chapter 7 bankruptcy

Chapter 7 Bankruptcy : 

Chapter 7 Bankruptcy American Advantage Law Group, Inc. Presents

Why People File for Bankruptcy : 

Why People File for Bankruptcy Studies show that the most common reasons for filing for bankruptcy are: Job loss, followed by an inability to find work that pays nearly as well Medical expenses that aren’t reimbursed by insurance or government programs Divorce or legal separation Small business failures, and The foreclosure crisis

“Credit Cards May be on Their Way Out for Many of Us” : 

“Credit Cards May be on Their Way Out for Many of Us” credit card companies are deceiving They easily available: we receive “new and improved” cards with attractive low-interest rates in our mailboxes They only require us to make “minimum payments” with the result that many of us came to hold multiple cards which generates compound interest Then they raise interest rates without advance notice because of late payments on unrelated bills, charging late fees and penalties or you may have a Foreclosure Crisis for many reasons, a lot of homeowners are in over their heads on their mortgage debt they are turning to bankruptcy either to hold on to their homes or to dispense with the considerable civil and tax liabilities that often follow in the wake of losing a home

Overview of Chapter 7 Bankruptcy : 

Overview of Chapter 7 Bankruptcy We’re going to explain how to file for Chapter 7 Bankruptcy But first… FYI Its called Chapter 7 because that's where it appears in the bankruptcy code Chapter7 bankruptcy sometimes called “liquidation” bankruptcy – it cancels most types of debt, but you have to let the bankruptcy trustee liquidate (sell) your nonexempt property for the benefit of your creditors the whole process takes about 3 months, costs $299 in filing fees, and usually requires only one brief meeting, out of court, with the bankruptcy judge to process your bankruptcy.

Mandatory Credit Counseling : 

Mandatory Credit Counseling Before you can file for bankruptcy, you must consult a nonprofit credit counseling agency to see whether there is a feasible way to handle your debt load outside of bankruptcy, without adding to what you owe To qualify for bankruptcy relief, you must show that you received credit counseling from an agency approved by the US Trustee’s office without the 18-day before before you filed. You should complete your credit counseling the day before or earlier After counseling, you will get a certificate and a copy of any repayment plan you worked out with the agency The purpose of credit counseling is to give you an idea of whether you really need to file for bankruptcy or whether an informal repayment plan would get you back on your economic feet

Filing Your Papers : 

Filing Your Papers To begin a Chapter 7 bankruptcy case, you must complete a packet of forms and file them with the bankruptcy court in your area After filing, the court will send a notice of your bankruptcy filing to all of the creditors listed in your bankruptcy documents. You begin a Chapter 7 case by filing a “Voluntary Petition”: the official court form that requests a bankruptcy discharge of your debts. Other forms you will need: List of your creditors, assets, debts, income, and financial transactions prior to filing Copies of most recent federal tax return and wage stubs List of property you are claiming as exempt Info on what you plan to do with property that serves as collateral for a load (such as car or home) Proof that you have completed your prefiling credit counseling And proof that you have completed budget counseling

The Meeting of Creditors : 

The Meeting of Creditors as mentioned before, creditors meet shortly after you file your bankruptcy papers this will be the only personal appearance you have to make they can ask you questions under oath, like questions of how you assigned the values to your property and etc after this meeting, they can determine if you have any nonexempt property which you may be required to either surrender that property or provide the trustee with its equivalent value in cash.

Slide 8: 

Contract and Leases if you’re a party to a contract or lease that’s still in effect, the trustee may take your place as a party to the contract Personal Financial Management Counseling all debtors must attend a 2-hr course on managing finances in order to receive a bankruptcy discharge. You must take this course from an agency approved by the US Trustee Program. (www.usdoj.gov/ust, and click on “Credit Counseling & Debtor Education”) Once counseling is completed, you must file a certification form with the court.

The Bankruptcy Discharge : 

The Bankruptcy Discharge You will receive a Notice of Discharge from court. After that you are free to resume your economic life without reporting your activities to the bankruptcy court Start to rebuild your credit almost immediately because it will take several years to get decent interest rates on a credit card, mortgage, or car note.

Who Can File for Chapter 7 Bankruptcy : 

Who Can File for Chapter 7 Bankruptcy To figure out whether you will be allowed to use Chapter 7, you must first: Determine your “current monthly income” (your average income in the 6 months before you file for bankruptcy) and You must include all almost all types of income, taxable or not To do this add up all of the income you received during the 6-month period before the month in which you filed for bankruptcy and divide by 6 to find monthly average Compare that figure to the median family income in your state To compare your current monthly income to the annual family median income for your state, multiply your current monthly income by 12 Determine if yours is more or less You can file if you are equal to or less than the family median income of your state Otherwise, you have to take the full means test

Slide 11: 

You Cannot File for Chapter 7 Bankruptcy if… You previously received a bankruptcy discharge Was dismissed within the previous 18- days You haven’t met the credit counseling requirements You defrauded your creditors Your filing constitutes “abuse” You are attempting to defraud the bankruptcy court Alternatives to Chapter 7 Bankruptcy Do nothing Negotiate with your creditors Get outside help to design a repayment plan Pay over time with Chapter 13 Bankruptcy Things to consider if applies Family Farmers should consider Chapter 12 Bankruptcy Business Entities Might Benefit from Chapter 11 Bankruptcy

The Automatic Stay : 

The Automatic Stay Actions Prohibited by the stay Its called “automatic” because you don't have to ask the court to issue the stay, and the court doesn't have to take any special action to make it effective Once you file, the stay is in place automatically What it does The stay prohibits creditors and collection agencies from taking any action to collect most kinds of debts you owe them, unless the law or bankruptcy court says they can What the Stay does… They cannot Collect credit card debts, medical debts, and attorney fees They cannot Cease public benefits, but you may become ineligible Stops the IRS from issuing a lien or seizing your property or income Foreclosures are stayed by your bankruptcy filing Companies providing you with utilities cannot cut you off Actions not stopped by the stay Divorce and child support Tax proceedings Pension loads

What happens to your personal property when you file for Chapter 7 Bankruptcy? : 

What happens to your personal property when you file for Chapter 7 Bankruptcy? Property in Your Bankruptcy Estate When you file for Chapter 7 Bankruptcy, almost everything you own when you file becomes subject to the bankruptcy court’s authority All property subject to the court’s jurisdiction is collectively called your “bankruptcy estate”

Property You Own and Possess : 

Property You Own and Possess Property you own and possess like… clothing, books, computers, cameras, TV, tools, furniture, car, real estate, artworks, etc… is included in your bankruptcy estate Property that belongs to someone else is not part of your bankruptcy estate Property You have Recently Given Away property given away or paid out in anticipation of filing for bankruptcy is still part of your bankruptcy estate Property you are entitled to receive but don't yet possess when you file is still included in your bankruptcy estate Proceeds from property of the bankruptcy estate Certain property acquired within 180 days after you file How much of your martial property is included in your bankruptcy estate depends on 1. Whether you file jointly or alone and 2. The laws of your state regarding martial property Prefiling transfers of property, like selling or giving property away during the 2 yr period before filing can make you ineligible to file for bankruptcy Paying off a preferred creditor is forbidden

6 Guidelines for Prebankruptcy Planning : 

6 Guidelines for Prebankruptcy Planning Don’t convert nonexempt property if you have equity in your home Accurately report all your prefiling transactions on Form 7, the Statement of Financial Affairs Sell and buy for equivalent value Sell and buy property at reasonable prices When you sell nonexempt property in order to purchase exempt property, charge an amount as close to the item’s market value as possible Don’t make a last-minute transfers or purchases Don’t just change the form of property ownership

Complete and File Your Bankruptcy Paperwork : 

Complete and File Your Bankruptcy Paperwork

Gather the Necessary Documents : 

Gather the Necessary Documents The Credit Counseling Certificate Certificate showing that you completed a credit counseling workshop within the last 180 days Place of counseling must be approved by US Trustee’s office www.usdoj.gov/ust attach this to Exhibit D of your bankruptcy petition or file the certificate within 15 days after you file Your Tax Return or Transcript Your most recent federal tax return or a transcript of the return (this goes to the trustee, not the court) Give trustee and the US Trustee your most recent federal tax return no later than 7 days before your creditors’ meeting For privacy, remove birth date and social security # Wage Stubs Your wage stubs for the last 60 days

Get Some Information from the Court : 

Get Some Information from the Court Fees Total fee to file for Chapter 7 bankruptcy is $299 Verify the amount with the court Local Forms Besides official forms that every bankruptcy court uses, your local bankruptcy court may require you to file one or two additional forms Local Court Rules You can get your local rules from the bankruptcy court –in person or on its website- though these rules mainly govern hearings conducted by the bankruptcy judge and aren’t relevant in routine bankruptcy cases Number of Copies Find out how many copies your court requires Order of Papers and Other Details Visit court and examine court’s sample filing

Required Forms and Documents : 

Required Forms and Documents

Get the Official FormsOnline at www.uscourts.gov/bkforms/index.html : 

Get the Official FormsOnline at www.uscourts.gov/bkforms/index.html Checklist of required bankruptcy forms Form 1- Voluntary Petition Form 3A (to pay your filing fee in installments) Form 3B (if you apply for a fee waiver) Form 6- Schedules Form 7- Statement of Financial Affairs Form 8- Chapter 7 Individual Debtor’s Statement of Intention Form 21- Statement of Social Security Number Form 22A- Statement of Current Monthly Income and Means- Test Calculation Form 23- Certification of Instructional Course on Financial Management Form 201- Notice to Consumer Debtors Under 342(b) of the Bankruptcy Code Mailing Matrix Local forms if any Checklist of Required Documents Your most recent federal tax return (or a transcript of the return obtained from IRS) A certificate showing that you have completed the required credit counseling Any repayment plan that was developed during your credit counseling Your pay stubs for the previous 60 days Proof that you have completed a course in personal financial management (attach to form 23)

Slide 21: 

Form 1- Voluntary Petition Exhibit D- this exhibit is necessary, debtors filing for Chapter 7 bankruptcy are required to participate in debt counseling session within 180 days of their bankruptcy filing. Exhibit D tells court whether you’ve complied w the requirement Form 7- Statement of Financial Affairs this form gives info about your recent financial transactions, such as payments to creditors, sales, or other transfers of property and gifts. Form 6- Schedules refers to a series of schedules that provides the trustee and court with a picture of your current financial situation. Schedule A-J- Real Property, Personal Property, Property Claimed as Exempt, Creditors Holding Secured Claims, Creditors Holding Unsecured Priority Claims, Creditors Holding Unsecured Nonpriority Claims, Executory Contracts and Unexpired Leases, Codebtors, Current Income of Individual Debtors, Current Expenditures of Individual Debtors Form 8- Chapter 7 Individual Debtor’s Statement of Intention This form is very important if you owe any secured debts (Schedule D) or are a party to any unexpired leases (Schedule G). This is where you inform the trustee and your secured creditors what you want to happen to the collateral for each of your secured debts.

Slide 22: 

Form 21- Statement of Social Security Number Form 201- Notice to Consumer Debtors Under 342(b) of the Bankruptcy Code This form, required by the new bankruptcy law, gives you some info about credit counseling and the various chapters of bankruptcy available, It also warns you of the consequences of lying on your bankruptcy papers, concealing assets, and failing to file the required forms on time Form 22A- Statement of Current Monthly Income and Means- Test Calculation this form helps the US Trustee decide whether your income and expenses qualify you to file for Chapter 7 bankruptcy, or whether you will have to use Chapter 13. As mentioned before if your monthly income is above the median income, you will have to take the means test

Mailing Matrix : 

Mailing Matrix As part of your bankruptcy filing, you are required to submit a list of all of your creditors so the court can give them official notice of your bankruptcy. Called the “mailing matrix,” this list must be prepared in a specific format prescribed by your local bankruptcy court Step 1: make a list of all your creditors in alphabetical order. Be sure to include cosigners and join debtors. Also include collection agencies, sheriffs, and attorneys who either have sued you or are trying to collect the debt. Step 2: Make several copies of the Mailing Matrix form Step 3: If you are using the “box” format, enter your name and address in the top left hand box on the sheet you designate as the first page, Then enter the names and addresses of each creditor, one per box.

How to File Your Papers : 

How to File Your Papers Basic Filing Procedures Step 1: Put all your bankruptcy forms in the proper order Step2: Check that you have signed and dated each form where required Step 3: Make the required # of copies, plus one for you to keep Step 4: Use a standard 2-hole punch to punch the top center of your original set of bankruptcy papers. Don't staple together Step 5: If you plan to mail your documents to the court, address a 9”x 12” envelope to yourself and affix adequate postage to handle one copy of all the paperwork Step 6: Clip or stable money order to petition, payable to the US Trustee Step 7: Mail it to the correct bankruptcy court

Thanks for your time! : 

Thanks for your time! Contact American Advantage Law Group, Inc Address: 3848 Campus Dr. Suite # 205 Newport Beach, CA 92660   Phone: (949) 863-1888 Fax: (949) 863-1888 Email: americanlawfirm411@gmail.com Website: www. AmericanAdvantageLawGroup.com