Tuesday, July 20, 2010

Client FAQs - Is It Too Soon To File Again?

Many people who come in to my office seeking bankruptcy protection have already filed before. This begs the question, how soon is too soon to re-file? Unlike most things in bankruptcy the rules for filing a second (or third) bankruptcy are clear cut.

There are different waiting periods for different chapters. The important date is the date of filing of your previous case. It is also important to know that you are only prohibited by these dates if you received a discharge in your previous case. If, for instance, you had a Chapter 13 case that was dismissed, you do not have to wait to re-file (unless the court has prohibited you from doing so).

So here are the different scenarios:
  • If you filed a Chapter 7 bankruptcy and received a discharge, you must wait 8 years from the date of filing to file another Chapter 7.
  • If you filed a Chapter 7 bankruptcy and received a discharge, you must wait 4 years from the date of filing to file a Chapter 13 bankruptcy.
  • If you filed a Chapter 13 bankruptcy and received a discharge, you must wait 6 years from the date of filing to file a Chapter 7 bankruptcy.
  • If you filed a Chapter 13 bankruptcy and received a discharge, you must wait 2 years  to file another Chapter 13.
One caveat is that if you received a discharge in a Chapter 13 bankruptcy in which you repaid 100% to your unsecured creditors, or at least 70% and the plan was proposed in good faith and was your best effort, then there is no waiting period to file a Chapter 7.

One scenario that can occur, however, is when a client needs to file a Chapter 13 bankruptcy to stop a foreclosure, but it is too soon to re-file. That person can still file a Chapter 13, but they cannot receive a discharge. However, the filing of the Chapter 13 can stop the foreclosure and allow them to pay off the arrearages over the course of their plan.

For more information on Chapter 7 and Chapter 13, visit my website at http://www.ohiobankruptcyrelief.com/.

Wednesday, July 14, 2010

What Is A "Bankruptcy Petition Preparer"? - Someone You Should Avoid At All Costs!

Want to overpay for a simple service you could do yourself? Want to throw hundreds of dollars away? Then I've got just the thing for you. It's called a "bankruptcy petition preparer".

So what is a bankruptcy petition preparer? This is the best definition I found. This is taken directly form Nolo.com. A link to this page is here.


"A bankruptcy petition preparer is any person or business, other than a lawyer or someone who works for a lawyer, that charges a fee to prepare bankruptcy documents. Under your direction and control, the bankruptcy petition preparer generates bankruptcy forms for you to file either by typing them or inputting information into a bankruptcy software program.

Because bankruptcy petition preparers are not attorneys, they cannot provide legal advice or represent you in bankruptcy court. This means that the bankruptcy petition preparer cannot:

tell you which type of bankruptcy to file

tell you not to list certain debts

tell you not to list certain assets, or

tell you what property to exempt.

In essence, you must understand what debts your bankruptcy will discharge, what will happen to your property in the bankruptcy, and what laws should be used to exempt your property from being taken for the benefit of your creditors.

In addition, you must file the bankruptcy papers yourself and represent yourself in court. In other words, you are responsible for your case. You act as your own attorney and use the bankruptcy petition preparer as a typing service that transposes the information you give them onto the official forms."

A typing service. That's all they are supposed to be. Understand this point, first and foremost: A BANKRUPTCY PETITION PREPARER IS NOT A LAWYER! Did I say that loud enough? How about this too: A BANKRUPTCY PETITION PREPARER CANNOT GIVE YOU LEGAL ADVICE. Here goes another: A BANKRUPTCY PETITION PREPARER CANNOT REPRESENT YOU IN COURT OR AT YOUR HEARINGS! Let's see, what else? OK: THERE IS NO FORMAL TRAINING OR CERTIFICATION REQUIRED TO BE A BANKRUPTCY PETITION PREPARER. A bankruptcy lawyer has a bachelor's degree plus a degree from an accredited law school. They have also passed the bar exam and are licensed to practice law in a federal court. A bankruptcy petition preparer is not required to have any education or certification at all.

If you choose to use a bankruptcy petition preparer instead of a bankruptcy attorney, you are still completely on your own. And the cost for an attorney (who will represent you, give you legal advice and attend hearings with you) is often not much more than you'd pay the bankruptcy petition preparer. Filing for bankruptcy can be full of pitfalls, and the bankruptcy petition preparer is neither permitted nor qualified to give you any advice about whether you should file under Chapter 7 or Chapter 13 or what the consequences might be. They cannot tell you which property is exempt and which property you may lose. In short, they cannot tell you anything.

Bankruptcy petition preparers are often attractive to people because of the low cost involved. If you decide to file for bankruptcy, it can be an expensive option. Most good attorneys, however, will have flexible fees and payment arrangements that can help you get your case filed in a timely manner. But if you decide to take the risk and do it yourself, throwing hundreds of dollars at a typist could be your biggest mistake of all.

For more information on Chapter 7 and Chapter 13, visit my website at http://www.ohiobankruptcyrelief.com/.

Monday, July 12, 2010

Bankruptcy Fraud - Just How Much Trouble Can You Get In By Lying?

The following is a common situation that needs to be addressed. Often, people will come into my office to talk about bankruptcy and discuss their options. During the course of our conversation, we talk about their assets. Sometimes, I unfortunately have to tell people that they may lose property if they file a Chapter 7 bankruptcy, or pay money to the trustee. Although many people understand this, others get upset. They may talk about transferring property or just not disclosing it on their petition. Of course, I have to advise them that I will not file their petition if I know that we have not disclosed all of their assets or transfers. I often wonder how many of those people then go to visit another attorney and do not tell them about their assets. If you're thinking about hiding assets during your bankruptcy, you need to think twice.

First things first. BANKRUPTCY FRAUD IS A CRIME. According to some sources, nearly 70% of all bankruptcy fraud involves the concealment of assets. You need to know that when you sign your bankruptcy petition, you are signing it under penalty of perjury.

Under federal law "A person who - (3) knowingly and fraudulently makes a false declaration, certificate, verification, or statement under penalty of perjury as permitted under section 1746 of title 28, in or in relation to any case under title 11 (The Bankruptcy Code) shall be fined under this title, imprisoned not more than 5 years, or both." 18 USC 152. The maximum fine is $250,000. This should impress upon you the consequences of intentionally lying on your bankruptcy petition or attempting to conceal assets.

Furthermore, when you sign your petition, it states that "I declare under penalty of perjury that the information provided in this petition is true and correct". Also, when you attend the Meeting of Creditors, your bankruptcy trustee will swear you in. The point is that this is serious stuff people.

Other consequences of lying during your bankruptcy could include: having your discharge denied or revoked. You may also be forced to surrender property to your bankruptcy trustee.

Finally, you need to know that going back and fixing your schedules or disclosing assets does not relieve you of liability for lying in the first place.

If you're concerned about losing property through a bankruptcy, talk to an experienced bankruptcy attorney about the possibility of filing a Chapter 13 bankruptcy. In a Chapter 13, you can keep all of your property, although you will pay the value of your non-exempt property through your Chapter 13 case.

For more information on Chapter 7 and Chapter 13, visit my website at http://www.ohiobankruptcyrelief.com/.

Thursday, July 8, 2010

Client FAQs - Do I Have To List ALL of My Debts?

Many times clients will come into my office saying that they "don't want to file on" a certain debt. Perhaps it's a credit card they want to keep, a doctor they have a relationship with, or a family member. Rarely do we have black and white answers to bankruptcy questions, but the answer to this is simple: YES, you have to list EVERYBODY you owe money to in your bankrupcy petition. Even if you THINK you may owe someone money, list them. Even if you don't think you owe someone, but they think you do, list them (as "disputed").

What are the consequences of not listing someone on your petition? It is possible that the particular debt may not be discharged. If you are in a Chapter 7 bankruptcy and the trustee discovers assets to administer, leaving someone off of your bankruptcy petition may mean that the debt is not discharged. The same situation can arise in regard to a Chapter 13 bankruptcy. If you discover that you've left someone off your petition, you should alert your bankruptcy lawyer immediately. He or she can file amended bankruptcy schedules, although the court can charge a fee to do this.

Unfortunately, there is no one resource where you can find out all of your debts. I encourage my clients to go to http://www.annualcreditreport.com/. You are entitled to receive a free copy of your credit report once a year from each of the credit bureaus (Equifax, TransUnion, Experian). At this site you can get them with no cost and no need to sign up for phony credit monitoring.

For more information on Chapter 7 and Chapter 13, visit my website at http://www.ohiobankruptcyrelief.com/.

Tuesday, July 6, 2010

Being Sued? - You Can't Ignore It, And Here's Why

If you're sued in Ohio, you need to act. Sitting back and burying your head in the sand is the WORST thing you can do. So how does your standard lawsuit proceed and what time frames are you looking at? And how does bankruptcy fit in the equation? Here's a primer on how they work and what can happen.

When you're sued, whether in municipal court or common pleas court, you have to be "served" with the lawsuit. Most people have the idea that process servers hunt people down and find unusual and amusing ways to hand them lawsuits and "serve" them. We can thank movies and television for this perception. The fact is that personal service is unusual in Ohio, except in the case of foreclosures. Most service is done through the mail. Ohio rules dictate that you have to first be served by certified mail. If certified mail service is unsuccessful, it is usually tried a second time. If it is unsuccessful again, service is usually by ordinary mail. If the mail is returned or service is otherwise unsuccessful, then you can be served by "publication". Basically, notice of the lawsuit is put in a newspaper and you are considered "served" after a certain amount of time. I won't go into the details, but the point to take away is that you can only delay being served with a lawsuit, but you cannot completely avoid it.

OK, so you've been served. You then have 28 days (not including the date of service) to "answer" the lawsuit. Answering it means filing an answer with the court and serving a copy of your answer on the plaintiff or their attorney, if they have one. If you've answered it, this will delay the lawsuit and the court will put it on a case management track that includes deadlines and hearing dates. If you don't answer it, the plaintiff will likely get a default judgment against you for not answering it. Either way, if it is a legitimate claim, you will likely have a judgment against you eventually.

So what are the consequences of having a judgment against you? This is where we need to pay close attention. If a creditor has a judgment against you, they can then start garnishing your wages, attaching bank accounts and putting liens on your property.

So how does bankruptcy fit in? A Chapter 7 or Chapter 13 bankruptcy will STOP any lawsuits, whatever stage they're at. Whether you've just been served or you're already having your wages garnished, a bankruptcy will stop it. But, as always, there is a caveat. If a creditor has a lien against your home, you may or may not be able to get rid of it through a bankruptcy. If the lien is completely unsecured (you owe more on superior liens than the house is worth), then you can get rid of it in a Chapter 7 or Chapter 13 bankruptcy. If, however, the lien is even partially secured, then the debt may be wiped away, but the lien will continue to stay on the property. If this is the case, then it will have to be dealt with whenever the house is sold or refinanced. An experienced bankruptcy attorney should be able to help you through the process of getting rid of liens in bankruptcy.

For more information on Chapter 7 and Chapter 13, visit my website at http://www.ohiobankruptcyrelief.com/.

Thursday, July 1, 2010

Client FAQs - Will Filing for Bankruptcy Affect My Spouse?

There are really two sides to this question. In bankruptcy, we're mainly concerned about two things: your debts and your property.

DEBTS

In Ohio, when one spouse files it does not affect credit of the non-filing spouse. As long as the non-filing spouse has not co-signed or otherwise used the credit of the filing spouse, they will not be held liable for the debts of the filing spouse.

One thing to keep in mind, however, is the situation in which both spouses have co-signed for a loan or are jointly liable for a debt. In that circumstance, one spouse's bankruptcy filing does not relieve the other of liability for the debt. The non-filing spouse is fully liable. One caveat to this is if the debtor is filing a Chapter 13 bankruptcy and is re-paying a consumer debt in full through their plan. In this circumstance, the bankruptcy code has a "co-debtor stay" in effect that protects the co-debtor from the creditor (11 U.S.C. 1301).

PROPERTY

As a general rule, any property that is solely in the name of the non-filing spouse cannot be touched by the bankruptcy trustee. One thing to keep in mind, however, is the concept of fraudulent transfers. In Ohio, the trustee can look back up to four years at any property the debtor has transferred out of his or her name. If the debtor transferred property out of his or her name to the non-filing spouse, the trustee may be able to reclaim that property from the spouse.

Also, joint property can be an issue if there is equity in it. For example, if a couple owns a home worth $100,000 that has no lien on it, the trustee may end up selling the house. The debtor owns a 50% interest ($50,000), but Ohio bankruptcy exemptions only cover $21,625 worth of equity. The trustee could then sell the house, give the non-filing spouse the value of their interest, give the debtor the value of their exemption, and give the rest to creditors. This is the sort of situation that can result in the loss of a home, a car or any other jointly titled property. An experienced bankruptcy attorney should be able to point out these potential pifalls before you file your case.

For more information on Chapter 7 and Chapter 13, visit my website at http://www.ohiobankruptcyrelief.com/.