Your Case has Been Confirmed!

I was on the phone the other day with one of my chapter 13 clients, telling him the great news:  "Your case has been confirmed!" I said gleefully.  There was a pause on the line.
"What does that mean?" he finally asked, worried maybe that his case was confirmed DOA or confirmed some other horrible status.  I realized I hadn't properly explained the beauty of "confirmation" in a chapter 13.

I am an attorney who files a ton of Chapter 13 Bankruptcy in Salt Lake City in Ogden, so I go through this process all the time.  It's no wonder that folks who aren't in the bankruptcy trenches would be befuddled by "confirmation."

See, Chapter 13 bankruptcy is the kind of bankruptcy where we take all of your debts and wrap them up into a single monthly payment plan.  After I write up your plan and present it to the bankruptcy judge, he "confirms" it.  That's confirmation and it's a good thing.  No, it's a great thing because for a very low monthly payment you can stop all the crazy garnishments and collection activities and harassment.

Most of my chapter 13 clients pay only $100 per month and they pay it for 36 months.  At the end of their plan, whatever hasn't already been paid off just gets wiped out.  Doesn't matter if you have $2,000 of debt or $200,000 of debt.  What matters is the kind of debt you have and if you're like most folks, you've got the usual menagerie of medical bills, credit cards, or payday loans.  I call all of this "junk" debt but in legal terms it's called "non priority, unsecured" debt.  Call it what you want but in chapter 13 you end up paying back very, very little of it.  Hence, only $100 per month on your payment plan in most cases.

Introducing $0 Down Bankruptcy

At last, what you've all been waiting for:  Filing bankruptcy with no attorney fees up front!  Look, I know that you've been struggling trying to get the cash together to file bankruptcy.  It's hard to save any money when the creditors are bleeding you dry with wage garnishments and collection activities.

So I am now filing cases where you pay absolutely no attorney fees up front.  You only have to pay the $281 court filing fee and that will get you a case number and full bankruptcy protection!  I have offices in Ogden and Salt Lake City.

What kind of bankruptcy is this?  It's Chapter 13 and it is the greatest thing going since congress changed the bankruptcy laws in 2005.  Chapter 13 is a court supervised debt consolidation program where we take all of the debt that is causing your problems and wrap it into a single monthly payment.  The best part?  You don't have to pay back all of your debt.  In fact, in most of my chapter 13 cases, my clients pay back only a small fraction--maybe a couple pennies on the dollar--so they have a very low monthly payment.  How low?  How about $100 per month for 36 months.  At that end of your 36 month repayment plan, whatever you haven't fully paid off just gets wiped out!

If you want to learn more about the power of $0 down chapter 13, just click here.  Or, you can just call me.  I am an experienced chapter 13 bankruptcy attorney in with offices in Salt Lake City and Ogden and I am happy to talk to you right now on my cell phone:  801.721.9633.

It's Been Too Long

Wow, I haven't posted anything on the Utah Bankruptcy Blog in a long time.  Let's get the party started again.

Since my last post, the Utah State Legislature changed the exemptions in a couple of key areas.  Remember that "exemptions" are the pieces of property you own that cannot be taken from you by creditors or bankruptcy trustees.  The first big one relates to real estate.  Under the new law, a single person can protect up to $30k of equity in their primary residence ($60k if it's a married couple and they are both on title).  It used to be $20k/$40k.  This matters A LOT as the real estate market in Utah starts to turn around.

Another area is vehicles.  The new law protects up to $3k of equity in a car.  Used to be $2,500.  Not a huge amount but certainly moving in the right direction as far as I'm concerned.

Now you can keep your gun in a chapter 7 so long as it's not worth more than $250, and you can protect tools used in your trade up to $5,000 (used to be $3,500).

We bankruptcy lawyers tried to push a whole bunch of other more favorable exemptions through but the bankruptcy trustees fought us.  We had to compromise in order to get even these changes done.  That's democracy I guess.

Beware the Petition Preparers

If you are considering bankruptcy, you may have seen ads in the newspaper by organizations that will help you with all of the bankruptcy paperwork, then let you represent yourself through the actual process.  These organizations can be very tempting because they seem to provide an option for bankruptcy that is very cheap compared to what you would pay an attorney to represent you.

These organizations are called "Bankruptcy Petition Preparers."  They are recognized as legitimate organizations by the courts, the trustees, and the bankruptcy code.  I am sure there are some good bankruptcy petition preparers out there, but I am equally certain there are some really bad apples right here in the Utah market.  I see the results of these bad apples when I got to creditor meetings and watch the Trustee rip the poor unrepresented people a "new one" because their bankruptcy case is in such disarray.

You see, the process of bankruptcy requires a whole lot more than simply filing the statements and schedules.  There are a LOT of other forms that have to be provided, classes to be taken, declarations to make, and a virtual minefield of rules and regulations to follow.  Many of the rules require automatic dismissal of your case if you don't follow them on time.  It's clear to me that the bankruptcy petition preparers do not know or fail to tell their customers all of these rules.

Unless you have the simplest and most vanilla possible chapter 7 case, using a bankruptcy petition preparer instead of a lawyer is almost certainly a very bad idea.  If you decide to use such a service, ask them to guarantee in writing that your case will go off without a hitch if you follow their directions. 

Huge Tax Refunds Require Careful Planning

This time of year, a lot of my clients are getting big tax refunds.  Like, HUGE tax refunds.  In the last few days I've had clients call me and tell me of refunds in the $7,000 $8,000 and even a few with over $9,000 in state and federal tax refund.  Thankfully, most of my clients call me before they spend those refunds because how they spend the money can have major complications and consequences in either a chapter 7 or chapter 13 bankruptcy.

If you have already filed your case and are now getting the refund back, your options are very limited.  In almost every chapter 7, you'll probably need to hand over most of the refund to your chapter 7 trustee.  In a chapter 13, you'll need to give the trustee everything over $1,000 (or possibly $2,000 if your chapter 13 was filed after 12/1/10.)

If you haven't yet filed your case, you definitely need to consult with a bankruptcy lawyer about how to spend the money.  DO NOT pay any of the money to friend or family members you might owe.  That' is the single biggest problem people get into with their bankruptcy trustees.  Paying friends or family is called a preferential transfer to an insider and doing so allows the Trustee to sue that person to get the money back.

So what to do with all the tax refund money?  Spend it and keep your receipts.  Ask your lawyer what is a safe way to spend it, but here are a few generally safe categories:  food, medicine, medical procedures like braces or glasses, clothes, one months' worth of regular bills like gas and electricity, home improvements, car repairs and certain kinds of home furnishings and appliances.  Again, it is always safer to ask a lawyer what to spend it on.

"Will My Bankruptcy Petition Be Approved?"

This question has come up a lot recently during my intakes with clients.  Fortunately, the question is totally irrelevant.  Bankruptcy does not require you to submit all of the details of your financial life for "approval" or "disapproval" by a bankruptcy judge.  Instead, all of the qualifying factors for bankruptcy are already set forth in the statutes and cases that govern bankruptcy law.  If you have a good bankruptcy attorney, he or she can tell you before the case is ever filed (or any fees are ever paid) if you meet the qualifications to have your debts discharged in bankruptcy.

By the time your lawyer has reviewed your case and filed your petition in bankruptcy, all of the guesswork should be long gone and there should be no reason you have to wait to find out if your case will "be approved."

Can a Creditor "Opt Out" of the Bankruptcy?

So many of my clients have been subject to outrageous scare/humiliation tactics by unscrupulous creditors that I could easily write a short novel about it.  Nearly all of these tactics are illegal under the Fair Debt Collection Practices Act so the methods must be working pretty well for creditors to keep using them.

Today I had a client tell me that a creditor called her at work and demand payment.  We had listed the creditor in the bankruptcy and my client told that to the person on the phone.  The creditor said they had "denied" the bankruptcy and were seeking to collect anyway.

WRONG!  Creditors do not get to choose whether to "accept" or "deny" a bankruptcy.  Unless the creditor is a government agency or a secured creditor (like a home or a car lender, for example), the creditor won't be getting to "deny" a bankruptcy.  A bankruptcy filed in the United States Bankruptcy Court applies to all debts and includes all creditors.

Official bankruptcy is different from these so-called "debt settlement" programs you see advertised all over the place.  Those non-governmental programs do not require a creditor to participate and all too often some of the creditors in those programs do not participate.  Instead, they go after the debtor directly, garnishing her wages and bringing the whole "settlement" program crashing down.  Not going to happen in Bankruptcy.

So what happened to my client in the illustration above?  As with most bullies, once you stand up to them they leave you alone.  I advised my client that the next time the creditor called, my client should tell the creditor that she was keeping a log of all the illegal contacts and that we would be filing a motion in bankruptcy court to get sanctions of $5,000 for every attempt to collect that creditor made.  My client told the creditor she hoped the creditor would keep calling so she could get enough to put her kids through college at the creditor's expense!

No more phone calls.  :)