Things You Should Know Before Filing Bankruptcy in the Winter

Bankruptcy is a very powerful tool that helps millions of Americans get relief from crushing debt every year.  The ultimate goal of a bankruptcy is the bankruptcy discharge, basically an order prohibiting the affected creditors from ever collecting on a discharged debt.  December is typically a slow month for bankruptcy filings, but the subsequent months might be even worse, depending on your situation.

If you used your credit cards for Christmas, they may be nondischargeable. - 11 U.S.C.§ 523(a)(2)(C)(i)(I) states that consumer debts owed to a single creditor and aggregating more than $500 for luxury goods or services incurred by an individual debtor on or within 90 days before the order for relief under this title are presumed to be nondischargeable.

Likewise, if you got cash advances for Christmas, the debt may be nondischargeable. - 11 U.S.C.§ 523(a)(2)(C)(i)(I) states that cash advances aggregating more than $750 that are extensions of consumer credit under an open end credit plan obtained by an individual debtor on or within 70 days before the order for relief under this title, are presumed to be nondischargeable.

If neither one of those fit your situation, creditors will sometimes ask that a debt be declared nondischargeable due to fraud.  They will essentially say that you made misrepresentations about your financial condition when using your credit cards and you knew that you would be unable to make the payments.  They generally use  11 U.S.C.§ 523(a)(2)(A) to argue this, which states that a discharge does not apply to any debt for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor’s or an insider’s financial condition.

If you are considering filing bankruptcy, the longer that you wait between credit card usage and filing your bankruptcy the better.  If you used any credit card for more than $500, it is best to wait at least 90 days before filing your bankruptcy.

If you receive large tax refunds, it might make since to wait until after you have received it and spent most of it.  Chapter 7 bankruptcy is a liquidation bankruptcy.  You turn over all of your unexempt assets over to the trustee.  The trustee may liquidate any unexempt asset that you have the right to receive within 6 months after the filing of the bankruptcy petition.  If you are filing bankruptcy during the winter months, one of the assets may be your tax refund.  The amount of what is exempt depends on state law.  For instance, people in Georgia may be able to protect up to $5,600 pursuant to O.C.G.A. §44-13-100(a)(6), however Louisiana residents can only protect the portion of their refund attributable to the earned income credit, and Florida residents who own a home can only exempt $1,000 in personal property (this includes furniture, clothing, cash, and tax refunds).  Many jurisdictions require Chapter 13 debtors turn over all or most of their tax refund to the trustee every year that their case is pending.

If you generally get large tax refunds, it might make sense to wait to file your taxes until after you have received and spent most or all of the tax refund.  That does not mean that you should go spend the refund as fast as possible for the purposes of filing bankruptcy.  The trustee may ask you to show where you spent the money and can seek judgement against friends and family that have been paid with the refund or even ask that your case be dismissed for fraud.  You can use the money to pay utility bills, catch up rent payments or car payments, make minor home and car repairs, etc.

If you are considering filing bankruptcy, Simplified Document Solutions can help you get a bankruptcy discharge for a low flat $249 fee.  To get more information, please call Charles at (678) 490-5841 or visit our website at www.249bankruptcy.com.


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This is intended as general information, not legal advice.  Your situation may have complexities that are unknown to the author and have not been considered in this blog.  If you have specific questions about your situation, you may wish to obtain information from competent counsel.

Ten Things that your bankruptcy attorney won’t tell you.

Ten Things that your bankruptcy attorney won’t tell you.

After working for 2 bankruptcy law firms as a paralegal, I couldn’t continue to take advantage of people that came to me seeking help when in need.  The lies were getting to me and I could not sleep.  I quit my stable job and started Simplified Document Solutions to help those who were actually in need obtain the bankruptcy relief that they sought for a reasonable fee of $249.00.

It is amazing how many of these attorneys are self-serving and lie to their clients to maximize their profits.  Based on my experience, I have put together a list of things that your bankruptcy attorney won’t tell you.  If you want honest answers, you can contact me at (678) 490-5841 or visit me online at www.249bankruptcy.com.

11.       “You don’t need to hire an attorney to file bankruptcy.”

11 U.S.C. §527(b) requires that an attorney advise you of your bankruptcy options, but most attorneys don’t want you to know so they either glaze over it or simply “forget” to discuss it with you.  The bankruptcy code says that you have 3 options for filing bankruptcy; hire an attorney, proceed by yourself; or hire a non-attorney bankruptcy petition preparer.

If you choose to do everything yourself, the Bankruptcy Court Clerk has packets of all of the forms that you will need and will give them to you free of charge.  If you want someone to help you with the forms, 11 U.S.C. §110 permits a non-attorney to assist you in completing the forms for a nominal charge.  Generally, petition preparers are happy to help you for $300 or less, and may even meet with you in your home.

22.      “A bankruptcy attorney may not know anything about the bankruptcy code.”

When you hire an attorney to help you with your bankruptcy petition, you probably think that he or she is an expert in the bankruptcy code.  While the most experienced attorneys probably are experts, many attorneys are simply not. 

Here is the truth, bankruptcy is a unique area of law.  However, in many law schools a bankruptcy course is not offered and in those where it is offered, it is an elective.  When an attorney takes the bar exam, it is not tested.  Often, bankruptcy firms offer recent law school graduates because they are cheap and rely on support staff and a couple of senior attorneys for most issues.  Others open a “general practice” firm and are forced to take bankruptcy cases to pay the bills.  If you are lucky, they will have a paralegal that knows what is going on, otherwise they will just struggle through it.

33.      “Chapter 13 is probably a bad option for you, but that isn’t going to stop me from recommending it.”

Unlike Chapter 7, Chapter 13 requires that you make payments to the court for a period of 3-5 years.  Most Chapter 13 Cases are either thrown out of court or converted to Chapter 7.  The reason is simple, if you come to me and say “I can’t afford my debt” and my response is “let’s give you another payment,” you probably can’t afford that either. 

Chapter 13 does have some benefits.  If you are behind on your car or home, it will allow you to catch up on the payments (but in most cases, you would be better to file Chapter 7, give up the collateral, and get another house or car with a lower payment and/or lower interest rate).  Some people may not be eligible for a Chapter 7 due to a previous filing, high income, or equity in property, but far too many attorneys steer poor people into Chapter 13s that don’t have any of those situations.

Why would an attorney recommend Chapter 13 to someone who doesn’t really need one?  The simple answer is money.  Attorneys typically charge 3-4 times more for Chapter 13 as they do for a Chapter 7.  After the Chapter 13 gets dismissed, they hope that you re-file and pay them again.  Did I mention that attorney’s get paid before most of the Creditors in a Chapter 13 plan?

I can actually milk nearly $10,000 from someone making $25,000 per year using this technique.  I will charge $4,000-$4,500 for a Chapter 13, when that gets dismissed, I’ll do it again, and finally I’ll charge $1,000-$1,500 to convert the case to a Chapter 7.

44.      “You might be hiring me but that does not mean you will see me in Court.”

So you met with my paralegal to start your bankruptcy, so it must mean that I will be working with you in Court, right?   Wrong.  It is generally cheaper for me to use a contract attorney to introduce you to the trustee than to drive there, park, and take me away from my business.  This person won’t know you or your situation, but it’s okay because any idiot can say “John Smith for the Debtor.”  It does lead one to ask, what does the attorney I hired do?

55.      “Many Bankruptcy Petition Preparers are more familiar with the code than the attorneys.”

We already discussed how attorneys can start practicing bankruptcy law without knowing anything about bankruptcy.  While bankruptcy petition preparers could theoretically do the same thing, it is generally uncommon.  Most bankruptcy petition preparers are current or former bankruptcy paralegals.  Because of the scrutiny that petition preparers are subject to, someone that doesn’t know what they are doing will quickly be shut down.

66.      “I was not at or near the top of my class in law school.”

The top law school graduates are recruited by Ivy League law firms with huge salaries.  These firms generally cater to businesses or celebrities with lots of money.  The top graduates start out making $150,000+, while a first year associate at one of the big bankruptcy firms start out at about a third of that.

77.      “If anything goes wrong, I am going to drop your case like a hot potato.”

In bankruptcy, most things that can go wrong involve an adversary proceeding, a lawsuit within the bankruptcy.  Most attorneys put that their representation does not include adversary proceedings.  If one gets filed, I will either demand additional payment or file a request to withdraw from your case with the Court.  I will also withdraw if you file anything with the Court yourself, you call me too often, or file a grievance with the state bar.

88.      “The price that I advertise is NOT what my actual charge is.”

I always advertise just a down payment, which is generally only the court filing fee or a portion thereof.  My attorney’s fees are never disclosed and will run into the thousands of dollars.  In Chapter 13, I will collect them through the Chapter 13 plan, and I may be willing to take Chapter 7 fees in installments; whether I file your case before I get all my fees depends on how much I trust you and where you live.

99.      “You may be eligible to get your court filing fee waived.”

28 U.S.C.§1930(f) permits a judge to waive the Chapter 7 filing fee if you are living at or below 150% and cannot afford the filing fee.  Many attorney’s don’t give you that as an option, because how can they tell a judge you can’t afford $335 in filing fees after you have spent well over a thousand dollars in attorney’s fees?

110.  “I am going to spend a lot of time and money trying to keep you from finding out this information.  If I need additional resources to protect my income, I can make the taxpayers pay to protect it.”

           

My behavior is bad, but if the public finds out how bad, I will lose my livelihood.  I need an uninformed customer base to keep filing these cases and taking advantage of those in need.  I will put out untrue information about petition preparers in hopes that I can convince someone to use an attorney rather than a petition preparer.

If I’m not successful at this, I will get judges and U.S. Trustee’s to use taxpayer money to slander my competition and put unreasonable restrictions on petition preparers.  For example, in the Eastern District of Wisconsin caps petition preparer fees at an unreasonably low $75 per case, meanwhile attorneys will charge $1,200+ to do a Chapter 7.

If you want honest answers from a qualified Bankruptcy Petition Preparer, contact Charles at Simplified Document Solutions.  You can reach him at (678) 490-5841 or online at www.249bankruptcy.com.

 

Atlanta debtors are saving thousands using paralegal services

The U.S. Bankruptcy Court in Atlanta is reporting a substantial increase in pro-se bankruptcy filings.  Pro-se debtors are those advocating on their own behalf before the bankruptcy court, rather than being represented by an attorney.  Many ask how they are able to represent themselves and if they are successful.

The average attorney in Atlanta is now charging $1500 for even the most simple Chapter 7 bankruptcy petitions, and many are charging in excess of $2500.  These same attorneys will hand your file off to a paralegal to do everything.  Depending on the attorney you select, you may not even get the chance to meet with the attorney, as everything is done by the paralegal.  More and more often, Debtors are choosing to go directly to the paralegal, avoiding the attorney markup.

There are a couple of ways that debtors represent themselves in bankruptcy court.  First, one can download the forms from the court website.  I tried to help a friend do this a couple of years ago and even with 7 years experience in the bankruptcy system, I found the forms to be a nightmare.  For the life of me, I do not know how an individual with little to no experience with the Court system can get through this.  In fact, many of the people that try to do this are unsuccessful due to the complexity and sheer number of the forms.

A second, and slightly better option, is utilizing software that can be purchased online.  This will probably help ensure most of the forms are completed and makes completing them infinitely easier than trying to do it without software.  The software generally only knows the official national forms, which is MOST of what you need, but will likely not include local forms and the software engineers are not familiar with local court policies and procedures.

The third, and probably the best, option is to hire an experienced bankruptcy paralegal, or petition preparer.  The bankruptcy code permits non-attorneys to assist pro-se individuals pursuant to 11 U.S.C. 110.  Petition preparers are certainly not all created equal.  Some preparers will only meet with clients online or over the phone.  Some preparers advertise all over the country and do not specialize in local courts, this poses the same problem as online software companies do.  Yet others do not comply with all of the requirements of the law and do not disclose themselves to the Court.  Failure to disclose yourself as a petition preparer is criminal and can case thousands of dollars in fines to be assessed.  If your preparer is not disclosing themselves to the Court, one has to ask, What are you hiding?  Perhaps it is because they have been banned from assisting individuals with their bankruptcies, likely for screwing someone's bankruptcy up.

I have over 7 years of experience with filing bankruptcy petitions in the Northern and Middle Districts of Georgia both pro-se and under attorneys.  I have prepared thousands of bankruptcy petitions, discharging millions of dollars in debt.  I comply with all aspects of the law and will make my self available to you throughout the entire bankruptcy process.

 

If you are considering filing bankruptcy, and live in the Northern District of Georgia, I would love to help.  I charge a flat rate of $249 for both Chapter 7 and Chapter 13.  For that $249, I can help you obtain a credit report, prepare ALL of the documents that you will need to file your bankruptcy in Atlanta, I will bring them to your home and review all documents with you, and remind you of your hearing.

I can be reached at (678) 490-5841 or visit my website at http://www.249bankruptcy.com.