We are Debt Relief Agency. We HELP PEOPLE FILE FOR BANKRUPTCY RELIEF UNDER THE BANKRUPTCY CODE.
Raoul D. Revord, Esq.
B 201 (10/05)
UNITED STATES BANKRUPTCY COURT
NOTICE TO INDIVIDUAL CONSUMER DEBTOR UNDER § 342(b) OF THE BANKRUPTCY CODE
In accordance with § 342(b) of the Bankruptcy Code, this notice: (1) Describes briefly the services available from credit counseling services; (2) Describes briefly the purposes, benefits and costs of the four types of bankruptcy proceedings you may commence; and (3) Informs you about bankruptcy crimes and notifies you that the Attorney General may examine all information you supply in connection with a bankruptcy case. You are cautioned that bankruptcy law is complicated and not easily described. Thus, you may wish to seek the advice of an attorney to learn of your rights and responsibilities should you decide to file a petition. Court employees cannot give you legal advice.
1. Services Available from Credit Counseling Agencies
With limited exceptions, § 109(h) of the Bankruptcy Code requires that all individual debtors who file for bankruptcy relief on or after October 17, 2005, receive a briefing that outlines the available opportunities for credit counseling and provides assistance in performing a budget analysis. The briefing must be given within 180 days before the bankruptcy filing. The briefing may be provided individually or in a group (including briefings conducted by telephone or on the Internet) and must be provided by a nonprofit budget and credit counseling agency approved by the United States trustee or bankruptcy administrator. The clerk of the bankruptcy court has a list that you may consult of the approved budget and credit counseling agencies.
In addition, after filing a bankruptcy case, an individual debtor generally must complete a financial management instructional course before he or she can receive a discharge. The clerk also has a list of approved financial management instructional courses.
2. The Four Chapters of the Bankruptcy Code Available to Individual Consumer Debtors
Chapter 7: Liquidation ($245 filing fee, $75 administrative fee, $15 trustee surcharge: Total fee $335)
1. Chapter 7 is designed for debtors in financial difficulty who do not have the ability to pay their existing debts. Debtors whose debts are primarily consumer debts are subject to a “means test” designed to determine whether the case should be permitted to proceed under chapter 7. If your income is greater than the median income for your state of residence and family size, in some cases, creditors have the right to file a motion requesting that the court dismiss your case under § 707(b) of the Code. It is up to the court to decide whether the case should be dismissed.
2. Under chapter 7, you may claim certain items of your property as exempt under governing law. A trustee may have the right to take possession of and sell the remaining property that is not exempt and use the sale proceeds to pay your creditors.
3. The purpose of filing a chapter 7 case is to obtain a discharge of your existing debts. If, however, you are found to have committed certain kinds of improper conduct described in the Bankruptcy Code, the court may deny your discharge and, if it does, the purpose for which you filed the bankruptcy petition will be defeated.
4. Even if you receive a general discharge, some particular debts are not discharged under the law. Therefore, you may still be responsible for most taxes and student loans; debts incurred to pay non-dischargeable taxes; domestic support and property settlement obligations; most fines, penalties, forfeitures, and criminal restitution obligations; certain debts which are not properly listed in your bankruptcy papers; and debts for death or personal injury caused by operating a motor vehicle, vessel, or aircraft while intoxicated from alcohol or drugs. Also, if a creditor can prove that a debt arose from fraud, breach of fiduciary duty, or theft, or from a willful and malicious injury, the bankruptcy court may determine that the debt is not discharged.
Chapter 13: Repayment of All or Part of the Debts of an Individual with Regular Income ($235 filing fee, $75 administrative fee: Total fee $310)
1. Chapter 13 is designed for individuals with regular income who would like to pay all or part of their debts in installments over a period of time. You are only eligible for chapter 13 if your debts do not exceed certain dollar amounts set forth in the Bankruptcy Code.
2. Under chapter 13, you must file with the court a plan to repay your creditors all or part of the money that you owe them, using your future earnings. The period allowed by the court to repay your debts may be three years or five years, depending upon your income and other factors. The court must approve your plan before it can take effect.
3. After completing the payments under your plan, your debts are generally discharged except for domestic support obligations; most student loans; certain taxes; most criminal fines and restitution obligations; certain debts which are not properly listed in your bankruptcy papers; certain debts for acts that caused death or personal injury; and certain long term secured obligations.
Chapter 11: Reorganization ($1167 filing fee, $550 administrative fee: Total fee $1717)
Chapter 11 is designed for the reorganization of a business but is also available to consumer debtors. Its provisions are quite complicated, and any decision by an individual to file a chapter 11 petition should be reviewed with an attorney.
Chapter 12: Family Farmer or Fisherman ($200 filing fee, $75 administrative fee: Total fee $275)
Chapter 12 is designed to permit family farmers and fishermen to repay their debts over a period of time from future earnings and is similar to chapter 13. The eligibility requirements are restrictive, limiting its use to those whose income arises primarily from a family-owned farm or commercial fishing operation.
3. Bankruptcy Crimes and Availability of Bankruptcy Papers to Law Enforcement Officials
A person who knowingly and fraudulently conceals assets or makes a false oath or statement under penalty of perjury, either orally or in writing, in connection with a bankruptcy case is subject to a fine, imprisonment, or both. All information supplied by a debtor in connection with a bankruptcy case is subject to examination by the Attorney General acting through the Office of the United States Trustee, the Office of the United States Attorney, and other components and employees of the Department of Justice.
WARNING: Section 521(a)(1) of the Bankruptcy Code requires that you promptly file detailed information regarding your creditors, assets, liabilities, income, expenses and general financial condition. Your bankruptcy case may be dismissed if this information is not filed with the court within the time deadlines set by the Bankruptcy Code, the Bankruptcy Rules, and the local rules of the court.
Certificate of [Non-Attorney] Bankruptcy Petition Preparer
I, the [non-attorney] bankruptcy petition preparer signing the debtor’s petition, hereby certify that I delivered to the debtor this notice required by § 342(b) of the Bankruptcy Code.
Printed name and title, if any, of Bankruptcy Petition Preparer Social Security number (If the bankruptcy petition preparer is not an individual, state the Social Security Address: number of the officer, principal, responsible person, or _______________________________________
partner of the bankruptcy petition preparer.) (Required by 11 U.S.C. § 110.)
Signature of Bankruptcy Petition Preparer or officer, principal, responsible person, or partner whose Social Security number is provided above.
Certificate of the Debtor
I (We), the debtor (s), affirm that I (we) have received and read this notice.
Printed Name (s) of Debtor (s) Signature of Debtor Date Case No. (if known) ____________________ X___________________________________
Signature of Joint Debtor (if any) Date
Chapter 7 - Liquidations
A means test has been designed to force those debtors who have the ability to pay some of their debts into Chapter 13 as opposed to liquidating their debt under Chapter 7 and wiping the slate clean. The Act eliminates the presumption that, without a finding of substantial abuse, a debtor is entitled to relief under Chapter 7. Instead, a debtor's Chapter 7 case will be dismissed or, with the debtor's consent, converted to a Chapter 13 upon a finding of abuse. The Act lowers the "substantial abuse" standard for dismissal or conversion to one of simple abuse. Whether abuse is presumed depends on the outcome of the means test. This test is complicated, but in a nutshell, once the debtor's current monthly income (CMI) is determined and reduced by all of the allowances, actual monthly expenses, and secured and priority claimed deductions, the number resulting from those calculations is multiplied by 60 months. Abuse is presumed if that number is not the lesser of 25% of the debtor's non-priority unsecured claims or $7,475.00, whichever is greater, or $12,475.00. The debtor will be required to show the calculations to determine whether a presumption of abuse arises. (Sec. 707 (b)(2)(C)). The presumption of abuse may only be rebutted with detailed documentation of "special circumstances" requiring additional expenses or adjustment of current monthly total income for which there is no reasonable alternative. (Sec. 707(b)(2)(B)(ii)).
The United States Trustee must review all materials filed by Chapter 7 debtors, and not later that ten days after the meeting of creditors, file a statement as to whether the presumption of abuse is triggered. If the debtor has income in excess of the of the median income, the United States Trustee must either file a motion to dismiss or convert the case or file a statement setting forth the reasons why the motion is not appropriate, within 30 days of the filing of the notice.
|The purpose of a chapter 7 is to grant debt relief and allow a person to obtain a fresh start, free from creditors and free from the pressures of over-whelming debt. Under chapter 7, a trustee takes possession of non-exempt property assets, converts them to cash and distributes the funds to creditors. After filing for relief, an individual debtor may receive a discharge of debts.|
|A discharge permanently prohibits most creditors from attempting to collect those debts listed by the debtor on the bankruptcy schedules. However, some debts are non-dischargeable. They include certain taxes, student loans, alimony, and child support to name just a few.|
|A corporate business that files chapter 7 is not eligible to receive a discharge.|
Frequently asked Questions about Chapter 7
Chapter 11 - Reorganizations
|The purpose of a chapter 11 bankruptcy is to allow an individual or business a limited amount of time free from creditors collection efforts to restructure its financial obligations so it may continue to operate in a normal fashion under a court approved plan of reorganization. Creditors of a business filing a chapter 11 vote on the repayment plan and the plan must be approved by the court.|
|The advantage of chapter 11 is if a trustee is not appointed, the individual or business maintains control of its property during the bankruptcy and allow time to deal with creditors and to negotiate a plan of repayment.|
|Chapter 11 is normally for corporations and businesses but individuals may also file chapter 11. Chapter 11 is complicated and there may be advantages to filing under a different chapter. An individual should consult with an attorney before making the decision to file chapter 11.|
Chapter 12 - Family Farmer Debt Adjustment
|The chapter 12 bankruptcy law was created to help family farmers who need to reorganize their debts while keeping their land and farming business. Chapter 12 is meant to assist farmers who have potential to reorganize and to allow them relief from a heavy debt burden, while at the same time allow farmers to pay their creditors what is deemed reasonable under the terms of a court approved repayment plan.|
|The rules of a chapter 12 bankruptcy are modeled closely after those of a chapter 13. A chapter 12 case may only be filed by certain family farmers and businesses. A trustee is appointed, but the farmer usually remains in possession of the farm while formulating a plan.|
Chapter 13 - Individual Wage Earner
|The purpose of a chapter 13 bankruptcy is to allow an individual debtor with a regular income pay back debts using their income and enabling a debtor to keep certain assets. A person who operates a small business as a sole proprietor may also file under this chapter.|
|Under a chapter 13 bankruptcy filing, the debtor must promptly file a repayment plan and obtain the court's approval of the plan. Any creditor may object to the plan. The debtor, along with the appointed trustee, must work out any objections to the plan before the court will approve it. The typical repayment period of a chapter 13 is 3 to 5 years, depending on financial circumstances of the assisted person (debtor). The assisted person (debtor) makes regular payments to the trustee and the trustee distributes these monies to creditors according to the terms of the plan.|
After completion of the plan, the assisted person (s) (debtor (s) debts are discharged (with some exceptions) and the debtor (s) is no longer obligated to pay them. There are certain things you can do in a Chapter 13 that you are unable to do in a Chapter 7 bankruptcy. For instance, if you are behind on your mortgage or vehicle payments, it allows you to pay back the arrearage within the plan over a period of time. The Chapter 13 can sometimes offer more relief by being able to strip certain liens in a mortgage and/or cram down what is owed on a vehicle. If you have owned your vehicle for more than 910 days, you are eligible to cram down what you owe on your vehicle to the fair market value. this is exceptional for those who are upside down on their vehicle, but still want to keep it. If you have more than one lien or mortgage on your home, in certain circumstances we are able to strip those liens off so that they do not have to be repaid.
If you are behind on your taxes, you can place them into a Chapter 13 which allows you to pay the money back over a period of 3-5 years without your bank account being frozen. It helps you avoid the high interest rate the IRS typically charges for penalties when money is owed.
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