Chapter 13 Bankruptcy Information

It is a real accomplishment to complete your Chapter 13 case.  In an environment where jobs come and go, unexpected expenses can pop up and more than two-thirds of all Chapter 13 plans fail, anyone who fulfills the terms of his Chapter 13 plan should take pride in this milestone.

It is a real accomplishment to complete your Chapter 13 case.  In an environment where jobs come and go, unexpected expenses can pop up and more than two-thirds of all Chapter 13 plans fail, anyone who fulfills the terms of his Chapter 13 plan should take pride in this milestone.

I saw that Katie Porter over at Credit Slips posted a blog that new, simplified forms for consumer bankruptcy cases are being considered by the Bankruptcy Rules Advisory Committee.  The proposed forms can be accessed here and start at page 189 through page 315.  One item of note is that the forms are being divided into two categories:  a set of forms for “business” cases and a set of forms for “consumer” cases.

I saw that Katie Porter over at Credit Slips posted a blog that new, simplified forms for consumer bankruptcy cases are being considered by the Bankruptcy Rules Advisory Committee.  The proposed forms can be accessed here and start at page 189 through page 315.  One item of note is that the forms are being divided into two categories:  a set of forms for “business” cases and a set of forms for “consumer” cases.

Happy Groundhog Day!

Lately the same refrain keeps cropping up in my practice:  why did you wait so long?  I understand that very few people want to file bankruptcy, and I agree that the decision to file bankruptcy is an important one.  And while it is common to hear that bankruptcy should be a last resort, it is also true that you can wait too long.  So, in honor of Groundhog Day, while we wait to find out when spring will arrive, here are some problems that might crop up if you wait too long to file bankruptcy.

Bankruptcy is not always a one time event.  Unfortunately, despite the best efforts of many past bankruptcy filers, circumstances may come up where they face financial difficulties again.

Few of us could have predicted the economic difficulties of recent years, nor the high amount of unemployment, or drop in real estate values.

Many people think that if they filed a bankruptcy less than (7 or) 8 years ago, there is no help for them if they get into financial difficulty again.  That is not true.

Lie #14: You Can Only File Once for Bankruptcy.

Truth-o-Meter: 

The truth is, you can only get one Chapter 7 discharge every 8 years. After 8 years, if need be, you can file a Chapter 7 again. As for filing a case under Chapter 13 of the Bankruptcy Code, there are no such restrictions; you can even file a “Chapter 20,” which is a Chapter 7 followed in short order by a new Chapter 13.

Hopefully, however, you will never need to file more than one bankruptcy.

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Lie #15: There is a Minimum Amount of Debt Required to File for Bankruptcy.

Truth-o-Meter: 

Theoretically you could file bankruptcy even if you only have $10 in debt, although you would need to have your head examined, since it costs $306 in Court costs to file a Chapter 7.

But we have had clients with little or no income who have filed for amounts that would be very manageable for those with higher income, but are completely unmanageable for these clients. There is no minimum.

Lie #13: You Can’t Get Rid of Back Taxes in Bankruptcy.

Truth-o-Meter: 

We have gotten rid of millions of dollars of back taxes–both federal and state–for our clients. Even if your return was filed late, as long as enough time has passed, the taxes are still dischargeable.

There is a five part test for being able to get rid of, or discharge taxes.

First, they can’t be “trust fund taxes.” What are these? The amount that, as an employer, you withhold from your employees’ paychecks. Sales taxes. Taxes where you’re holding someone else’s money. Trust fund taxes are not dischargeable in bankruptcy no matter how old they are or when they were filed.

As a Consumer Bankruptcy Lawyer who regularly meets with individuals about their financial issues, I always treat the initial interview as if I am applying for a job.  Yes, that is correct.  The Client is actually hiring the bankruptcy lawyer, so why should I treat the initial interview as anything else.  After all, they are hopefully going to hire me.