Bankruptcy attorneys see people from all cross-sections of our population. Most people have a good understanding of their financial obligations and know who they owe. Others bring in grocery store bags and boxes full of bills they have collected for months and, in some cases, years.
It is very important to identify all of your creditors when you file a bankruptcy. The Bankruptcy Code requires that you list all of your creditors, even those you want to pay in the future. You must also make a good-faith effort to list the amount owed to the creditor.
There are two excellent sources for discovering who you owe. The first is the US Postal Service. Creditors and collection agencies are very good at sending monthly bills when you owe them money. Collect your mail for a month and you will have a good start on listing your creditors.
The second excellent source for creditor information is your credit report. There are three main consumer credit reporting agencies:
Equifax
http://www.equifax.com
800-685-1111
P.O. Box 740241
Atlanta, GA 30374-0241
Experian
http://www.experian.com
888-397-3742
P.O. Box 2104
Allen, TX 75013
Trans Union
http://www.tuc.com
800-916-8800
P.O. Box 2000
Chester, PA 19022
Each of the above consumer credit reporting agencies are required by federal law to provide one free credit report to you every 12 months. You can obtain an absolutely free credit report from Equifax, Trans Union, and/or Experian by visiting the following website: https://www.annualcreditreport.com/cra/index.jsp
Obtaining a copy of your credit report is a very good step in making a good-faith effort to identify all of your creditors. However, it is important not to rely exclusively on the information contained in the credit reports. Not all creditors report to the credit reporting agencies. Additionally, the information contained in your reports may be inaccurate, outdated, or incomplete.
If you are considering a bankruptcy filing, get a free copy of your credit report and seek legal assistance. You and your bankruptcy attorney can review your credit report and assess you financial situation. While bankruptcy isn’t the answer to all financial problems, it can provide powerful relief to people who are buried in debt.
Showing posts with label creditors. Show all posts
Showing posts with label creditors. Show all posts
Tuesday, November 30, 2010
Wednesday, September 1, 2010
What If You Forget a Creditor?
Usually by the time a person visits a bankruptcy attorney he has been struggling with overwhelming debt for months if not years. Often the person’s creditors have not been paid for a considerable time. It is not surprising that occasionally a person will forget to list a creditor in the bankruptcy paperwork.
If an omitted creditor is discovered during the bankruptcy case, the law requires the debtor to file amended schedules and identify the creditor. The debtor has an obligation to ensure all creditors are identified and receive notice of the bankruptcy case. Intentionally failing to list a creditor can cause that debt to be declared non-dischargeable and survive the bankruptcy. In extreme cases the bankruptcy court may deny a discharge altogether.
Sometimes even the most diligent debtor will forget a creditor. Things get trickier if the omission is discovered after the bankruptcy case has closed. How the debtor proceeds will depend on the court and the circumstances. In many cases an omitted creditor is considered discharged as a matter of law. If an unsecured creditor did not receive notice of the bankruptcy, but none of the debtor’s assets were distributed to creditors, many bankruptcy courts say the omission did not have any practical effect. In these cases it didn’t matter that the creditor did not receive notice, the debt is discharged anyway.
Conversely, if an omitted creditor loses the opportunity to receive money through the bankruptcy, the omission matters a great deal. Under these circumstances the failure to include the creditor means the debt cannot be discharged and the debtor is stuck with paying the debt.
If you discover an omitted creditor during or after your bankruptcy case, inform your attorney immediately. You and your attorney can discuss the proper procedure for dealing with an omitted creditor.
If an omitted creditor is discovered during the bankruptcy case, the law requires the debtor to file amended schedules and identify the creditor. The debtor has an obligation to ensure all creditors are identified and receive notice of the bankruptcy case. Intentionally failing to list a creditor can cause that debt to be declared non-dischargeable and survive the bankruptcy. In extreme cases the bankruptcy court may deny a discharge altogether.
Sometimes even the most diligent debtor will forget a creditor. Things get trickier if the omission is discovered after the bankruptcy case has closed. How the debtor proceeds will depend on the court and the circumstances. In many cases an omitted creditor is considered discharged as a matter of law. If an unsecured creditor did not receive notice of the bankruptcy, but none of the debtor’s assets were distributed to creditors, many bankruptcy courts say the omission did not have any practical effect. In these cases it didn’t matter that the creditor did not receive notice, the debt is discharged anyway.
Conversely, if an omitted creditor loses the opportunity to receive money through the bankruptcy, the omission matters a great deal. Under these circumstances the failure to include the creditor means the debt cannot be discharged and the debtor is stuck with paying the debt.
If you discover an omitted creditor during or after your bankruptcy case, inform your attorney immediately. You and your attorney can discuss the proper procedure for dealing with an omitted creditor.
Tuesday, June 8, 2010
Making Your First Chapter 13 Payment
In a Chapter 13 bankruptcy case the debtor proposes a plan to pay back creditors. That plan is composed of monthly payments to satisfy all or part of the creditors' claims over three to five years. Monthly payments are made to the Chapter 13 Trustee, who then pays your creditors.
There is often confusion over when the first plan payment due. Section 1326 of the Bankruptcy Code directs that the first payment must be made within 30 days after filing the bankruptcy case, even if the debtor’s bankruptcy plan has not yet been approved by the court. Often the first meeting with the Trustee (also known as the "341 meeting" or "meeting of creditors") is scheduled more than 30 days after the filing date, so the Trustee expects your first payment before that meeting. The Trustee will hold all payments until the plan is approved by the Bankruptcy Court (called "confirmation"), and then make distributions to creditors.
It is critical that you make this initial payment within thirty days after filing. It is especially important to monitor the status of this first payment when you have instructed your employer to pay the Trustee from your wages. It is your responsibility to ensure that this first payment is made, and neither the Trustee nor the Bankruptcy Court gives much latitude to a debtor who misses the first deadline in the case.
Making a timely first Chapter 13 payment allows your plan to proceed to confirmation and will expedite the bankruptcy process. Failure to commence making payments can result in delays, additional expenses, or even dismissal. Consult with your bankruptcy attorney regarding payment details, and make that first payment on-time!
There is often confusion over when the first plan payment due. Section 1326 of the Bankruptcy Code directs that the first payment must be made within 30 days after filing the bankruptcy case, even if the debtor’s bankruptcy plan has not yet been approved by the court. Often the first meeting with the Trustee (also known as the "341 meeting" or "meeting of creditors") is scheduled more than 30 days after the filing date, so the Trustee expects your first payment before that meeting. The Trustee will hold all payments until the plan is approved by the Bankruptcy Court (called "confirmation"), and then make distributions to creditors.
It is critical that you make this initial payment within thirty days after filing. It is especially important to monitor the status of this first payment when you have instructed your employer to pay the Trustee from your wages. It is your responsibility to ensure that this first payment is made, and neither the Trustee nor the Bankruptcy Court gives much latitude to a debtor who misses the first deadline in the case.
Making a timely first Chapter 13 payment allows your plan to proceed to confirmation and will expedite the bankruptcy process. Failure to commence making payments can result in delays, additional expenses, or even dismissal. Consult with your bankruptcy attorney regarding payment details, and make that first payment on-time!
Tuesday, June 1, 2010
Who Will Know About My Bankruptcy?
Filing bankruptcy is a very personal process. Many clients worry that their friends and neighbors will learn about their bankruptcy. A common question is, "Who will know about my bankruptcy?"
First, personal bankruptcy cases are generally not reported in the local newspaper. Unless you are a celebrity or public figure, your bankruptcy is not newsworthy. More than 1.4 million consumer filings were recorded last year, so many larger newspapers would have to publish thousands of bankruptcies in their papers each month. It is not cost-effective for a newspaper to search through the bankruptcy court records to find individuals who filed in their distribution area and use valuable print space to report on personal bankruptcy cases.
Second, the bankruptcy laws require notices of the bankruptcy filing to go out to the following:
1. Everyone you owe money (called "creditors");
Under special circumstances other notices are sent, for instance if you owe taxes, or if you want to terminate a lease or contract. Family, neighbors, friends, your employer, your bank, etc. will generally not receive notice of your bankruptcy. A common exception to this general rule is when the debtor causes a voluntary wage withholding to pay chapter 13 plan payments.
Third, while bankruptcy court proceedings and trustee meetings are open to the public, it is unusual for the press or members of the public to attend. Most of these meetings are very brief and can even be a little boring.
Finally, other than receiving notice of the bankruptcy filing from the bankruptcy court, there are only a few ways to learn of a bankruptcy case. The most common way is to contact the bankruptcy court directly. Most bankruptcy courts have an automated telephone system that will provide basic case information to the public.
Filing a bankruptcy petition is generally a private and confidential process. While there are no guarantees that your friends and neighbors will not learn about your bankruptcy, chances are they will not unless you decide to tell them. However, every case is different. If you have specific questions about the effects of filing bankruptcy, consult with an experienced bankruptcy attorney.
First, personal bankruptcy cases are generally not reported in the local newspaper. Unless you are a celebrity or public figure, your bankruptcy is not newsworthy. More than 1.4 million consumer filings were recorded last year, so many larger newspapers would have to publish thousands of bankruptcies in their papers each month. It is not cost-effective for a newspaper to search through the bankruptcy court records to find individuals who filed in their distribution area and use valuable print space to report on personal bankruptcy cases.
Second, the bankruptcy laws require notices of the bankruptcy filing to go out to the following:
1. Everyone you owe money (called "creditors");
2. The bankruptcy trustee;
3. Co-signors and co-debtors; and
4. You and your attorney.
Under special circumstances other notices are sent, for instance if you owe taxes, or if you want to terminate a lease or contract. Family, neighbors, friends, your employer, your bank, etc. will generally not receive notice of your bankruptcy. A common exception to this general rule is when the debtor causes a voluntary wage withholding to pay chapter 13 plan payments.
Third, while bankruptcy court proceedings and trustee meetings are open to the public, it is unusual for the press or members of the public to attend. Most of these meetings are very brief and can even be a little boring.
Finally, other than receiving notice of the bankruptcy filing from the bankruptcy court, there are only a few ways to learn of a bankruptcy case. The most common way is to contact the bankruptcy court directly. Most bankruptcy courts have an automated telephone system that will provide basic case information to the public.
Filing a bankruptcy petition is generally a private and confidential process. While there are no guarantees that your friends and neighbors will not learn about your bankruptcy, chances are they will not unless you decide to tell them. However, every case is different. If you have specific questions about the effects of filing bankruptcy, consult with an experienced bankruptcy attorney.
Sunday, February 28, 2010
Can I Have Money in a Bank Account When I File Bankruptcy?
The two most common types of consumer bankruptcies are Chapter 7 and Chapter 13. In a Chapter 7 all of the debtor’s property is placed into an estate which is controlled by the bankruptcy trustee. While no property physically changes hands (at least not at the beginning of the case), the trustee and bankruptcy court have broad legal power over your property. If you have money in a bank account on the day you file, your bank account and money are assets of the bankruptcy estate. You are no longer free to transfer funds or assets as they now belong to the bankruptcy estate.Take for example that you have $5,000 sitting in your checking account on the day you file bankruptcy. That money is property of the Chapter 7 bankruptcy estate and is no longer yours to control or use. If you take the $5,000 out of the bank the day after filing to pay your mortgage payment and other bills, the Chapter 7 trustee can seek to recover those funds, either from you or from the payee.
During a Chapter 13 bankruptcy the debtor retains possession and control over his or her property, and is free to use any funds in the debtor’s bank account. An accounting is performed and the debtor’s property is classified as either exempt or non-exempt. Non-exempt property is not taken from the debtor (as is often the case in a Chapter 7), but the Chapter 13 debtor is required to pay unsecured creditors a sum equal to the amount of non-exempt equity. For instance, if there is $5,000 in the debtor’s bank account, the debtor may only be able to exempt a portion of the entire sum. The non-exempt portion must be paid to the creditors through the debtor’s Chapter 13 plan (over three to five years).
Cash in a bank account can be a problematic issue for a debtor. Avoiding these problems is the joint responsibility of the debtor and the debtor’s bankruptcy attorney. Timing is critical to minimizing your financial exposure. An experienced bankruptcy attorney can help you maximize the benefits of the bankruptcy laws and navigate around any pitfalls.
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