Bankruptcy

“We are a debt relief agency: we help people file for relief under the bankruptcy code.”

Bankruptcy is not an easy choice to make.

Although the bankruptcy laws changed on October 17 th, 2005 , and the new law changed many aspects of filing for bankruptcy, it is still a viable option for many people.

Despite the change in the law, as much as 98% of all people attempting to file for Chapter 7 bankruptcy will still be able to file.

How do the changes affect you?

Some additional duties are now required of people filing for bankruptcy, such as:

• Credit Counseling : All debtors in bankruptcy are now required to complete a credit counseling session prior to filing their case. This counseling session can be done over the telephone or over the internet, as well as in-person, and must be performed by a credit counseling agency approved by the United States Trustees Program, the entity within the United States Department of Justice charged with overseeing bankruptcy filings. A list of approved credit counseling agencies can be found at www.usdoj.gov/ust.
• Financial Management Course : debtors are also required to complete a financial management course after the case is filed but before the bankruptcy court can issue a discharge. The United States Trustees Program has also approved the agencies who can provide such a course. The list of those agencies can be found at the above link.
• Documentation : Additional documents will also need to be provided to your attorney, and may also have to be made available to creditors under the new legislation. Also, in order to determine your eligibility to file for bankruptcy, you will need to provide your attorney with important financial information that includes:
• Tax returns for the past three (3) years;
• Pay stubs, pay advices, or other proof of income for the past six (6) months;
• Copies of bank statements for the past twelve (12) months;
• Copies of homeowners' insurance policies;
• If you are a small business, profit and loss statements for the past twelve (12) months.

Additional information may also be required.

The need for this additional information is vital to the success of your bankruptcy case. Why? Under the new bankruptcy law, an individual’s, or a family’s, annual income needs to be determined based upon a formula contained within the bankruptcy code. Those people seeking to file for Chapter 7 relief will need to demonstrate that, as calculated by this new formula, their annual income, depending upon the size of your family, falls below the median income for similarly sized families in the state in which you reside.

In the worst-case-scenario, the new means test will force some people (2-3% as reported by ABI as cited above) to file a Chapter 13 bankruptcy. Of course it would be preferable to choose the particular type of bankruptcy chapter for your case, but a Chapter 13 bankruptcy may still significantly reduce your unsecured debts that could not be done outside of bankruptcy.

The new law simply requires you to complete more steps. If you would like to discuss your unique situation with a bankruptcy attorney, please call us at (603) 894-4141 in New Hampshire , or (978) 989-9944 in Massachusetts.

Many Areas of the Bankruptcy Laws Remain Unchanged

Chapter 7: A debtor can still obtain a discharge of their dischargeable debts if they qualify. Once a debtor in bankruptcy has received their discharge, they are no longer legally obligated to pay those debts. There will still be a significant impact on one’s credit, but receiving a discharge means that one is finally free of the debt that has been ruling their lives, and has resulted in harassing telephone calls, repossessions, and lawsuits.

Chapter 13: Under Chapter 13, people can also get the benefit of stopping harassing telephone calls, repossessions, foreclosures and lawsuits, and allows those debtors who qualify to submit a repayment plan to the court. That repayment plan would allow a debtor in Chapter 13 bankruptcy to get current with their mortgage if they have fallen behind, stop a repossession of a motor vehicle or other item of personal property, and pay all or a portion of their credit card debts and unpaid medical bills. Once the repayment plan is completed, the debtor in a Chapter 13 receives a discharge as in Chapter 7, and also receives the satisfaction of having paid their creditors some or all of what was owed.

Please contact us to discuss your particular situation. We can help make the choice of filing for bankruptcy a little easier.

DeBruyckere, Roth & Associates is a debt relief agency.