Credit Counseling Requirements for Bankruptcy

What are the Credit Counseling Courses?

Before you can be eligible to file for chapter 7 or chapter 13 bankruptcy, you must complete two separate counseling courses. To prove that you properly completed the course you must receive a certificate of completion.

In 2005 Congress changed the bankruptcy laws to make credit counseling and debtor education courses mandatory to receive a bankruptcy discharge. §109(h) provides that a debtor will no longer be eligible to file under either chapter 7 or chapter 13 unless within 180 days prior to filing the debtor received an “individual or group briefing” from a nonprofit budget and credit counseling agency approved by the United States trustee or bankruptcy administrator.

The Purpose of the Pre-filing Credit Counseling Course

The intended purpose of the credit counseling course is to help you determine whether bankruptcy is right for your situation. The counseling agency helps you prepare a budget based on your income and expenses and then will review with you your options for repaying the debt. In most cases, the agency confirms that bankruptcy is your best option but not always. However, even if the agency doesn’t suggest bankruptcy you’re not required to adhere to their decision. The law only requires that you complete the counseling not follow their suggestion.

Credit Counseling Costs

There are many agencies that are approved by the United States trustee or bankruptcy administrator and the cost can vary greatly, from approximately $15.00 to $50.00. Two (2) courses are required the second course is usually slightly cheaper than the first one.

Debtor Education Course

This is the second course and is required to be completed after filing your case but within 45 days of your 341(a) meeting with the trustee. If you don’t complete this second course, the trustee will not approve your discharge. The purpose of this course is to educate the debtor to make more sound financial decisions in the future to prevent you from becoming insolvent yet again. Once this course is completed you must file it with the bankruptcy court.

Ways to Complete the Courses

There are a couple different ways to complete these courses. The first and easiest way is to complete it online, the next is to complete it over the phone, and the final way is in person in a group setting. The in-person courses are usually much more expensive due to covering the cost for the instructor. After each course you will receive a certificate of completion. You should forward this certificate to your attorney for filing with the court.

Conclusion

Although, the courses are two more hoops to jump through to obtain your bankruptcy discharge, it is necessary, and usually doesn’t take longer than 90 mins to complete. All in all, it is painless and you can learn some helpful tips for life after bankruptcy. If you have any further questions, please contact our office.

What Documents Do I Need To File For Chapter 7 Bankruptcy?

A quick google search can provide an overwhelming amount of information about Chapter 7 Bankruptcy.  Although it is important to do your research do not be overwhelmed by the amount of information available on the internet.  Like a lot of information online, not all of it is correct and, in most cases regarding legal issues, the information might not pertain to your specific situation.  For example, what is true for someone living in Texas could be very different for someone living in New York; even if their legal issue is the same.

In order to properly prepare your Bankruptcy Petition (which is filed with the Court) our bankruptcy attorneys will request documents from you that will assist us in completely understanding your financial situation.  At Balmer Black, our Bankruptcy Attorneys will assist a bankruptcy client with completing our client specific Bankruptcy Questionnaire.  This questionnaire is used internally to provide our firm with detailed financial information so that our attorneys can properly prepare your Bankruptcy Petition for filing.

In addition to the questionnaire, there are specific documents that are required as part of your Bankruptcy both by our office and the Bankruptcy Trustee (The Trustee is appointed to oversee your Bankruptcy Case).  And, it is important to note that every Trustee is different and may require different documents.  For example, one Trustee may require three months of bank statements while a another Trustee will request four months of statements.

In order to give you an overview of the most common documents requested in conjunction with a Chapter 7 Bankruptcy, our attorneys have complied a list of the most commonly requested documents in New York:

1) Proof of income for the last 3 months, if applicable.

If you or your spouse did not work for the entire 60-day pre-petition period, then an Affidavit will be prepared for you or your spouse to sign, explaining that there was no income for a certain period of time.

2) Federal and State income tax returns for the two previous years.

3) Credit Counseling Certificate.

4) Additional Documentation that may be requested:

–   Deeds to houses/land

–   Purchase contracts for mobile homes

–   Titles to vehicles

–   Proof of insurance for houses/vehicles

–   Proof of values of land/houses (tax assessments/appraisals)

–   UCC1 documents that place liens on personal property (e.g. furniture, 4 wheeler etc.)

–   Proof of any child support obligations

–   Retirement plan/loan information (monthly payments & proof deductions)

–   Life insurance documents

The above list is meant to provide you with a basic, general overview of what documents may be required as part of your Chapter 7 Bankruptcy.  Every Trustee and case is very different so in order to determine what documents you will need to file Bankruptcy you can contact one of Balmer Black’s experienced bankruptcy attorneys today to discuss your situation.

As always, you can contact our office by visiting the following link https://balmerblack.com/contact/

We look forward to hearing from you!

What is the Meeting of Creditors/341 Hearing?

Part of the process of Bankruptcy is the 341(a) hearing, otherwise known as the meeting of creditors. This is a public meeting that is a requirement set forth in the bankruptcy code and it is necessary to receive your discharge. Essentially, the 341 hearing is a meeting with your appointed trustee during which the creditors can be present and they both have the right to ask you questions. The trustee that is appointed by the bankruptcy court administers the hearing; there will not be a bankruptcy judge present. During this hearing the trustee will ask questions regarding your finances past or present to ensure that your paperwork is accurate and that there hasn’t been any fraud committed.

What is the purpose of this meeting?

The purpose of the meeting is for the trustee to determine if your paperwork is in order and to do some fact-finding regarding your case. Your attorney will appear with you at this hearing. Theoretically, your creditors have the right to be present to challenge the dischargability of their particular debt. Practically speaking however, if your debts are mainly consumer debts the creditors do not actually show up. In 99% of the cases, the creditors do not bother appearing at the 341 hearing.

When is the 341 hearing?

In a chapter 7 case, the 341 hearing is set by the court usually roughly 30 days after your petition has been filed. It can be set as soon as 21 days but no later than 40 days after the filing of your petition. Depending on where your case is filed determines where your meeting will be. For example, if you filed in the Southern District Bankruptcy Court, your hearing will likely be located in New York City.

What should you bring to the Meeting of Creditors?

First and foremost you must bring your social security card and Photo ID (either State Driver’s License, ID, or Passport). These items are to prove that you are actually the named debtor in the petition.  If you do not have these items on your scheduled date, the trustee will not conduct the meeting, you will have to reschedule and return once you have them.  Each trustee may request different items, they will inform your attorney what documents they want to review, if you don’t have an attorney they will inform you directly. Some of these items include:

  • Title to house;
  • Title to any vehicles;
  • Pay stubs or proof of public assistance;
  • Bank statements;
  • Balance of any retirement funds;
  • Tax returns;

Your attorney should provide these items directly to the trustee before the hearing, as well as bring them to the meeting. If for some reason you do not have them, then you will be required to either return at a later date or provide them to the trustee by a certain date so you don’t have to return.

What to expect at the meeting?

The meeting will be pretty informal and will likely last anywhere from 5-20 minutes. The trustee will ask certain questions about your financial situation and your paperwork. Usually the questions are pretty standard, but they can vary depending on your situation. Types of questions that the trustee could ask are:

  • Are you the debtor listed in the petition?
  • Why are you filing bankruptcy?
  • Have you listed all your assets in the petition?
  • Whether you have paid any creditors within 3 months of your filing?
  • Have you repaid any friends or relatives in the last year?
  • Does anyone owe you money?
  • Do you have any pending litigation where you are a Plaintiff? (Could you receive any money).
  • How you determined the value of your property listed in the petition?
  • Whether your income is accurate on your schedules and means test?
  • Whether you have dependents?
  • When was the last time you used any credit cards?
  • Whether you owe any child or spousal support?
  • Whether your monthly expenses are necessary and reasonable?

This list does not include everything that the trustee might ask, only some of the questions. If you are not sure how to answer any question that is asked, your attorney may advise you.

Conclusion

Overall, the 341 meeting is nothing to be intimidated by, it is just a part of the process. More often than not it is very brief and most people are surprised with how informal it is. As long as you are being honest with the information that you provide to the Trustee you will have nothing to worry about. Because Bankruptcy can involve complex legal issues, it is always best to consult with an experienced Bankruptcy attorney.

 

 

The above post was written by Joshua C. Sibenik, Esq.

Will I Lose My House or Apartment If I File For Bankruptcy?

If you, like many others, are dealing with a substantial amount of debt then you might be considering filing for Bankruptcy. A very common question that many of our potential Bankruptcy clients ask us is: What Will Happen to My House? And, Will I Lose My Home If I File For Bankruptcy?

Filing for Chapter 7 Bankruptcy

For purposes of our article we will focus on Chapter 7 Bankruptcy. For more information on Chapter 7 and Chapter 13 Basics you can take a look at our blog post “Bankruptcy 101” https://balmerblack.com/bankruptcy-101/

As discussed in the above article, Chapter 7 is a total liquidation of qualifying debts and as part of your Petition, the documents filed with the Bankruptcy Court, you must list your assets; which is where your home can come into play.

So What If I Rent My Home or Apartment?

If you rent your home or apartment bankruptcy should have no effect in regard to your current lease. Technically, your home, condo, or apartment, if it is rented, is not an asset because you do not own it and you do not have the ability to sell or borrow against a rental property.

So What If You Own Your Home?

The short answer is…. Maybe. I know that is not the answer that you were looking for, but there are some factors that we have to consider before determining whether or not you will be able to keep your home and still file for a Chapter 7.

It is all about the Equity That You Have In Your Home

No Equity? – First off, the Trustee will not require that you sell your home if there is no equity in it. Basically, if the balance due on your mortgage is more than the current fair market value of your home then you have no equity.

Equity in your home? – Having equity in your home is a good thing! This means that the balance due on your mortgage is less than the fair market value of your home. So, technically, if you were to sell your home today you would walk away with some cash. Now, in regards to Chapter 7 Bankruptcy, this could cause a potential issue. Why is that? Because the Trustee sees the equity as a way that you can pay back some of your creditors if you were to sell or borrow against your home. Therefore, the Trustee can force you to sell your home to pay back your debts.

The Homestead Exemption Can Save Your Home!

If it is determined that you do in fact have equity in your home it does not automatically prohibit you from filing for Chapter 7 Bankruptcy, but does potentially give the Trustee the ability to sell your home to pay back your creditors. The Homestead Exemption is very important because it allows a debtor with under a certain amount of equity to file for Chapter 7 and save their home.

How much is the Homestead Exemption and How Do I Know If I Qualify?

If the home in question is your primary residence, federal and state laws may allow you to exempt the equity in your home; thus, preventing the Trustee from selling your home to pay creditors.

In New York, the Homestead Exemption is up to $165,550.00 for the following counties: Kings, New York, Queens, Bronx, Richmond, Nassau, Suffolk, Rockland, Westchester, and Putnam; $131,325 for the following counties: Dutchess, Albany, Columbia, Orange, Saratoga, and Ulster; $82,775 for the remaining counties in the state.

Conclusion

If you are considering Bankruptcy and you worried about saving your home an experienced bankruptcy attorney can help you determine whether or not the Homestead Exemption applies to your situation. Also, if your primary concern is saving your home and the Homestead Exception doesn’t apply to you, our expected team of attorneys can discuss with you alternatives to bankruptcy.