Are there different types of
bankruptcies?
Chapter
7 is the most popular
form of bankruptcy. It is a liquidation proceeding. In
this proceeding, a consumer or business asks the
bankruptcy court to eliminate the debts owed. This
gives the debtor a “fresh start.” However, certain
debts cannot be eliminated or discharged. Generally,
student loan debts are nondischargeable. Alimony and
child support are also nondischargeable. In a Chapter
7 case, all of the debtor’s nonexempt assets are
liquidated and distributed to creditors. The debtor
then receives a bankruptcy discharge in about four to
six months after filing bankruptcy.
Chapter
11 is normally used by
corporations, partnerships and wealthy individuals. It
involves a reorganization proceeding.
Chapter 12
is also a reorganization
proceeding. It is used by family farmers. It is
similar to a Chapter 13, because the debtor retains
his property and pays creditors out of future
earnings.
Chapter
13:
Instead of paying
creditors out of the debtor assets, a Chapter 13
bankruptcy provides debtors with a repayment plan to
pay back creditors. It is available to individuals
with regular income. In a Chapter 13 bankruptcy,
debtors keep their assets and pay back creditors out
of future earnings over the life of the payment plan
(3-5 years). However, the Chapter 13 debtor can also
decide to make some payment out of current assets. At
the completion of the payment plan, the debtor
receives a discharge. With certain exceptions, the
discharge that the Chapter 13 debtor receives is
similar to the discharge that the Chapter 7 debtor
receives.
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Can filing a Chapter 7 stop an
eviction proceeding in landlord-tenant
court?
Generally, filing a
Chapter 7 bankruptcy stops an eviction proceeding. An
“automatic stay” will stop your landlord and the
marshal from evicting you until your bankruptcy case
has been completed or the landlord’s attorney gets the
automatic stay lifted. It normally takes about four to
six months for the completion of a bankruptcy case.
However, a skilled bankruptcy attorney can drag the
case on for another two to four months or more,
putting the eviction on hold, allowing you to save
your money and have more time to look for a new place
to move to.
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Are the bankruptcy laws going to
change? And what does this mean to
me?
Yes, the bankruptcy laws
are going to change. Recently, Congress passed
legislation that is going to drastically change the
bankruptcy laws. President Bush has assured Congress
that he will sign the legislation into law, as soon as
Congress resolves some slight differences between the
House and Senate versions of the bill. Not only is
this bill supported by the credit card industry, it is
hostile towards debtors.
The new bankruptcy laws
will be very unfriendly to debtors for several
reasons. Here are just some of the
ways the change in bankruptcy laws will effect
debtors:
· Make it very difficult,
if not impossible, for some people to file
bankruptcy.
·
Increase the number of
debts that are nondischargeable in
bankruptcy.
·
Give power to collection
agencies that wish to go after debtors after they file
bankruptcy.
·
Make it harder to put
together a manageable repayment plan for debtors who
wish to pay back
creditors.
What all this means to
you is that you need to file bankruptcy AS SOON AS
POSSIBLE before the new laws take
effect.
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How long does a bankruptcy filing
stay on my credit
report?
A bankruptcy filing can
stay on your credit report for 10
years.
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A credit card creditor obtained a
judgment against me and sent a restraining notice to
my bank. My bank has now placed a restraint on the
money in my checking and savings accounts. If I file
bankruptcy, will my bank have to release this money to
me or is it too
late?
As soon as you file
bankruptcy, by law an “automatic stay” takes effect.
The automatic stay stops virtually all creditors from
taking any action against you. If you file bankruptcy,
your bank must immediately release your funds to you.
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Why should I hire an attorney to
do my bankruptcy case when there are bankruptcy filing
services that will help me do a Chapter 7 Bankruptcy
case for only $200 to $250 plus court
fees?
As indicated on my firm’s
home page, I only charge $299 plus court fees. In your
attempt to save $50 to $100, you may end up costing
yourself more in the end. I have seen so many cases
where people tried to save themselves money by filing
bankruptcy without the assistance of a skilled and
experienced bankruptcy attorney. In the long run, it
cost them more money.
I am just going to give
you a couple of examples of the many cases that I have
seen where a debtor should have used a qualified
bankruptcy attorney. In one case a creditor refused to
remove a restraint on the debtor’s checking account
after the debtor filed bankruptcy. The creditor knew
that the debtor was not being represented by counsel.
The creditor also knew that the only way he would be
punished for refusing to remove the restraint was if a
lawyer made an application in bankruptcy court to
compel the creditor to honor the stay and to punish
the creditor.
Since the debtor didn’t
have a lawyer, the creditor went unpunished for his
failure to respect the automatic stay. If the debtor
had hired me as his lawyer, I would have made an
application to the bankruptcy court to enforce the
automatic stay. I would have also had the bankruptcy
court impose monetary penalties against the creditor
for refusing to honor the stay. The debtor
would have received the money from the penalties paid
by the creditor. This money would have been more than
enough for the debtor to offset the difference between
the fee that the bankruptcy filing service charged and
the fee that I would have charged the debtor. Not to
mention the additional money he received when the
restraint was lifted from his account.
Here’s another instance
that I saw where it cost a debtor for not hiring an
attorney. This debtor received a very large sum from
her income tax return shortly after she filed
bankruptcy. The Chapter 7 Trustee made her turn over
the entire sum to the Chapter 7 Trustee – every last
penny of it.
Since the bankruptcy
filing service that helped the debtor file did not
consist of attorneys, they were not able to give the
debtor legal advice. If the debtor would have retained
me, I would have been able to advise her that the
Chapter 7 Trustee was going to make her turn over the
entire sum from her income tax return. I could have
advised her to delay her bankruptcy filing until some
time after she actually received the money from the
income tax return. Or I could have had her file her
income tax returns in a way that would have allowed
her to receive her large refund at some point after
her bankruptcy case was
closed.
I could go on and on and
give you more examples where I saw debtors hurt
themselves – and in some cases a loved one – by not
hiring a qualified bankruptcy attorney. Some of these
cases involved accident lawsuit settlements that were
taken by the Chapter 7 Trustee. Other cases involved
instances where a debtor transferred property or gave
something of value to a friend or family member before
filing bankruptcy, and the Chapter 7 Trustee made the
debtor’s friend or family member give the property or
gift back to the Chapter 7 Trustee.
In every case, if the
debtor would have hired me, I could have structured
the transactions so that the debtor would have been
able to keep all of the money from the lawsuit
settlement, or the debtor’s friend or family member
would have been able to keep any property or gifts
given to them by the
debtor.
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DISCLAIMER: You should
not take any of the information contained on this Web
site as legal advice. For legal advice, always contact
an attorney.
Law Offices of Patrick
Jackson
56
Harrison Street, Suite 504
New Rochelle, New York
10801
(914)
235-8281
