What to expect once you've decided to file
Part 1: Exploring the basics, busting some myths
If you're considering filing for bankruptcy protection, you may be encountering all sorts of contradictory information, especially if your research is limited to the Internet. The single-best source for information on your state's exemptions and any idiosyncrasies of the bankruptcy courts in your region will probably be a trained, experienced bankruptcy attorney in your area.
That being said, however, today we'll attempt to demystify a few bankruptcy myths and explore some commonalities shared by the most usual chapters of consumer bankruptcy, Chapter 7 and Chapter 13.
BAPCPA requires pre-filing credit counseling
According to the Federal Trade Commission:
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 launched a new era: With limited exceptions, people who plan to file for bankruptcy protection must get credit counseling from a government-approved organization within 180 days before they file. They also must complete a debtor education course to have their debts discharged.
The Department of Justices U.S. Trustee Program approves organizations to provide the mandatory credit counseling and debtor education. Only the counselors and educators that appear on the U.S. Trustee Programs lists can advertise that they are, indeed, approved to provide the required counseling and debtor education. By law, the U.S. Trustee Program does not operate in Alabama and North Carolina; in these states, court officials called Bankruptcy Administrators approve pre-bankruptcy credit counseling organizations and pre-discharge debtor education course providers.
As a rule, pre-bankruptcy credit counseling and pre-discharge debtor education may not be provided at the same time. Credit counseling must take place before you file for bankruptcy; debtor education must take place after you file.
In general, you must file a certificate of credit counseling completion when you file for bankruptcy, and evidence of completion of debtor education after you file for bankruptcy but before your debts are discharged. Only credit counseling organizations and debtor education course providers that have been approved by the U.S. Trustee Program may issue these certificates. To protect against fraud, the certificates are produced through a central automated system and are numbered.
Make sure your attorney receives the certificate
The truth is, this pre-bankruptcy credit counseling is not a rigorous, sweat-wringing session, and the main reason to get it out of the way is very simple: Your bankruptcy attorney needs the certificate of completion in order to file your case. For example, let's say your home is in foreclosure and is scheduled to be auctioned off tomorrow. Today you need to complete your counseling session, most likely with an agency that provides an online session finalized with a 30-40 minute, question-and-answer discussion.
An alternative: online & phone sessions
Most likely, your attorney routinely uses one or two agencies and will be able to give you her or his attorney code, to bill the session to the attorney ($30 to $50, which you will pay back) and to have the certificate automatically e-mailed to the attorney. That way, your attorney can file the petition electronically before the auction starts; the automatic stay is then in effect and all creditors' collection efforts are immediately halted--frozen, in effect--including the foreclosure sale of your house.
Certificate good for 180 days
Of course, it may be that yours is not an emergency situation. Perhaps your life events are such that filing later is more advisable than sooner. In that case, once you have your certificate, your petition can be filed anytime in the next 180 days (six months). Obviously, if that time lapses, you must start over and re-take the pre-bankruptcy counseling.
Pulling all three credit reports
If you haven't done so by now, the next step will be compiling a list of all creditors that will be included in your bankruptcy. A natural place to start is by pulling all credit reports from the three major credit-reporting agencies. Don't be fooled by the various sales pitches that wind up costing you good money for something you are entitled to for free. Again, look first to the FTC; in this case its page on credit repair, including a link to the official, free credit report site. Your attorney will probably have some sort of workbook to help you assemble all the data necessary for a complete filing; for sure, some sort of process will be in place to help you, and eventually the attorney will have the info necessary to perfect your filing.
Amending a filing: Don't panic, but be ready to shell out more dough
Don't panic if you realize you've forgotten a creditor or made a mistake--your attorney can amend the filing for several weeks. Just be sure to let the attorney know of any mistake or omissions as soon as possible. That being said, don't be lazy in your original efforts: each and every amendment costs more money in filing fees and attorney time and effort.
Actively participate in your attorney meeting
Once you have submitted all your "workbook" data to the attorney, very soon the day will come when you and the attorney meet to go over your paperwork in detail, walking you through myriad notices and requirements. Don't be shy about asking questions; make sure you understand each section you sign off on. Finally, the meeting will end, and the attorney will have a full package to file with the appropriate bankruptcy court.
Next time: the 341 meeting and more basic info.
Consider free case evaluation
If you're interested in learning more about the power of bankruptcy protection, please, browse our site for more information, and consider signing up for a free case evaluation.
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