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What kind of Bankruptcy should I file ? Chapter 7, 11 or 13

WHAT KIND OF BANKRUPTCY SHOULD I FILE ?? CHAPTER 7, 11 OR 13

A Lawyer might say: it depends.

Here are some guidelines:

1.  Most people can file either a Chapter 7 or 13.

2.  If you are not qualified for a Chapter 7, then Chapter 13 is an option.

3.  If you are not qualified for a Chapter 7 or 13, then Chapter 11 is your best bet. However, remember, if you are filing a Chapter 11 bankruptcy, then you are moving around with the big boys with lots of rules to follow, and expensive legal fees.

4.   Almost anybody with a stream of income [including social security or disability] is qualified to file a Chapter 13.

5.   Chapter 7 is a liquidation bankruptcy and is usually filed by individuals whose expenses exceed income, who are below the median income, who have a lot of credit card or other unsecured debt, and no assets [cash, land, equity in cars, etc.]

6.    Chapter 13 filed by people who wish to pay a portion of their debt and/or who want to catch up on their mortgage or car payments and save their homes from foreclosure or cars from being repossessed or those individuals who cannot qualify for a Chapter 7 because they make too much money or because they have issues like..fraudulent transfers, receipt of large tax refunds, etc.

This is not an exclusive list. Therefore, it is important that you consult with a Bankruptcy attorney before making a decision. The one thing that I advise individuals contemplating filing a bankruptcy..do not try to do it on your own. Bankruptcy is complex. It is like jumping into quick sand. You will drown. I have seen too many instances where people have lost significant assets:

Example:

1. One case a paralegal filed her own Chapter 7 and lost her $250,000 annuity that she had purchased from the life insurance proceeds of her deceased husband. Annuities are usually exempt in a bankruptcy, however this one was deemed not exempt by a Bankruptcy judge because of the way it was set up, and timing of the purchase of the annuity.

2.  A postal worker lost $360,000 of tax free municipal bonds. He thought that just because they were tax-free that they were exempt in the Chapter 7 bankruptcy.

3.   One widow lost $250,000 life insurance proceeds from her deceased husband. She thought that since Life Insurance is exempt in a bankruptcy, the life insurance proceeds from her husband's policy are also exempt. He has died a few days before she filed her bankruptcy.

Attorney Dsouza practices in the areas of Bankruptcy, and may be able to assist you to plan for your bankruptcy legally. www.DsouzaLegal.com. 954-358-5911

 

What is a Meeting of Creditors or 341 Meeting

About 30 days after a Bankruptcy is filed, the Court schedules a Meeting of Creditors.

Really, the Meeting of Creditors is a non-event as long as all the things are done properly. The Meeting usually lasts 5 minutes or less. However, here are certain guidelines that needs to be followed:

1.  Be at the Courthouse at least 30 minutes before the Meeting.

2.  Don't carry excessive/metallic stuff with you when entering the Courthouse. Just carry your government issued ID/Drivers License and Social Security card. No electronic devices or cell phones are allowed in the Courthouse. If you do not have ID and Social Security card, your Meeting will be rescheduled.

3.  Dress appropriately. No cutoffs, torn jeans, etc. 

4.  Meet with your Attorney before your meeting.

5.  No talking in the Meeting Room. If you want to ask your attorney a question it is best if you go outside the room.

6.  The Trustee is not your friend. Do not ever ask him questions or for guidance. You have an attorney. Speak with your attorney if you have questions.

7.   All your answers must be short and to the point. For example: What is your name. The answer to this question is: My name is William Smith. An answer like this is not acceptable: Well, 20 years ago my parents called me "Chucky." Then my wife used to call me "Billy." and then when I was in South America, they called me 'Jose." This is not acceptable for two reasons: Your name is William Smith, and the second reason is that the Trustee does not care..

8.   One of the questions Trustees like to ask is: what caused your financial problems that you had to file a bankruptcy. The answer must be a one-liner..such as: unemployment, divorce, child support payments, lost my second job, I got sick, etc. etc. Please no long winded stories are needed. Trustees do not have the patience to listen to you sad stories.

9.   Always be honest. Don't lie. You are under oath and under penalty of perjury. Trustees are experts in what they do, and they know when you are "lying."

10.  Don't ever say "My attorney told me to do it." Blaming the attorney is not going to get you off the hook from anything. Remember, you signed your Bankruptcy Papers under penalty of Perjury.

11.  Don't be rude to the Trustee or argue with the Trustee. He can make your life difficult if he/she wants to. Be polite and professional.

12.  Don't become emotional. Bankruptcy is not a moral judgment on what you did or what you did not do. It is purely a legal process for an honest but unfortunate person to get rid of his/her debts.

13.  Most of questions the Trustee will ask you comes right from the Bankruptcy Schedules filed with the Court. You need to know your financial affairs. Therefore if the Trustee asks you: What did you buy with these credit cards. The answer cannot be: I don't know. I don't know is not an acceptable answer in any situation. You used the credit cards, and you know what you used it for. Just say the way it is. If you used it for groceries and gas and food..just say say so and move on. Don't guess or lie.

If you follow some of these basic guidelines...everything will be fine.

If you have questions contact Attorney Elias Leonard Dsouza, Esq. at 954-358-5911 or visit www.DsouzaLegal.com for more information.

What do you recommend people do when facing a lot of collection calls and lots of financial stresss? How should they handle this situation?

There are two ways of handling debt. One is to just live in continuous fear of your creditors and live under stress all the time or the second way would be to do something about it. One of the ways I suggest is if you are qualified is to file a simple chapter 7 bankruptcy or a chapter 13 bankruptcy if you’re not qualified for a chapter 7. And of course there is  differences between the two bankruptcies, and I’ll be able to explain to you more when I meet with you. Chapter 7 for example is a very simple process from start to finish within 4 months it’s all over with. And then you can move on and rebuild your credit and do all the things that you have always wanted to do in terms of assets and finances. Chapter 13 is a streamlined but a little bit of lengthy procedure, however, as soon as you file your chapter 13, there will be no more harassment calls, and all collection and garnishments will stop immediately.  All the stress goes away in a moment’s notice. So, you have a choice. What do you want to do? Live in stress and destroy your family, your marriage,  and destroy your peace of mind or do something about it and get rid of those debts.

A lot of people hear on TV and radio about services that will help you with debt settlement or debt consolidation, what do you say about those type of services?

Debt settlement, debt consolidation, debt negotiation, these are all great, great things. They help certain people. And the kind of people they help is who are currently making a lot of money and have a disposable income at the end of each month. I just want to warn you. If you think that you can do a debt settlement and that is going to somehow magically improve your credit score, I can tell you “That is wrong.” Once you’re late, 30 days, 60 days, 90 days, your credit is already ruined. And just settling the debt with the creditor is not going to improve your score. In fact, they’re going to report on your credit report that the “debt was settled for less than full value” and that’s bad for your credit. So, if you are under the impression that, “Oh, if I pay something towards my debt, my credit is going to become better.” That is not correct. I suggest if you don’t have excess amount of money, if you’re not making a lot of money, file a chapter 7 or a chapter 13. A Chapter 7 or 13 does not affect your score any worse than a foreclosure, or a loan modification, or  being 30 days, 60 days, 90 days late. In fact once your score is low enough, nothing you do will lower the score any more.

What is your advice for people that are afraid of creditors garnishing their wages.

The only time a creditor can garnish your wages or take your car or try to garnish your bank account is if they have a judgment against you. Once they have a judgment against you, they have the right to do all kinds of bad things to you including sometimes intercepting your tax refunds, garnishing your wages, bank accounts, seizing your cars, etc.  You need to see me immediately if that happens to you because a bankruptcy filing will automatically stop all these kinds of bad things that a creditor can do to you. Let’s say for example you had an accident and there is a judgment against you because you didn’t have insurance to cover for the damage, if you cannot pay that judgment or make arrangements to pay their judgment, the DMV will suspend your driver’s license. We can file a bankruptcy, get that debt discharged and get back your driver’s license and you’ll not have to pay that debt at all. Many people don’t know that and they drive around with suspended license. But remember, if you get caught with a suspended license, you can actually go to jail. So don’t do that. If your drivers license is suspended because of a judgment due to a car accident, we can get your license back and get rid of the debt at the same time.  

So what’s happening in 2012 as far as the loan modifications with the banks? Are they more flexible? What is this current status?

Loan modifications are not working. Very few people are getting loan modifications and even when they get them, the payments are so high that people default within a few months. Again, you’re taking a chance. I would say you should apply for a loan modification as a delay tactic so that they can delay your foreclosure or they can delay the foreclosure or filing the foreclosure case against you. But if you’re depending on them giving you a good loan modification, it doesn’t happen many times. In the past 7 years, I have seen about 3 clients who have got principal reduction and that’s a very small percentage. I have some clients that have got loan modifications but they were not always affordable. So loan modifications are difficult to get, and even when you get them they are not affordable. Bank of America is probably the worst bank to deal with. They will just give you the run around for the next 8 months and then say, “Oh, we cannot approve your loan modification application.”