Williams Bankruptcy A Debt Relief Agency helping people eliminate debt and obtain relief under Chapter 7 of the Bankruptcy Code

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1 A Publication of the Law Office of Richard L. Williams Williams Bankruptcy A Debt Relief Agency helping people eliminate debt and obtain relief under Chapter 7 of the Bankruptcy Code Tips for Questionnaire Review Appointment Arrive on time Plan on a 11/2 hour meeting Bring copies of your last Federal and State Tax Returns and payroll check stubs for last 60 days Bring your diver s license and Social Security card Write down questions you want to ask Only bring children if you cannot find a setter Parking Free parking is available at any Light & Breuning parking lot or garage Inside this Publication Introduction to Reaffirmation Agreements Think seriously before Reaffirming a debt Reaffirming car loans and home mortgages Claiming exemptions and keeping your assets Judgment liens may need to be avoided How ordering a Credit Report can help you 341 meeting and other hearings Bankruptcy can help solve serious financial problems Bankruptcy gives you a fresh start Bankruptcy is a choice that may help if you are facing serious financial problems. You can cancel your debts, stop collection calls, law suits and garnishments. Bankruptcy can let you start over again without the burden of debt. If you choose bankruptcy, you should take advantage of the fresh start it offers and then make careful decisions about future borrowing and credit, so you won t ever need to file bankruptcy again. Bankruptcy and your Credit Report Your bankruptcy will be a part of your credit report for ten years. The ten years are counted from the date you filed your bankruptcy. This does not mean you can t get a house, a car, a loan, or a credit card for ten years. Often, persons find that their credit has actually improved by filing bankruptcy since all their debts and interest rate burden have been cancelled and they now have enough disposable income to make monthly loan payments. Not all debts are discharged in bankruptcy When you bankruptcy is complete most of your d e b t s w i l l b e discharged. This means Copyright 2004 Bankruptcy may be your gate to a better future they are canceled and you are no longer legally obligated to pay them. However, the following debts are generally not cancelled: child support, student loans, money obtained by fraud, most taxes, most criminal fines, penalties, and restitution orders, and drunk driving injury claims. There is a way for you to keep your home, car and other secured property The term secured property applies when you give a lender a mortgage or lien on your property as collateral for a loan. The most common types of secured debts are home mortgages and car loans. Although the bankruptcy cancels your personal legal obligation to pay the debt, your creditor can take back the collateral if you don t pay by asking permission of the court or by waiting until your bankruptcy is closed. For this reason, if you want to keep your property you need to catch up on your payments if delinquent and continue to make them. You and your creditor will also need to sign a written agreement to reaffirm your debt. It is then filed with the Court.

2 PAGE 2 WILLIAMS BANKRUPTCY Introduction to Reaffirmation Agreements What is Reaffirmation? Although you filed a bankruptcy to cancel your debts, you have the option to sign a written agreement to reaffirm a debt. If you choose to reaffirm, you agree to be legally obligated to pay the debt despite bankruptcy. If you reaffirm the debt is not canceled by the bankruptcy. If you fall behind on a reaffirmed debt, you can get collection calls, be sued, and possibly have your wages garnished. Reaffirming a debt is a serious matter. You should Wake up to a future with only the debt you want to keep never agree to reaffirm without a very good reason and only if you can afford the payments. You do not have to Reaffirm Reaffirmation is always optional. It is not required by bankruptcy law or any other law. If a creditor tries to pressure you to reaffirm, remember you can always say no. Even if you do reaffirm a debt you can always cancel it at any time before the court issues you a discharge order or within sixty days after the reaffirmation agreement was filed with the court, whichever is later. To cancel a reaffirmation agreement, you must notify the creditor in writing. You do not have to give a reason. Once you have canceled, the creditor must return any payments you made on the agreement. The creditor usually prepares the agreement. However, if your attorney has to prepare it, you may incur additional attorney fees. Credit Card Debt It is almost never a good idea to reaffirm a credit card. Try paying cash for awhile, then in a year or two get a new card with 0 balance. Think seriously before Reaffirming a debt Can you afford the payments If you are thinking about reaffirming, the first question should always be whether you can afford the monthly payments. Reaffirming means that you are agreeing to make the payments every month and to face the consequences if you don t. If you have any doubts whether you can afford the pay- ments, do not reaffirm. Caution is you of this fresh start. always a good idea when you are giving up your right to have a debt Do you need the property canceled. Remember the pur- Unless you absolutely need the property you pose of filing Your lawyer also needs to sign should not reaffirm the bankruptcy is to the Reaffirmation and agree debt, especially if the give you a fresh amount of the debt far start. Keeping that it will not impose an exceeds the market too much debt value of the asset. could deprive unreasonable hardship on you Reaffirming car loans and home mortgages If you are behind on a car loan or a home mortgage and you can afford to catch up, you can reaffirm and possibly keep your car or home. If the lender agrees to give you the time you need to get caught up, this may be a good reason to reaffirm. But if you are having trouble Federal Law lets you liberate yourself from debt staying current with your payments before bankruptcy and your finances have not improved, reaffirmation may be a big mistake. If your car or home are repossessed or foreclosed after your bankruptcy is over, you could be required to pay the differ- ence between what the property sold for and what you owe. If you are up to date on your loan, you may not need to reaffirm to keep your car or home. Some lender will let you keep if your property as long as you continue making payments. Always check with the lender to see if he will agree to a reaffirmation.

3 WILLIAMS BANKRUPTCY PAGE 3 Claiming exemptions and keeping your assets In general, a debtor may claim an exemption of his home and certain personal property in a bankruptcy proceeding. If the property is exempt it cannot be taken by the bankruptcy court and used to pay your creditors. Indiana permits every debtor in the state an exemption consisting of: The equity in a personal or family residence in an amount up to $15, in value for a single debtor or $30, for husband and wife. Some other exemptions may include other real or tangible personal property, such as household goods, furniture, and cars up t o $8, in equity per debtor. Financial accounts and cash on hand up to $ p e r debtor professionally prescribed health aids, interest in retirement plan and medical care savings accounts. Also, if you file your bankruptcy Think about getting an appraisal before you receive your federal or state tax refund, you may be asked to turn your refund over to the bankruptcy court. Similarly, if you are an heir but have not yet received your inheritance, you will likely have to turn it over. It is very important that you disclose not only all of your current assets to your attorney but also inform him of any money or property you are likely to receive within the next six months. If you anticipate receiving any property, such as a tax refund, in the near future, it may be possible to hold off filing your bankruptcy until after you have received it and either spent it or purchased exempt property. Judgment liens and other liens may need to be avoided Judgment liens If you have real estate equity which you are claiming as exempt and you have Court Judgments against you they will need to be avoided so they do not remain on the real estate when the bankruptcy is over. A money judgment by a court constitutes a lien against real estate located in the county where the judg- ment is obtained. Although the bankruptcy itself will cancel the money judgment, it will not cancel the lien. To cancel or avoid the lien a special motion requesting the avoidance of the lien needs to be filed with the Bankruptcy court. Only if the lien impairs your exemption can it be avoided. You must show that you have equity in the home against which the lien applies Since each judgment constitutes a lien, a separate motion will need to be filed for each lien and additional attorney fees may be incurred. Other liens A non purchase lien can also be avoided by the court. This is a lien against household goods and furnishings that you give a lender as security for a loan. How Credit Reports can help you Obtaining a credit report helps get accurate creditor name, addresses, types of debt, balances due, and account numbers. A credit report can help find creditors whom you may have overlooked. A credit report can also alert the attorney to We re Working to improve peoples lives judgments against you so that he can take action to avoid the lien. It can also identify co-signers to some of your debts, which must be listed in your bankruptcy. The credit report will also contain the names and addresses of collection agencies who should be notified of your bankruptcy so that collection effort stops. IRS tax liens will also show up on your credit report. The Law Office of Richard Williams will obtain free credit reports from three national credit bureaus in order to provide the most accurate and reliable credit information.

4 PAGE 4 WILLIAMS BANKRUPTCY Chapter 7 Bankruptcy Chapter 7 of the Bankruptcy Code is designed for debtors in financial difficulty who do not have the ability to pay their existing debts since all of their income is needed to pay ordinary living expenses including debts that will be reaffirmed. Debtors whose debts are primarily consumer debts are subject to a means test designed to determine whether the bankruptcy should be permitted to proceed under Chapter 7. If your income is greater than the median income for the state of Indiana and your family size, there arises a presumption that you should not be allowed to continue under Chapter 7. Before we file your bankruptcy, we will do the necessary calculations to ensure that you meet these requirements and that you will be able to have all of your debts discharged under Chapter 7. Chapter 13 Bankruptcy Chapter 13 bankruptcy is designed for individuals with regular excess income who would like to pay all or part of their debts in installments over a period of time. 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 on your income and other factors. The court must approve you plan before it can take effect. Under the plan you must make regular A Chapter 13 Bankruptcy can prevent foreclosure on your home and permit you to make up your back payments payments to a Trustee who then distributes the money to those creditors who have submitted claims for payment and which the Trustee has approved. After completing the payments under your plan, your remaining debts are generally discharged. Bankruptcy Crimes A person who knowingly and fraudulently conceals assets or make 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 you supply in connection with your Always tell the whole Truth 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. All information you provide must be complete accurate and truthful. Assets and liabilities must be completely and accurately disclosed. All income and expenses must also be fully and truthfully disclosed. Also, failure to provide complete and accurate information may result in the dismissal of your bankruptcy.

5 WILLIAMS BANKRUPTCY PAGE 5 IncomeTax Liability Each of the following requirements must be met in order for a Chapter 7 bankruptcy to discharge tax debts: 1. No fraud or will full evasion of taxes. You cannot obtain a discharge if you file a fraudulent tax return or otherwise willfully attempt to evade paying taxes. 2. Only income taxes. Only income taxes may be discharged in bankruptcy. 3. The three- year rule. The due date for the return must be more than three years prior to the bankruptcy petition. 4. The two year rule. You must have filed the tax return more than two years prior to the bankruptcy petition. Returns filed by the IRS on your behalf do not qualify. However, the IRS has three years to audit and correct a return after the return has been filed. Thus, it is possible to discharge taxes on a return only to have the IRS assess additional taxes on account of corrections the IRS makes to the return. 5. The 240-day rule. The assessment date for the taxes must be greater than 240 days prior to the date the bankruptcy petition is filed. If you have not filed tax returns for prior taxable years, the Bankruptcy Trustee may require that they be filed. Tax Refunds Any Federal and State tax refund due to you may have to be turned over to the bankruptcy trustee and become property of the bankruptcy estate You should not cash or spend any refund you receive while your bankruptcy is pending. In the event, you receive a tax refund after your initial consultation with me and prior to filing your bankruptcy, you are not to spend the refund until those expenditures are approved by me. You will also need to provide documentation of any expenditures of your tax refund. Some tax preparation companies offer Refund Anticipation Loans, also known as a Rapid Refund. Under no circumstances should you obtain a Refund Anticipation Loan. Not only will you be charged excessive fees but if the Trustee takes only a portion of your tax refund, the loan fees will be deducted from your portion of the refund. Other Property Received After Filing Bankruptcy In addition to tax refunds, the Trustee is entitled to other property that you might receive after your bankruptcy is filed such as: 1. Inheritances, Life Insurance Proceeds, and Divorce Settlements. Any interest that you currently have in any es- tates or as beneficiary of any life insurance policy, or any divorce settlement or that you become entitled to receive within 180 days after the date you bankruptcy was filed. 2. Claims and Lawsuits. Any claims or lawsuits that you have a right to bring against another person to collect money. 3. Lottery Winnings. Any winnings with respect to any lottery ticket purchase before the filling of you bankruptcy.

6 A PUBLICATION OF THE LAW OFFICE OF RICHARD L. WILLIAMS 809 S. Calhoun Street Suite 303 Phone: Fax: The Cost for your Bankruptcy Please call the Law Office of Richard Williams for Quote on Fees and Payment Plan Options, including discounts for Advance Cash or Credit Card Payment Richard L. Williams WilliamsBankruptcy.com Helping people get a fresh start in life The 341 meeting and other hearings How the 341 meeting works After your bankruptcy is filed the court will schedule a Section 341 meeting which you must attend with your attorney. It is called a Section 341 meeting because Section 341 of the Federal Bankruptcy Code requires all debtors to appear before a Trustee to answer questions regarding their financial affairs. The Trustee is generally an attorney hired by the Bankruptcy Judge to conduct the 341 hearing. You, your attorney, and all your creditors will be notified by mail regarding the time of the 341 meeting. This meeting normally takes place in room 1194 of the Federal Building located at 1300 S. Harrison Street, Fort Wayne, Indiana. You should plan to meet your attorney at least 20 minutes prior to this hearing directly outside the meeting room for a pre-hearing conference. At the pre-hearing conference, your attorney may review with you various reaffirmation agreements that he has received from your creditors and discuss with you the wisdom of reaffirming these debts. At this time you should also notify him of any financial changes that have occurred since the bankruptcy was filed and any corrections that need to be made to your bankruptcy. Normally this will be the only hearing your will A brighter future awaits you be required to attend. However, a creditor can file an adversary proceeding under certain circumstance that could require you to attend additional hearings. Adversary proceedings A creditor may be able to file a proceeding to deny the discharge of its debt or to deny your bankruptcy completely. You will then be required to attend additional hearings. These proceedings are called adversary proceedings. If you obtained a debt through fraud or misrepresentation the court will likely not allow you to discharge that debt. If you lied in your bankruptcy papers regarding your financial condition, your bankruptcy could be denied. Always be honest and tell the true to the court.