The Process of Filing For Bankruptcy



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Bankruptcy Process

The process of filing Bankruptcy is not as complex as you might think.

You must provide your lawyer with complete information on all the debts that you owe, or that someone claims that you owe.  Debts that you intentionally leave off may not be discharged, and may cause you to not get discharged from the rest of your debts.  Under certain circumstances you can go to jail for failing to list certain debts.

Once you have identified all your debts, you must identify all the things that you have an ownership interest in.  This includes houses that you are buying, cars that you are buying, even if you have not finished paying for them, or there is a loan against them.  It includes retirement accounts, annuities, lawsuits you might have against someone else (like personal injury lawsuits), furniture, household goods, clothing, collectables, motorcycles, bicycles, bank accounts, cash, and anything else you own.

The job of your lawyer is to determine how to protect the items you listed.  This is called exemptions.  While a Bankruptcy Petition Preparer is NOT permitted to advise you on what exemptions are available, a lawyer is obligated to do so.

You must then identify you r income and expenses on an ongoing basis- what it would look like after you file Bankruptcy, and Discharge all that debt.

We must also look at your income for the last 6 months, and take an average of the last 6 months, and compare that to the median income for people living in the state of your residence- in this case, Virginia.  That number changes annually.  If you are above that the average income, then, ordinarily, you must make payments to your creditors through the Chapter 13 Trustee for 5 years.  If you are below, then the presumption is that you can pay for as little as 3 years, though there are exceptions.  This test is called The Means Test, and tests to see if you have the means to pay back some portion of the debts that you owe.

You must also complete Credit Counseling from an accredited Credit Counseling agency.  Krumbein Consumer Legal Services, Inc uses Abacus Credit Counseling, and our fees include the cost of Credit Counseling.

Your Bankruptcy lawyer is required to do a “due diligence” check, which in most cases includes a Credit Report.   Krumbein Consumer Legal Services, Inc, uses a service that obtains credit reports from all 3 credit reporting agencies, Equifax, TransUnion and Experian, and merges that information into your Bankruptcy petition, and the cost of this is included in the cost of your Bankruptcy.

If you have filed a Chapter 13 Bankruptcy, your lawyer will also work with you to prepare a plan of repayment, explaining to the Trustee and your creditors how and how much you will be paying your creditors, and over what period of time.

Once the background has been prepared, and all of the information has been entered into the Bankruptcy Petition, and you have signed the Petition, the Bankruptcy will be filed.

You must then schedule and take an approved class on Debtor Education.   Krumbein Consumer Legal Services, Inc uses Abacus Credit Counseling, and our fees include the cost of Debtor Education.

You will then have to attend a “Meeting of Creditors” or “Section 341 Meeting”.  In this meeting, a Bankruptcy Trustee will have to see if there is anything of yours that he or she can take and sell and pay some money to creditors.  If your lawyer has done a good job, usually this will be minimal if anything.  You are required to cooperate with the trustee in obtaining this information, and failure to cooperate is reason to deny you a Discharge.

You must also certify that you have filed all of your taxes for the last 4 years, and that you do not owe any child or spousal support since the filing of the Bankruptcy, or that you have paid any child or spousal support.

If all has gone well with a Chapter 7 Bankruptcy, you will get your Discharge about 90 days later.

If all has gone well with your Chapter 13 Bankruptcy, you should then get a Discharge 3 to 5 years later, after you have completed all the payments, and signed a certification of certain things at the end.  You can find a copy of the certification here, or see your lawyer, who will prepare a copy for you to sign.

After your Discharge (90-120 days after you file a Chapter 7) (3-5 years after you file a Chapter 13), you should start looking at your credit report to ensure that you have obtained the full benefit of your Discharge.  The Fair Credit Reporting Act has protections to ensure that your debts that are Discharged are reported as Discharged.  For some creditors, even looking at your Credit File is a violation, and may entitle you to money.

Collection of debts included or Discharged in Bankruptcy is prohibited by the Automatic Stay or the Discharge, and also some other laws, including the Fair Debt Collection Practices Act.  Note that not all debts are Discharged, and not all debts are debts covered by the Fair Debt Collection Practices Act.  If you are in the West Coast area- called the 9th Circuit, and portions of the North East (3rd Cir. and portions of the 2nd Cir.) this does not apply.

In any event, you should report all collection efforts to your lawyer immediately.

Contact us by e-mail or by telephone or fax or US Mail.

You can call us: 804.303.0204
You can fax us: 804.303.0209
You can contact us by US MAIL:
Krumbein Consumer Legal Services, Inc.
5310 Markel Rd. Suite 102
Richmond, VA 23230

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