What Happens After The Bankruptcy Meeting of Creditors?

I have discussed the bankruptcy Meeting of Creditors in some previous posts, including it's purposes and procedure. The Meeting of Creditors is very straightforward. The trustee assigned to your case reviews your petition, your income and expenses, and your property and debts. He or she verifies you are being truthful and thorough, and they also recommend (or object to) your case being discharged. But, your case is not quite complete when the Meeting of Creditors is over. There are still a few things to keep in mind.

I will mostly discuss what happens after the Meeting of Creditors in a Chapter 7 case. The Chapter 13 case typically lasts 3 to 5 years, so the time after the meeting is much greater, and the continued case is more complex. A Chapter 13 Meeting of Creditors is more of a beginning to your case than an end. There is still a lot to do.

The Chapter 7 Meeting of Creditors, on the other hand, signifies that your case is almost complete. The Chapter 7 discharge is usually official 60 days after the Meeting of Creditors. While you do not need to do anything yourself to bring about the discharge, you should keep an eye out for the notice in the mail. If you have not received it within 90 days, give your attorney a call. You should keep your discharge notice on file in case a creditor ever attempts to collect in the future. You may also need the notice of discharge in order to get student loan companies to accept your payments after bankruptcy (creditors are not allowed to attempt to collect from you while you are in bankruptcy, and some will want proof). So, keep an eye out for this discharge notice.

A responsibility you will need to remember after the Meeting of Creditors is to complete the second course, also known as the Financial Management Course. My office will order this course for you, but you will need to complete it over the phone or internet within 60 days of the Meeting of Creditors. Your case will be dismissed if you fail to do so, and you will be required to re-file EVERYTHING, with additional legal fees and costs. It's easy enough to complete, so there is no reason to take any chances... get it done as soon as possible. The consequences of not doing it are too great.

One final thing to keep in mind after the Meeting of Creditors is that you must notify your attorney of any inheritances, lawsuits settlements, insurance claims, or lottery winnings in the 6 months after your case is discharged. In some rare situations, creditors can make claims for a piece of this windfall. These situations are rare, but keep your attorney updated.

In every case, you should not transfer any property or take out any loans until your case is discharged. Your creditors will have the option of objecting to your discharge until 60 days after the Meeting of the Creditors, so it is safest to take no actions during this period, at least without consulting your attorney. I always tell my clients not to do anything there were told not to do in the months leading up to bankruptcy. Better safe than sorry.

Contact us if you have any questions about the Meeting of Creditors, or the period afterwards. There isn't much to do, but you should still be vigilant. Your case will almost be complete, there is no reason to needlessly raise an issue.

Savings and Bankruptcy

Most of my clients facing bankruptcy do not have much in the way of personal savings. In most cases, savings have been spent down to live. Bankruptcy becomes necessary because there are no savings. However, what savings my clients do have becomes that much more important. It is a final safety net, and losing those savings could be devastating. Fortunately, some savings will always be protected in bankruptcy.

Under the bankruptcy code, exemptions allow debtors to protect their personal property from their creditors. Every state has its own set of exemptions, and some allow debtors to opt for the Federal exemptions. This is the case in Pennsylvania. Under the Federal exemptions, debtors can protect their homes, cars, household items, retirement accounts, and most other goods. While there is no explicit exemption for savings, there is a "wildcard" exemption that can be used on anything. This exemption can be for over $11,000, depending on how much must be used to protect things such as equity in a home. It can be less than $2,000 if you have a large amount of equity in your home.

This "wildcard" exemption can be used to protect savings, and it is usually sufficient. Keep in mind, if your savings accounts are joint, only your 1/2 interest in the account must be exempted. Also, if you are married and filing jointly, your exemptions double. This can make protecting more savings possible. It will be important to review and list every account in your bankruptcy petition.

Your total of savings that needs to be exempted is set at the day of filing. So, if it will be close, you may want to file just before a new pay check arrives in your account, or just after you have paid your attorney, car payment, mortgage, or other major monthly expenses. Just because you must disclose your savings doesn't mean you must file at their highest tide. Discussing this planning with your attorney will be important if your savings are pushing the allowable limit. Intelligent bankruptcy planning is a must.

One thing you should NOT do with your savings before filing is hide it, or give it to your friends or family members to hold. This could be considered a fraudulent transfer, and it could prevent you from filing. It is better to speak to an experienced bankruptcy attorney before doing anything with your savings besides living off it. This also includes doing anything with your federal income tax return when you receive it, or it is due to be received..

Contact us if you have any questions about protecting your savings, or if you wish to set up a free consultation. I will be happy to review your situation and help you protect as much property as possible.

"Can I Keep My Car?"

This may be the most frequent question I am asked when I first meet with a new client. Thankfully, in most cases the answer is "yes", assuming you want to keep the car.

The Bankruptcy Code allow filers to keep their vehicles using the bankruptcy exemptions. The exemptions protect your car, home, and other personal property. The idea is to give filers a "fresh start", and a fresh start would not be possible if you were required to surrender all of your property to your creditors. You need your car to go to work, pick up your kids from school, and generally to live your life. So, it makes sense that bankruptcy law would you to continue doing these things by protecting your car.

However, this protection is not without some limitations and qualifications. First, in order to keep your car, you need to be able to continue to make payments. If you are behind on the payment, or do not have the income to make the payment going forward, you will need to surrender the car. Bankruptcy will wipe out your obligation on any amount owed, however the car will need to be surrendered. Bankruptcy law does not allow you to keep a car you cannot afford to pay for.

In some case, my clients want to surrender a car, either because the payment is too high, and/or the car does not run well (or at all). This is not a problem. In these cases, we will notify the finance company through the "Statement of Intent" that the car will be returned. You will be under no obligation to pay on the deficiency. Sometimes my clients believe they MUST keep their car, but they don't.

What if you are behind on the payment (perhaps due to temporary job loss) but wish to keep the car? You can still keep it through a Chapter 13 bankruptcy. Chapter 13 bankruptcy will allow you to catch up on the arrears and make the payment spread out over 3-to-5 years. Chapter 13 bankruptcy can even get your car back from the repo yard, as long as it has not been auctioned. Of course, this could make the car prohibitively expensive, but if you are comfortable with the payment and truly need the car, Chapter 13 bankruptcy can save it. It is rarely too late.

You cannot keep the car in Chapter 7 bankruptcy if you are behind on the payment. You will need to catch up (and keep the payments current) before filing. It is sometimes important to clearly explore all of these options before deciding what type of bankruptcy to file. Will you be able to finance another vehicle after bankruptcy? Do you owe far more than what the car is worth? What type of working condition is it in? These will be important questions to consider.

If you have multiple cars, or a motorcycle along with your car, the exemptions to protect them all may be strained. In these cases, we will need to examine the value and necessity of each vehicle. In any case, you can even keep multiple cars that are not exempt, as long as you file a Chapter 13 bankruptcy.

For now, it is only important to know that yes, you can keep your car in almost every situation in bankruptcy. Contact us if you wish to set up a free consultation. We will discuss any situation with your car and everything else relevant to filing bankruptcy.

Chapter 13 Wage Attachments

Chapter 13 bankruptcies require payments to be made to the Chapter 13 trustee. The trustee then disperses money to your various creditors, in amounts that are determined by bankruptcy law and your bankruptcy plan. How do you pay the trustee? If you are employed, my office is required to file a wage attachment.

A wage attachment motion is filed with the bankruptcy court after the initial case filing. Court permission is required to attach your wages, but this is pretty much a formality. Once the court approves the motion, an order signed by the bankruptcy judge is sent to my office. I then serve the order on the payroll department of your employer, along with other information to make sure they properly identify you.

The wage attachment, once in effect, will deduct money from your pay every pay period. Even though your bankruptcy payment is calculated on a monthly basis, the payments will be deducted each pay period, whether you are paid monthly, bi-weekly, or weekly. The money is directed to the trustee, who actually administers your case payments. This will continue through the completion of the bankruptcy case.

You will be responsible for making any payments not directly deducted from your paycheck. So, if it takes several weeks for your payroll department to process the order, you are still required to make the payment. Contact us for instructions how to do so.

As long as your employment is steady and uninterrupted, there should be no problems with your wage attachment. However, if you change jobs, or lose your job, you will need to inform your attorney immediately. Your wage attachment will need to be terminated (which requires another motion and service) and a new wage attachment must be filed. This should be done as quickly as possible to avoid any gaps in your payment. Once again, payments not made through the wage attachment must be made directly.

Clients are often concerned that the wage attachment will affect their employment in some way. It will not. An employer cannot sanction you, and in practice, they rarely if ever care. Most payroll departments process the orders with no confusion or problems. Wage attachments are not allowed on pensions, or disability payments. In these cases, payments must be made directly to the trustee.

The prospect of a wage attachment sometimes causes trepidation on the part of my clients. However, there is no reason to be concerned. The process is efficient, and secure. Case with wage attachments have much higher rates of success, as they greatly simplify the process. I will be happy to answer any questions related to the wage attachment requirement.

Do I Qualify For Chapter 7 Bankruptcy: Part 3

In my two previous posts, I discussed the importance of income and equity in determining if you qualify for Chapter 7 bankruptcy. In this third related post, I will discuss several other issues which may determine whether you will be able to file a Chapter 7 bankruptcy, or if you must file a Chapter 13 bankruptcy.... or if you are eligible at all.

The first important question to review is whether or not you have ever previously filed a bankruptcy. It is important to know if you have previously filed a Chapter 7 bankruptcy because you are only eligible to file another one 8 years after the previous date of filing. If your previous filing is too recent, there are really only two options... wait to file another Chapter 7 bankruptcy, or consider a Chapter 13 bankruptcy, which will allow another discharge of your debts, but will require you to repay at least some of your creditors. If you have filed another bankruptcy, definitely let your attorney know. Timing your case may be very important.

It is also important to know how long you have lived in the state in which you want to file. You must be domiciled at least 91 days in the state in which you wish to file. Domicile simply means the place where you consider it to be your home. For instance, if you rent an apartment in Pennsylvania, but often travel for weeks (or months) at a time out of state, Pennsylvania will still be considered your state of domicile. If you cannot wait the necessary 91 days, you will be forced to file in your previous state of domicile. This is important, because you absolutely cannot file in a state in which you are not domiciled.

Filing your taxes is also a requirement to filing Chapter 7 bankruptcy. If you have not filed your taxes, your bankruptcy attorney will have you complete them before filing your case, otherwise the case cannot be completed with a discharge. It should be noted, you will not be required to pay and Federal Income Taxes if you owe money. You are merely required to have them filed. Unfortunately, they will generally not be dischargeable.

A final issue that may prevent you from filing a Chapter 7 bankruptcy would be a recent transfer of property (such as a home or a car) to a friend, family member, or business associate. If you have made such a transfer in the past two years, let your bankruptcy attorney know when you discuss your case. It may be necessary to delay your case filing, or have the property returned.

Taken together, these issues along with your income and equity in your home will largely determine if you qualify for a Chapter 7 bankruptcy. Contact us if you would like to discuss your situation in detail in a free consultation. Chapter 7 bankruptcy may be a great option for you.