counseling – Rochester Bankruptcy and Debt Relief – Rochester, NY Bankruptcy Attorney

Debtors Get More Time to Take Personal Financial Management Course

One of the basic procedural requirements that the debtors have to satisfy before receiving their discharge in Chapter 7 Bankruptcy and Chapter 13 Bankruptcy is completing the personal financial management course.

Starting on December 1, 2010, the new rules went into effect giving the debtors in Chapter 7 Bankruptcy 60 days to file a statement of completion of a course in personal financial management. The statement of completion is also known as Official Form 23.

After December 1, 2010, debtors must complete the course within 60 days from the first date set for the meeting of creditors, also know as 341 Hearing. This is an increase of 15 days, up from the prior 45 day time limit.

If debtors fail to satisfy this requirement, they are denied a discharge of their debts. If debtors do not receive their discharge, their bankruptcy was not successful in discharging their debts, and they will not be able to file for bankruptcy again for a long time.

The rules for individuals in Chapter 13 cases were not changed, and still provide that the personal financial management course has to be completed no later than the date when the last payment was made by the debtor as required by the plan or the filing of a motion for discharge.

If you are contemplating filing Chapter 7 Bankruptcy or Chapter 13 Bankruptcy, or are dealing with debt problems in Western New York, including Rochester, New York, Canandaigua, Brighton, Pittsford, Penfield, Perinton, Fairport, Webster, Victor, Farmington, Greece, Gates, Hilton, Parma, Brockport, Spencerport, LeRoy, Chili, Churchville, Monroe County, Ontario County, Wayne County, Orleans County, Livingston County, and being harassed by bill collectors, and would like to know more about how bankruptcy may be able to help you, contact me today by phone or email to schedule a FREE initial consultation with a Rochester, NY, bankruptcy lawyer.

Bankruptcy and Cash in Excess of New York’s Exemption

Sometimes clients come to me with while having cash or liquid bank accounts in excess of New York’s $2,500 cash exemption. As a bankruptcy lawyer, it is my job to help the client retain as much value as possible for the fresh start after the bankruptcy. So what can be done without running afoul of the Bankruptcy Code?

Initially, there is a difference between the way this situation is treated in Chapter 7 Bankruptcy and Chapter 13 Bankruptcy. In Chapter 7 Bankruptcy, any cash in excess of the New York’s $2,500 cash exemption is the property of the bankruptcy estate and is no longer the debtor’s property to use. In Chapter 13 bankruptcy, any such funds are still property of the debtor, provided that the debtor’s Chapter 13 plan pays to the creditors a sum equal to the unexempt portion of the cash or other unexempt assets over the plan’s duration. This is also known as the good faith test.

If the debtor will be filing Chapter 7 Bankruptcy, the debtor can spend the money prior to the filing in such way that it would be accepted by the bankruptcy trustee. Some of the things that can be done include the following:

Stock up on groceries
Fix the car
Make a mortgage payment ahead of time
Pay car or homeowner’s insurance
Repay retirement loans
Pay for medical or dental care
Pay delinquent child support or spousal support
Pay for child care
Pay overdue taxes

Having too much cash in a bank account can be a problem for a debtor. Discussing these issues in advance with a bankruptcy lawyer and engaging in bankruptcy planning can preserve the debtor’s cash and help with the future after the bankruptcy. Avoiding problems is the joint responsibility of the debtor and the debtor’s bankruptcy attorney. Timing is critical to minimizing your financial exposure. An experienced bankruptcy attorney can help you maximize the benefits of the bankruptcy laws and navigate around any problem areas.

If you contemplating filing Chapter 7 Bankruptcy or Chapter 13 Bankruptcy, or are dealing with debt problems in Western New York, including Rochester, Canandaigua, Brighton, Pittsford, Penfield, Perinton, Fairport, Webster, Victor, Farmington, Greece, Gates, Hilton, Parma, Brockport, Spencerport, LeRoy, Chili, Churchville, Monroe County, Ontario County, Wayne County, Orleans County, Livingston County, and being harassed by bill collectors, and would like to know more about how bankruptcy may be able to help you, contact me today by phone or email to schedule a FREE initial consultation with a Rochester, NY, bankruptcy lawyer.

Chapter 7 and Chapter 13 Bankruptcy, Giving Advice to Clients and Restrictions Under BAPCPA

The U.S. Supreme Court has resolved an issue earlier this week that was of great concern to the bankruptcy lawyers ever since enactment of BAPCPA in 2005. This issue had to do with a provision of BAPCPA, which barred attorneys from advising their clients to take on more debt before filing for bankruptcy protection. The Supreme Court held in Milavetz, Gallop & Milavetz v. United States, 559 U.S. ___ (2010), that giving such advice is permissible in appropriate situations.

The high court, in an opinion written by Justice Sonia Sotomayor, said the provision prohibiting such advice was valid, but should be read narrowly. This provision should be read to prohibit bankruptcy lawyers from advising clients to abuse the bankruptcy system. Justice Sotomayer indicated that it would be permissible for lawyers to advise clients contemplating bankruptcy to take on additional debt in certain situations. She wrote that bankruptcy lawyers could advise clients to refinance a mortgage or purchase a reliable car prior to bankruptcy on the grounds that doing so would reduce the debtor’s interest rates or improve the debtor’s ability to repay. According to the opinion, “[i]t would make scant sense to prevent attorneys and other debt relief agencies form advising individuals thinking of filing for bankruptcy about options that would be beneficial to both those individuals and their creditors.” Professionals specializing in bankruptcy “remain free to talk fully and candidly about the incurrence of debt in contemplation of filing a bankruptcy case,” Sotomayor wrote.

This provision has been problematic in the past in situations where my client would have a vehicle that was likely to need repairs in the near future due to its age or mileage. Under BAPCPA, I could not advise the debtor in Chapter 7 Bankruptcy or Chapter 13 Bankruptcy to obtain a new car lease or car loan, as getting a new car is easier to do before filing for bankruptcy than after. Since BAPCPA contained a provision which prevented attorneys from advising clients to incur debt in contemplation of bankruptcy, I was unable to give debtors such advise since BAPCPA’s enactment. Similarly, this provision prohibited me from advising a debtor to refinance his mortgage immediately prior to filing for bankruptcy in order to benefit from a lower interest rate in the future.

The Supreme Court decision now clarifies the scope of BAPCPA provisions and holds that as long as bankruptcy lawyer’s advice is not meant to abuse the system, it is considered appropriate. Of course, a bankruptcy attorney cannot advise a client to go out and run up debt when the client has no reasonable expectation to repay it. The decision also upheld the BAPCPA’s requirement that attorneys make certain disclosures in their advertisements and ruled that attorneys who provide bankruptcy assistance are debt relief agencies within the meaning of the law. This requirement is the reason that whenever bankruptcy attorneys advertise their service, that sentence is included in the advertisement.

Overall, Milavetz was a positive result for bankruptcy lawyers here in Rochester, New York, and elsewhere across the country. The Congress should not have limited bankruptcy attorneys’ ability to engage in frank and open communications with their clients and give debtors the best possible advice.

Bankruptcy Basics – Credit Counseling and Financial Education Requirements

Under the BAPCPA, debtors planning to file for bankruptcy, under either Chapter 7 or Chapter 13, must complete a consumer credit counseling course before they will be allowed to file a bankruptcy petition. Such credit counseling program needs to be completed within 180 days prior to the filing.

A pre-bankruptcy counseling session with an approved credit counseling organization usually includes an evaluation of the debtor’s personal financial situation, a discussion of alternatives to bankruptcy, and a personal budget plan. A typical counseling course lasts about 60 to 90 minutes, and can take place in person, on the phone, or on internet. The counseling organization is required to provide the counseling free of charge for those consumers who cannot afford to pay. If you cannot afford to pay a fee for credit counseling, you should request a fee waiver from the counseling organization before the session begins. Otherwise, you may be charged a fee for the counseling, which will generally be about $50, depending on where you live, the types of services you receive, and other factors. The counseling organization is required to discuss any fees with you before starting the counseling session.

Once you have completed the required counseling, you must get a certificate as proof. You can check if the organization providing the course is approved in the judicial district where you are filing bankruptcy by going to the U.S Trustee’s web site. Once the course is completed, you will receive the certificate. Credit counseling organizations may not charge an extra fee for the certificate.

In addition, once the bankruptcy is filed, debtor must obtain debt management counseling before being allowed to complete the bankruptcy process. A debtor education course by an approved provider usually includes information on developing a budget, managing money, using credit wisely, and other resources. Like pre-filing counseling, debtor education may be provided in person, on the phone, or online. The debtor education session might last longer than the pre-filing counseling – about two hours – and the typical fee is between $50 and $100. As with pre-filing counseling, if you are unable to pay the session fee, you should seek a fee waiver from the debtor education provider. Make sure that you received the certificate from a debtor education provider that is approved in the judicial district where you filed bankruptcy. Check the list of approved debtor education providers at the U.S. Trustee’s web site.

There are three main objectives of the Personal Financial Management course:

The help the debtor understand the benefits of creating short-term and long-term financial goals.
To teach the debtor how to create a budget.
To teach the debtor how to balance a checkbook and reconcile bank statements.

The purpose of these courses is to help the debtor become financially literate and avoid another bankruptcy.

Once you have completed the required debtor education course, you should receive a certificate as proof. This certificate is a different document from the certificate you received after completing your pre-filing credit counseling. Unless they have disclosed a charge to you before the counseling session begins, debtor education providers may not charge an extra fee for the certificate.

The Personal Financial Management course must be completed within 45 days after filing bankruptcy; but before receiving a discharge through bankruptcy. This is important because if the debtor does not complete this second course after filing for bankruptcy, the Chapter 7 or Chapter 13 bankruptcy may be closed without a discharge.

If you are dealing with debt problems in Rochester, New York; Canandaigua, Brighton, Pittsford, Penfield, Perinton, Fairport, Webster, Victor, Farmington, Greece, Gates, Hilton, Parma, Brockport, Spencerport, LeRoy, Chili, Churchville, Monroe County, Ontario County, Wayne County, Orleans County, Livingston County, and being harassed by bill collectors, and would like to know more about how bankruptcy may be able to help you, contact me today by phone or email to schedule a FREE initial consultation.

Rebuilding Your Credit After Bankruptcy

If you were in a difficult financial situation, and were forced to file bankruptcy, you should view your bankruptcy filing as an opportunity for a fresh start in your financial affairs and the first step toward rebuilding your credit. After the bankruptcy, you will be able to rebuild your credit and work toward reestablishing your financial future. After the bankruptcy, many debtors are tired of dealing with credit and debt issues that they delay reestablishing their credit. If you received a discharge in your bankruptcy, or are currently making payments pursuant to a Chapter 13 plan, you can start rebuilding your credit. The first step in doing so is obtaining your credit report and challenging any inaccurate information contained in it. If you eliminate any inaccuracies in your credit report, this is likely to improve your credit score. The next step in reestablishing your credit is to obtain a credit card, and use it responsibly. You have to make sure that you make at least the minimal charges and try to pay off the balance in full every month. Even if you have to obtain a secured credit card, it will help you establish a history of payments demonstrating your financial responsibility. The same is true with respect to any other bills you may have such as utilities, rent, mortgage, or any other form of credit. The more you demonstrate your financial responsibility, the higher your credit score will rise. If you are meeting your bills, you may begin requesting credit increase after 6 months or payments or trying to switch from a secured credit card to unsecured credit card. Since an increase in your credit limit indicates that the lender trusts you to repay the debt, your credit score will continue to rise.

At the same time, you have to be careful to avoid credit traps that may set back this rebuilding process. As you work your way to financial health, make sure you steer clear of these common post-bankruptcy dangers. One very common danger is a simple failure to plan. You will not have any debt if you receive a Chapter 7 bankruptcy discharge, however, that will stay so as long as your expenses do not exceed your earnings. While it seems obvious, many people forget that their continued financial health depends on persistent awareness of those facts.

Another solution to common post-bankruptcy problems is developing a budget and following it. Since all filers are required to take the financial management course during the bankruptcy, the suggestions given in the course should be followed to stay out of debt.

Avoid over-reliance on credit since it is what pushed you into bankruptcy in the first place. After bankruptcy, you should avoid costly sources of credit and to try to pay off any credit balances every month.

It is also important to avoid credit repair scams that promise to wipe out bad credit, erase your credit history or achieve anything else that seems too good to be true. It takes time to rebuild your credit and if you follow the steps outlined above, your credit will improve. Any quick fixes or schemes will likely cost you money and hurt your credit. Instead, pay off your bills every month, don’t open more credit cards than you need and stick with your budget. Over the course of a couple years, you should see your credit improve.

As you are working on rebuilding your credit, be careful selecting credit card offers. Make sure that you are fully aware of the interest rates and fees. You can visit a site like bestcreditcards.com to see different options available to you.

With some planning, discipline and determination, you will be able to rebuild your credit and even improve your credit score after filing bankruptcy.

If you are dealing with debt problems in Rochester, New York, Canandaigua, Brighton, Pittsford, Penfield, Perinton, Fairport, Webster, Victor, Farmington, Greece, Gates, Hilton, Parma, Brockport, Spencerport, LeRoy, Chili, Churchville, Monroe County, Ontario County, Wayne County, Orleans County, Livingston County, and being harassed by bill collectors, and would like to know more about how bankruptcy may be able to help you, contact me today by phone or email to schedule a FREE initial consultation.

Bankruptcy Basics – The Process of Filing and Completing Chapter 13 Bankruptcy

Chapter 13 has helped many to resolve their debts and save their homes from foreclosure. The following is a short description of a typical process that someone filing Chapter 13 bankruptcy goes through, from the initial meeting and until a discharge is received.

The initial stage of a Chapter 13 bankruptcy usually involves meeting with your bankruptcy attorney and discussing the case. The attorney will typically ask you to prepare a bankruptcy questionnaire, in which you will be asked to list your income and expenses, assets and liabilities, and describe your financial dealings over the past few years. Once the questionnaire is completed, your bankruptcy lawyer will be able to review and identify various exemptions applicable to your assets, determine whether certain of your debts are dischargeable or not, and will try to do bankruptcy planning to preserve as many of your assets as possible.

Your next step will be taking the credit counseling course. Under the bankruptcy law, you must complete the course before your bankruptcy petition can be filed with the bankruptcy court. The course must be taken from an authorized provider and can be done in person, over the telephone or internet. You will also have to provide your bankruptcy attorney with copies of your pay stubs for 60 days preceding the filing, and a copy of your most recent tax return.

Once the above steps are completed, your petition will be prepared and filed with the bankruptcy court. Concurrently with the petition, a copy of your credit counseling certificate and copies of your paystubs will be filed. Once the bankruptcy petition is filed, the automatic stay begins and protects you from all collection activities by your creditors. The automatic stay will last until the end of your bankruptcy case, unless it is lifted by the bankruptcy court. Your petition will include a repayment plan pursuant to which your disposable income will be used to repay creditors.

Within 45 days of your filing, a meeting of the creditors, also known as 341 hearing, will take place. You will have to come to the bankruptcy court in Rochester, if you reside in Monroe County, and answer the questions posed to you by the bankruptcy trustee. The trustee will typically ask you questions about your financial affairs, your income, expenses, assets and liabilities. You also may have to answer questions from your creditors who have the right to appear at the hearing. You will have to swear under oath that the information you provided in your petition is complete and accurate. After the hearing the trustee will issue a report to the bankruptcy court stating whether he recommends that your repayment plan be confirmed.

A typical Chapter 13 plan involves using your disposable income to repay all or a portion of your debts to the creditors over the next three to five years. The plan provides a repayment schedule that you’ll comply with to catch up on your past-due balances while staying current with other payments. Filing of a Chapter 13 bankruptcy can stop foreclosure and allow you to repay any mortgage arrears over the duration of your plan. Your plan can include such debts as mortgage and other secured and unsecured loan arrears and any other debts. You must make your first payment (as part of the repayment plan) within 30 days of filing your petition. If such payment is not made, the court may dismiss your case.

Within 45 days after the meeting of the creditors, you will have to complete the financial management course. If you will not complete it, you will not become eligible for discharge. The course is designed to help you make the most of your bankruptcy and includes tips on saving, managing money and handling credit.

Within 30 days after the 341 hearing, your confirmation hearing will be scheduled. On that date, you will appear with your attorney before Hon. John C. Ninfo, United States Bankruptcy Judge for the Western District of New York, who will make the ultimate decision whether to approve your Chapter 13 bankruptcy.

Once the plan has been approved, the trustee will typically enter a wage deduction order pursuant to which, all or a portion of your plan payments will be taken out of your wages and paid directly to the bankruptcy trustee. The trustee, in turn, will be making the payments to your creditors. You are required to make your final payment under the plan within five years of filing your petition. After doing so, you will receive your bankruptcy discharge and officially be out of Chapter 13 bankruptcy.

You will not be eligible for Chapter 13 bankruptcy protection if you had filed for bankruptcy in the past four years, so make sure you tell your bankruptcy lawyer whether you had past bankruptcy filings.

Bankruptcy Basics – The Process of Filing and Completing Chapter 7 Bankruptcy

The following is a short description of a typical process that someone filing Chapter 7 bankruptcy goes through, from the initial meeting, until a discharge is received.

The initial stage of a Chapter 7 bankruptcy usually involves meeting with your bankruptcy attorney and discussing the case. The attorney will typically ask you to prepare a bankruptcy questionnaire, in which you will be asked to list your income and expenses, assets and liabilities, and describe your financial dealings over the past few years. Once the questionnaire is completed, your bankruptcy lawyer will be able to review and identify various exemptions applicable to your assets, determine whether certain of your debts are dischargeable or not, and will try to do bankruptcy planning to preserve as many of your assets as possible.

Your bankruptcy case will likely last between four and six months, during which time, the following events are likely to take place.

If the bankruptcy trustee is satisfied with your information, this is likely to be the only trip you will have to make to the bankruptcy court. If your petition is incomplete, and trustee has additional questions or needs additional documents, your hearing may be postponed to another date.

If the bankruptcy trustee identifies any non-exempt assets, he can sell them to raise money to pay your creditors. In many Chapter 7 cases, filers do not have any non-exempt assets. If such non-exempt assets are identified, you have the option of either letting the trustee take those assets or paying trustee the value of those assets in order to keep them.

If you have such assets as a home or a car, and you still owe money on either a mortgage or a car loan, you will have an opportunity to sign a reaffirmation agreement in order to keep those assets. A reaffirmation agreement is an agreement renewing your liability on the debt with the lender. You will agree to continue making payments so you will keep whatever property you don’t want to give up. You will have to be current on any such debts or will have to make them current in order for a creditor to let you sign a reaffirmation agreement.

Typically within 2 months of the meeting of creditors, you will receive the bankruptcy discharge. The discharge is basically an order of the bankruptcy court relieving you of your responsibility to pay debts that were discharged in the bankruptcy. After you receive your discharge, your bankruptcy is completed.

Once you complete a Chapter 7 bankruptcy, you cannot file a Chapter 7 again for the next eight years.