When you are considering a trip, usually, you make substantial preparations in anticipation of that trip. You make travel arrangements; you make sure you have a place to stay; you make reservations for any activities in which you wish to participate. You will often make significant plans and preparations for any “big” event. Bankruptcy is no different. It is a significant life event that demands some thought and preparation before you embark on it.
In talking with potential bankruptcy clients, it seems that a lot of them wait until the last minute before contacting a bankruptcy lawyer to find out how bankruptcy may help them. While visiting a bankruptcy lawyer most likely does not rank high on most people’s “bucket list,” if you are struggling financially, it most likely makes sense to determine if and how bankruptcy can help you sooner rather than later.
So, how can “preparing” for bankruptcy help? First, you will need to have the fees for the lawyer and for the court available. For now, for a chapter 7 filing, just the filing fee is $306.00. Additionally, before you file, you must complete a consumer credit counseling session and get the certification that must be filed with the court. If you “fail to plan” for your bankruptcy filing by finding out what you need ahead of time, when your car is on the verge of getting repo’d, you may not have the time and/or money to retain a bankruptcy lawyer.
Second, you can carefully go over your income and expenses and see where the trouble lies. Certainly a bankruptcy lawyer can help you identify the problem (with appropriate information) but you also need to know how you got into this financial mess. Some problems are easy to identify–temporary loss of income; extraordinary medical bills; overspending for a bit, etc. Bankruptcy can assist in overcoming those past problems but you need to be aware of the problem so that you can avoid it in the future. Bankruptcy is designed to be a “fresh start.” You can greatly assist in obtaining that “fresh start” by breaking or modifying some of the habits that perhaps got you here in the first place.
Third, make sure you know who you owe and how much. Find out if there is any collateral associated with the debts and gather up loan documents. Your lawyer will need this but, more importantly, you need to know your own financial picture. Credit reports are freely available and can be a big help. Also, if lawsuits or foreclosures have been filed against you, make sure you have that paperwork–all of it! It is important!
Finally, change your mindset. In dealing with individuals facing financial problems, it is often much more difficult instead of dealing with distressed businesses. That is because a business looks at assets and liabilities and can make a rational decision as to whether keeping an asset is worth the corresponding liability. Understandably, people are attached to their “things.” But, after all, they are just “things” and you have to consider carefully whether retaining a “thing” is worth the potential stress and headache. As an example, if you suffered a decrease in income and you have two relatively late model cars. No one wants to give up one or two cars but sometimes it is better to surrender a vehicle or two in order to keep your house (if that is important to you). There will be some emotional attachment to some “things” but it is imperative that you do this. Determining what is important to you is important for your bankruptcy lawyer in setting achievable goals for your bankruptcy filing.
Finally, do some research. There is a lot of information about bankruptcy that is freely available. However, you should exercise extreme caution in considering the information. Not that the information is inaccurate (some info may be outdated or simply inapplicable) but it takes an experienced profession to know what is appropriate and what is not. But, by familiarizing yourself with some basic bankruptcy information, you will be in a better position to appreciate and assist your bankruptcy lawyer in setting realistic and achievable goals.
After all, the real goal of a bankruptcy filing is a “fresh start.”
Read More from this Author and others at: http://www.bankruptcylawnetwork.com/preparing-for-bankruptcy/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+BankruptcyLawNetwork+%28Bankruptcy+Law+Network%29
Of Course You Can Qualify for a Mortgage After Bankruptcy, FHA Says
by Craig Andresen, Minnesota Bankruptcy Attorney · Posted in *Life After Bankruptcy,Consumer Credit Issues,Mortgage Issues
One of the things that troubles those considering filing personal bankruptcy is the fear that it might be impossible to qualify for a home mortgage after a chapter 7 or 13 case. Indeed, it would be a cruel irony if a bankruptcy filing freed you at last from a heavy debt burden, enabling you to finally afford a house payment, only to find that you were now a member of a no-credit underclass, shunned forever by mortgage lenders, permanently consigned to a cot in your parents’ basement.
If this has been a factor in your thinking about bankruptcy, there is good news for you: the federal home mortgage guaranty agency says that bankruptcy will not stop you from qualifying for a mortgage to buy a home. Better still, you don’t have to rely on this writer’s credentials or anecdotal evidence to know that bankruptcy won’t stop you from buying a home. FHA and HUD regulations, publicly available to anyone who cares to look, say in so many words that a chapter 7 or 13 filing will not disqualify a borrower from eligibility for an FHA-insured mortgage.
Regarding chapter 7 bankruptcy, HUD Guideline 4155.1 : 4.C.2.g provides:
A Chapter 7 bankruptcy (liquidation) does not disqualify a borrower from obtaining an FHA-insured mortgage if at least two years have elapsed since the date of the discharge of the bankruptcy.
During this time, the borrower must have
■re-established good credit, or
■chosen not to incur new credit obligations.
An elapsed period of less than two years, but not less than 12 months, may be acceptable for an FHA-insured mortgage, if the borrower
■can show that the bankruptcy was caused by extenuating circumstances beyond his/her control, and
■has since exhibited a documented ability to manage his/her financial affairs in a responsible manner.
Note: The lender must document that the borrower’s current situation indicates that the events which led to the bankruptcy are not likely to recur.
Regarding chapter 13 bankruptcy, HUD Guideline 4155.1 : 4.C.2.h provides:
A Chapter 13 bankruptcy does not disqualify a borrower from obtaining an FHA-insured mortgage, provided that the lender documents that
■one year of the pay-out period under the bankruptcy has elapsed
■the borrower’s payment performance has been satisfactory and all required payments have been made on time, and
■the borrower has received written permission from bankruptcy court to enter into the mortgage transaction.
TOTAL Scorecard Accept/Approve Recommendation
Lender documentation must show two years from the discharge date of a Chapter 13 bankruptcy. If the Chapter 13 bankruptcy has not been discharged for a minimum period of two years, the loan must be downgraded to a Refer and evaluated by a Direct Endorsement (DE) underwriter.
Reference: For more information on the TOTAL Scorecard recommendations, see the TOTAL Mortgage Scorecard User Guide.
What’s more, because bankruptcy usually relieves you of most or all of your monthly debt payments, the above regulations make clear that filing bankruptcy could actually help you to qualify for an FHA mortgage, rather than preventing you from qualifying. This would be true for those whose monthly debt payments leave them with insufficient income to pay a mortgage, but for whom a bankruptcy filing would eliminate those monthly payments, freeing up the disposable income necessary to qualify for the monthly mortgage payment.
Additionally, if you are not a first time home buyer, you should be aware that conventional mortgage lenders typically follow regulations similar to those followed by HUD and the FHA.
This doesn’t mean that everyone who wants to buy a home should file bankruptcy first, but it does mean that persons considering bankruptcy can be free of the fear that a bankruptcy filing will prevent them from ever qualifying for a mortgage.
Your Bankruptcy Lawyer–Experience Matters
by Dana Wilkinson, Attorney at Law · Posted in Bankruptcy Basics
Your Bankruptcy Lawyer–Experience Matters
by Dana Wilkinson, Attorney at Law · Posted in Bankruptcy Basics
If you are thinking about filing bankruptcy, possibly the most important decision you’ll make will be which attorney to hire to represent you in that bankruptcy. Your bankruptcy attorney will guide your decision-making throughout the process, from whether to file bankruptcy at all, when to file, and what type of bankruptcy is available, and most beneficial. You bankruptcy attorney will help you navigate the intricacies of the means test, will determine what exemption scheme is available to you and help you decide how to apply those exemptions. Your bankruptcy attorney will review your situation to identify any potential land mines, and should be there with you when you go to court, when you provide information to the trustee or your creditors, or in rare cases, when your case is audited.
Bankruptcy is one of a very few fields of expertise in the legal profession that is a recognized specialty. Many bankruptcy lawyers (myself included) don’t practice any other kind of law. In fact, I’ve never practiced any other kind of law. I’ve been practicing bankruptcy law for twenty-five years, and I still study new cases, and talk to other bankruptcy lawyers on a daily basis to maintain my expertise. I guess that’s why they call it “practice.” Bankruptcy law is an enormously detailed and intricate subject.
That’s why I maintain that there is no such thing as a “simple” bankruptcy case. Case in point: I met with a fellow recently who has a regular job, some credit card debt and medical bills, and not much property. His assets are fairly basic, too–a car and a boat. So, you might think that I didn’t have to use much of my expertise to advise him. Simple case, right? Well, not so much. In the course of our conversation, he mentioned moving, and when I checked with him, it turned out he had moved to South Carolina a little over two years ago. You wouldn’t think that would make a difference, but it does, and it would have affected the property he wants to keep. And that’s just one example; there are plenty of other surprising details lurking out there in bankruptcy land.
There is a great deal on ongoing discussion/controversy/moaning and groaning about the state of legal education right now. In a nut shell, law schools are graduating a lot more newly-minted lawyers than there are jobs for them. And traditionally the expectation has been that a lot of a new lawyer’s practical training would be provided by his first employer. In other words, law schools focus on teaching people how to think like lawyers; they leave it up to law firms and mentors to teach people how to practice law. The result: an awful lot of lawyers with minimal experience are being forced to fend for themselves. I’m not blaming them–most of them have student loan debt that makes my head hurt. But if I were out there looking for a lawyer (of any kind, but especially a bankruptcy lawyer) I wouldn’t necessarily want them to “practice” on me.
So how do you choose a bankruptcy lawyer? There are certainly factors to consider in addition to experience, but in my opinion experience ought to be right at the top of your list. Now, I can hear the cynics among you saying “Well, she’s experienced, of course she thinks experience should count.” And I can imagine some thinking that filing bankruptcy is just filling out a bunch of forms. But think back to what I said above. Do you really think that courts and bars would go to the trouble to test and certify specialists is it didn’t really matter? Do you think that there would be an entire division of the Justice Department whose job is to monitor and police bankruptcy cases if it was just filling out a bunch of forms? Yes, you need to have a decent working relationship with your bankruptcy lawyer, and yes, you should be satisfied that your lawyer is going to be reasonably responsive to you. But your lawyer’s personality isn’t going to get you through the bankruptcy process. And it doesn’t really matter if your attorney is available to answer your questions night and day if he doesn’t know the right answers. Experience and knowledge are key.
And now, to deal with the elephant in the room: what about fees? Isn’t an experienced bankruptcy lawyer going to cost more? Well, yes and no. An experienced bankruptcy lawyer might charge you a higher fee than someone who has little or no experience. But he might save you a lot more money if he prevents a mistake, or identifies a potential problem, or a way to make bankruptcy relief more comprehensive. And that really is the bottom line. Lack of an experienced bankruptcy lawyer (or lack of a lawyer at all) can leave you vulnerable to all sorts of problems. When it comes to choosing your bankruptcy lawyer, experience matters, and you really do get what you pay for.
We just received a copy of a Peer Review stating that we were rated as highly ethical. Considering all the lawsuits against other attorneys lately in the news, I think it might be a good point when looking for an attorney. If an attorney is willing to do something unethical FOR you, they are probably willing to do something unethical AGAINST you. For a knowledgeable, experienced, ethical attorney, give us a call 765-649-9340. We are insured for malpractice and our record of 31 years is clean.
We just moved into a new location all of a few feet away just down one floor to Suite 210. The Law Offices are still in the Union Building in Anderson but again, we have moved from little Suite 335 to bigger Suite 210. It was difficult transition because the phones were down for almost a week. So if you tried to call, now you know why. Come see the new office sometime.
The new address is:
Davenport Law Offices, Clifford M. Davenport
1106 Meridian Street, Suite 210
Anderson, IN 46016
Clifford Davenport, the attorney, focuses on Bankruptcy law, Family Law, Divorce, Small Claims Litigation, DUI/OWI, Minor Criminal Offense work, and Appellate work (appeals).
Has anyone ever read this and thought they should represent themselves?
IMPORTANT INFORMATION CONCERNING THIS CLAIM
1. If the Defendant does not dispute the Plaintiff’s claim, he or she may appear at the time set for the trial, confess judgment, and provide information as to how and when the judgment can be paid. Execution on the judgment shall be stayed automatically by the Court if the Defendant pays toward the judgment at least 15% of net take-home pay (calculated as gross pay minus taxes and social security).
2. A Trial will be held on the date listed on the front of this form unless rescheduled by the Court at that time. A continuance of the trial date will be granted only for good cause shown. Any request for a change of the trial date by either party should be directed to the Court Reporter.
3. Both Plaintiff and Defendant should have the cause number available and should refer to it when communicating with court personnel about the case. When reporting to court for any reason, including trial, both parties must bring all paperwork received from the Court plus any documents related to the Notice of Claim.
4. The Plaintiff and Defendant may represent themselves individually or be represented by attorneys. If Plaintiff or Defendant is a corporation, it must be represented by a lawyer on any claim of $1500.00 For Claims of $1500.00 or less, a corporation, partnership, or sole proprietorship may file with the Court a company resolution (for available at the court) designating a full-time employee as a representative for the business in court.
5. The Plaintiff and Defendant must bring to trial all documents and other available evidence that related to this claim. Witnesses who are unwilling to appear voluntarily may be subpoenaed into court for the trial.
6. By filing this claim on the small claims docket of the County Court, the Plaintiff no longer has a right to a trial by jury. The Defendant has ten (10) days from receipt of this notice to file an affidavit requesting a jury trial and to otherwise comply with the requirements of Indiana Code 33-30-5-5, or Defendant also loses the right to a trial by jury. If the request for a jury trial is granted, Defendant must within ten days tender a plenary transfer fee of Seventy dollars ($70.00). The grant of a jury trial may not be withdrawn without consent from all parties; the case will be transferred to the plenary (regular) docket and will lose its status as a small claim. All Formal rules of procedure and evidence are followed in cases on the plenary docket, and it is strongly advised that both Plaintiff and Defendant be represented by attorneys in such a situation.
7. If Defendant has any claim against the Plaintiff, he or she may contact the court and file a counter-claim. A counter-claim would be heard at the same time as the trial on Plaintiff’s claim. The counter-claim must be filed so as to give Plaintiff notice of it at least seven (7) calendar days prior to trial. If the counter-claim exceeds the $60,000 small claims limit, Defendant waives the excess by filing on the small claims docket.
8. A claim settled by out-of-court agreement may be disposed of in two ways: (1) Plaintiff may sign a form dismissing the claim if he or she is fully satisfied. (2) An Agreement that a judgment will be entered and paid in specific installments can be put in writing, signed by both sides, and submitted for the judge’s approval. If approved, the agreement will then become a judgment.
9. Court personnel are available to assist with questions about court procedures or filling our forms. Neither the employees nor the judge, however, are permitted to give legal advice (whether to file a claim, whom to file against, how much to sue for, etc.). An attorney should be consulted regarding legal questions.
10. FAILURE TO APPEAR. A Defendant who fails to appear for trial may have a default judgment entered against him or her at the request of the Plaintiff. Failure of the Plaintiff to appear for trial will usually result in dismissal of the claim and a judgment for Defendant if a counter-claim has been filed. An alternative to dismissing a case is assessing special costs against the non-appearing party. If a judgment is entered and the person owing the debt fails to obey a direct Court order to appear for further hearing, that person will usually be arrested for contempt of court.
11. If you have questions about court procedures or the first hearing that has been schedule in this case, you may call Superior Court 4 or 5. Please note the court of filing.
If you aren’t sure if you have a case worth taking to small claims court, come see us and get a special rate on small claims court work. Eviction proceedings and replevins might be more complicated than you previously thought. If you need a small claims court attorney, call a lawyer in Anderson at 765.203.6556.
Exemptions – http://www.ai.org/legislative/ic/code/title34/ar55/ch10.html
Bankruptcy is the new black and this group presents some amazing statistics about Bankruptcy and why you should not feel the negative stigma some feel when they file.
Take a moment to listen to this and if you want to know more, give us a call at our Anderson office at 765.203.6556 or Indianapolis at 317.641.4980
We are professional and we give every client personal attention.
As a paralegal, I often skim through tax returns when preparing documents for the attorneys. I also prepare taxes January through April 15th every year and go through about 60 hours of continuing tax law education per year. The other day I received some tax returns from a client going through a bankruptcy and I was able to give her wonderful news. Earned Income Credit is exempt from the Trustee, so if a person is due a tax refund, the portion of the refund that is part of the Earned Income Credit cannot be taken in your bankruptcy. This particular client qualified for the Midwestern Disaster Relief exemption which increased her Earned Income Credit by almost $2,000 but it wasn’t claimed on her 2008 taxes. We were able to amend her tax return and get her the extra $2,000 that she needed without the Bankruptcy trustee being able to take it to pay off her debts.
This is just another way Davenport Law Offices goes over and beyond the basics of bankruptcy by not just using the numbers you give us, but by correcting past taxes to help you keep all the money you can.
The Midwestern Disaster Relief credits cover Earned Income Credits as well as some others like Education credits, which are not exempt from the trustee’s powers. Anderson, Alexandria, Pendleton, Lapel, & Middletown were all included in the Midwestern Disaster Area as well as all of Madison County, Marion County, Hamilton County, and several others. Delaware County is NOT a Midwestern Disaster Relief Area.
Davenport Law Offices chief attorney is Clifford Davenport. He has been an Anderson Indiana Bankruptcy Attorney for 30 years. As a lawyer in Anderson Indiana, he has encountered complex issues regarding bankruptcy and worked through everyone of them giving each client personal attention. Often, the question we are asked is “How long does it take and what is involved?” This article details everything a person facing a chapter 7 Bankruptcy might be facing. Whether you are in Anderson, Muncie, Fishers, Noblesville, Pendleton, or anywhere else in between, we can handle your needs in one of our Indianapolis offices, our Anderson office, or our mobile office where we actually go to your home and give you a free consultation where you are most comfortable.
Bankruptcy is debtor protection provided by the federal government to help businesses and individuals repay their debts or eliminate them by means of liquidations or reorganizations. The Bankruptcy code is divided by chapters and that is how bankruptcies are referenced. A Chapter 13 bankruptcy is a bankruptcy where debt repayment plans are reorganized in a manner that allows the debtor the ability to repay those debts; however, that type of bankruptcy isn’t ideal for everyone and they made need to file a Chapter 7 bankruptcy. A Chapter 7 Bankruptcy is a liquidation bankruptcy where the debtor is only allowed to keep a certain amount of property, as described below, and all the other assets belonging to the debtor is sold off in an attempt to repay the creditors, the companies and people the debtor owes. A person is only allowed to file a Chapter 7 Bankruptcy every 8 years.
When a person files a bankruptcy petition, a Bankruptcy Estate is created. The Bankruptcy estate contains everything that the debtor owns and all of their equitable interests. This is then under the control of the Bankruptcy Trustee. The chapter 7 trustee is an individual appointed by the courts to administer the estate and is entrusted to try to find and liquidate all the assets of the debtor’s and repays the creditors as much as they can from the sale of the assets.
Before the decision to file a Chapter 7 petition is done, a Disposable Income Test and a Means Test should be done to determine if the debtor meets the requirements necessary to file. The Disposable Income Test is used to determine whether the debtor has enough income left over after paying necessary monthly expenses, to pay off at least a portion of their unsecured debts. If the disposable income adds up to more than the statutory amount set for the debtor’s location, they will fail the means test and cannot file for Chapter 7 bankruptcy. The Means Test is the method used to determine if the debtor makes more than the median income level for their geographic location. If their income is less than the median amount, they are allowed to file; however, if they do make more than the median amount, then the Disposable Income Test must be used.
At the same time the Bankruptcy Estate is created, an automatic stay is put into place to protect the debtor from any other collection efforts by their creditors. This protects the debtor from creditors proceeding with lawsuits, garnishments, and even initiating foreclosure proceedings against the debtor. Creditors cannot send the debtor collection letters or assess other charges and fees to their accounts. This is good for both the creditors and the debtors. The debtor no longer has the stress of collections while the creditors can be reasonably assured that an effort will be made to pay each and every creditor an equitable distribution of the assets rather than one creditor having the ability to take all the assets. This Automatic Stay remains in effect until the bankruptcy is dismissed or discharged.
An individual debtor under Chapter 7 is allowed to keep some of their assets through exemptions allowed under the Bankruptcy code. Exemptions are statutorily defined properties that an individual debtor may protect from administration in the bankruptcy estate. Some states offer their own exemptions though and the debtor is allowed to choose to use their states exemption laws or to use the federal exemption laws. In Indiana, the homestead exemption is currently at $7,500 for an individual filing and $15,000 if filing as a married couple. A debtor is also allowed to keep up to $8,000 in personal property or $16,000 is filing married. Indiana has scattered the statutes pertaining to all of a debtor’s possible exemptions all over the place. Some are under title 34, some under title 27, and yet you should always look for any other possible exemptions under § 522 of the Federal Code. There are exemptions of varying amounts for whole life insurance policies, automobiles, business partnership property exemptions, exemptions for crime victims’ benefits, unpaid wages still due to the debtor, earned income tax credits, health aids, jewelry, household goods, tools of the trade like uniforms, personal injury claims, retirement accounts, and government benefits like Social Security. There are many exemptions available depending on your state and your circumstances. It is the duty of the debtor’s bankruptcy attorney to find all those exemptions applicable.
One of the primary concerns for the debtor is, “How long will this take?”
There is a deadline of 15 days after filing the petition to file certain financial “schedules” with the court-documents declaring your assets, liabilities, expenses, income, and a statement of your affairs. These schedules are typically filed with your initial petition. About 15 days after a petition is filed, the courts will mail the Notice of Commencement of Case to the debtor and to all of the creditors listed in the petition. This notice will inform the debtor of the date set by the court for the meeting of your creditors, and the deadlines for your creditors to object to your case and file their claims against you. Within 30 days after filing a petition, or before the meeting of creditors (also called a 341 meeting), you are required to file a Statement of Intention whereby the court is informed if the debtor intends to keep their secured property that serves as collateral for their secured debts, or if the debtor plans to surrender the property. A debtor can reaffirm the debts and continue to make payments on those debts if they wish to keep the property or it can be sold for fair market value. Within 45 days after the Statement of Intention is filed, the debtor must surrender or keep the property as indicated in the Statement.
Sixty to ninety days after filing the bankruptcy petition, there will be a Meeting of the Creditors or 341 Meeting as it is typically called. The trustee will ask the debtor to testify under oath as to the accuracy of the statements in their petition. It is vital that the client, debtor, attends the 341 hearing. If the debtor is not there, the petition will be dismissed. Within 45 days after filing, evidence of any payments received from any employer within 60 days of filing, an itemized statement of monthly income, and an estimate of any increase income or expenditures expected over the next 12 months must be submitted.
Within 60 days of the 341 hearing, the trustee and any creditors must file any objections they have to any of the exemptions in the petition. Creditors can object to the discharge of a debt if the debt was obtained through fraud or theft, personal injury claims from a DUI or DWI, or assigned debt through a divorce. Another debt that cannot be discharged is a federally backed student loan without typically being permanently unable to repay it typically due to indigency or handicap. Orders for child support or alimony cannot be discharged as well. Creditors can also object to the discharge if it is found that there was any bankruptcy fraud, spoliation of necessary records, failure to explain losses, or failure to respond to interrogatories. Proofs of claim must be filed within 90 days after the first date set for the 341 hearing if they wish to share in the payments from your case if any assets are available for liquidation even though there typically are not any assets to divide in a Chapter 7 bankruptcy.
It is important to address certain times for the debtor, such as the 341 meeting again. The trustee will be asking some questions of the debtor like, “Have you paid off any debts to family members recently?” or “How did you get your unsecured debt?” It is important that the debtor is prepared to answer questions pertaining to their finances going back at least 180 days and that they bring any financial documents that may help to explain their situation and a copy of their most recent tax return. They should also bring their identification and social security card. The trustee is trying to make sure there has not been any preferential transfers (paying off one creditor to benefit them more than another creditor) or fraudulent transfers (transfer of assets to another without consideration to hinder, delay, or defraud creditors). If it is found that there has been a preferential transfer, the trustee is entitled to take that money back from the preferred creditor to more equitably divide among the other creditors. If it is found that there has been any fraudulent transfers, the petition may be dismissed and the debtor may not be allowed to file for bankruptcy and even be sent to prison. Make sure your debtors are honest in the preparation of their bankruptcy. It is also important to include certification of debtor counseling in the petition by the due date so the case isn’t dismissed. Debtor counseling is a new requirement since the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 went into effect. This certification is often overlooked by debtors especially if they had filed previously before the BAPCPA. After all, the purpose of bankruptcy is to give the debtor a fresh start, so that counseling may be the first time they were ever given any tips to stay out of debt.