRUPTCY OPTIONS
Chapter 11 (Business Reorganization) and Chapter 12
(Family Farmer) are also bankruptcy provisions available to Debtors.
However, because they rarely provide better relief for most Consumer Debtors, they are
not discussed here. Please contact us if you wish to learn more about
these options.
THE BANKRUPTCY CODE IS A COMPLEX PIECE OF
LEGISLATION. THIS OVERVIEW IS MERELY INTENDED TO GIVE YOU A GENERAL IDEA
WHAT TO EXPECT. IT IS NOT INTENDED TO MAKE YOU AN EXPERT IN
BANKRUPTCY. DO NOT USE THIS OVERVIEW TO BE YOUR OWN ATTORNEY. A
DISCHARGE IN A CHAPTER 7 BANKRUPTCY CAN ONLY BE GRANTED ONCE EVERY EIGHT
YEARS AND ONLY ONCE EVERY FOUR YEARS IN A CHAPTER 13 BANKRUPTCY.
THEREFORE, REPRESENTING YOURSELF IN A BANKRUPTCY IS ILL-ADVISED AND
IS AN EXTREMELY RISKY PROPOSITION WITH DIRE CONSEQUENCES IF YOU MAKE A
MISTAKE. DO NOT USE THIS INFORMATION TO REPRESENT YOURSELF!!!
PLEASE CONTACT US
TODAY FOR A CONSULTATION!
RAYMOND V. GESSEL Attorney At Law 1048 WEST JAMES ST STE 102 KENT, WA 98032
(253) 856-2745
RAYMOND@RAYMONDGESSEL.COM
