If you plan to file bankruptcy, please be aware that you must NOT use your credit cards for at least 90 days before the date your petition is filed.  If you do, the Bankruptcy Trustee and the Court may look upon any charges made during that 90 days as an fraudulent and will likely not discharge (wipe out) those debts in your bankruptcy.
    There are some minor exceptions, however.  If you use a credit card for small "necessities of life" such as food, necessary clothing, gasoline, and similar items, and the amounts charged are relatively minor, it is unlikely that the court will require you to pay for such charges.
    While there are no hard and fast rules, keep in mind that you would be wise to charge only those expenses which are absolutely necessary for your family's survival and, even then, keep the amounts as small as possible.

Chapter 11 Bankruptcy

First, there are really two kinds of Chapter 11’s. There is the so called Chapter 13/11’s. This is the case that you would file a Chapter 13 Bankruptcy, but for the fact that your secured debt is too high, or your unsecured debt is too high. These cases while requiring more paperwork, and additional meetings, are less difficult then the typical Chapter 11 case.

If you have a small business that is looking to file Chapter 11 Bankruptcy, the process can be paperwork intensive, difficult, and disappointing. Often times small businesses file Chapter 11 based on debtor optimism. Bear in mind that for a Chapter 11 to go smoothly, the business must be making some money above and beyond expenses to pay back creditors, and some money to pay the officers, you, a salary going forward. Afterall, if the company is not paying you a salary, what is the purpose of continuing the Chapter 11 Bankruptcy.

Our best advice is to check your expectations at the door and to not let any attorney tell you the Chapter 11 process is easy. In a Chapter 11, the creditors wield more power than in a Chapter 13, or Chapter 7 Bankruptcy. In addition, retainers required to prosecute a Chapter 11 case are much greater than those required to prosecute a Chapter 7 or Chapter 13 case.

People often call me at the last minute. Many times, I have met someone and then, that same day, prepared all of the legal papers needed to save their home from foreclosure, to stop a levy on their bank account, or to stop a creditor from taking their wages. However, it is always better to consult with me ahead of time. I can help you to be sure that you do not lose money and property that you otherwise could have kept.  I solve your problems by showing you how to fully use bankruptcy laws to your advantage. 

How can you know if YOU should be considering bankruptcy? Thousands of people file bankruptcy each day because difficult circumstances prevent them from paying their bills. In 2005 nearly 2 million bankruptcies were filed nationwide. Job and medical problems are the most common reasons people cite for filing bankruptcy. A study by Harvard Law School showed that two out of three people in bankruptcy have lost their job and half have experienced a serious health problem.

Contrary to public perception, the study said the average bankruptcy filer is well-educated, a homeowner and married. In fact, many successful people, including Walt Disney, Donald Trump, Mark Twain, and Frank Lloyd Wright have used bankruptcy to forge a fresh start. During our first visit to discuss bankruptcy, we will assess your situation and weigh the different options available. If you can answer any of the questions below affirmatively, it would be useful for us to meet.

Do you hate answering the telephone because you are avoiding multiple bill collectors?

Are you falling further and further behind on your home mortgage, rent, credit card, or other payments?

Have you had a disastrous event happen to you or your family, such as a serious medical illness or loss of job that will affect your ability to make payments on your outstanding debt?

Does all of your paycheck go to cover your debt payments and leave little, if any, money left to buy groceries, medicine or clothing?

Do you have to rotate which bills get paid each month?

Are you borrowing money to pay your bills?

Are you using one credit card to pay another credit card?

Do you regularly get red "pay now" notices - so often that you often disregard the non-urgent bills?

Do you lie awake at night trying to figure out how you are going to make ends meet?

Are your wages being garnished? House in foreclosure? Car repossessed?

You may have heard of or already tried credit-counseling services in order to reduce your monthly payments. Unfortunately, credit counseling services do little to reduce your actual debt and may actually increase the length of time it takes to pay off that debt. Studies have estimated that only 4% of debt management plans survive the first year of what is typically a 3-5 year repayment program. If you are currently in a repayment program but do not feel it is helping your financial situation, explore the option of bankruptcy.

Part of the problem with credit-counseling services is that they are primarily funded by credit card companies - their primary goal is to help the bank, not to help you.

If you are in a credit-counseling program that is not fulfilling your needs, call our office or fill out the consultation form to set up an appointment.

If you need to learn more or think you might be a candidate for bankruptcy, it is essential to discuss your situation in further detail so you may explore ALL of your options. 

I often get asked "I hear that you can't discharge credit cards anymore?" or "that it's harder to file bankruptcy?"

The answer to the first question is, that it is not true, you can indeed discharge credit cards still. What the new law did was make it slightly harder to discharge recent charges that aren't for household expenses. In other words, if you charge over $500 in the 90 days preceding your filing bankruptcy, the credit card company can object to discharge and would most likely succeed. Otherwise, you are able to get a discharge from your credit cards with no major issues coming up in the bankruptcy.

Now the second question CAN be true depending on one's circumstances. One thing that is harder for debtors under the new law is that they MUST provide the trustee with the past 6 months of paystubs (or other proof of income) from all sources of income. Additionally they must provide tax returns (tax return transcripts are acceptable, and serve as better proof that the taxes were actually filed). The income information gets put into your means test, which determines what Chapter you may file (although if you can file a Chapter 7 there may be circumstances in which you choose to file a Chapter 13 instead).

Now the means test is the most difficult part about filing bankruptcy under the new law. But in reality, I find most people that want to file a chapter 7, still can. I find that most of my chapter 13 clients at this time are filing chapter 13, not because of their income, but because they risk losing their house, or because they don't qualify for a chapter 7 for other reasons (for example, filing bankruptcy in the last 8 years, or having too much equity to file a chapter 7 and still keep the property they own). If you make below the median income for your state and household size, you will qualify for a chapter 7. If you make above the median for your household size in your state, then your attorney must look at other factors in order to determine whether there would be a presumption of abuse if you were to file a chapter 7. These factors include, mandatory payroll deductions, secured debt payments (like mortgage and car), and other relevant expenses. Unfortunately, the means test is based on a mythical budget deemed reasonable based on IRS allowances. Your real budget could be in the red, but the Means test might still think you should be able to afford a chapter 13 plan. It can also be the other way around. The Means test might say that you should be in the red, but your real budget is so frugal that that isn't the case for you (you would still qualify for a chapter 7 in that situation though).

Provided that after going through this analysis, you qualify to file a chapter 7 with no presumption of abuse, you will find that it really isn't much harder to file a bankrupty. The only other thing that would require more effort from a debtor would be the fact the debtor needs to complete credit counseling prior to filing and a debtor education class after filing but before discharge in order to obtain a discharge. If those requirements are not met, you cannot get a bankruptcy discharge. For a list of providers for said classes in your state and district, go to the US Trustee's website at www.usdoj.gov/ust. There will be links to their approved lists from that site.