341 Meeting Readiness

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By Attorney Christopher Carr, a Chester County bankruptcy attorney.

Tel: 610-380-7969 Email: cccarresq@aol.com WHAT IS THE 341 MEETING OF CREDITORS? Regardless of whether you file a Chapter 7 bankruptcy or Chapter 13 bankruptcy, you will be required to attend a “Meeting of Creditors” or a 341 hearing as attorneys call it. THIS IS A MISNOMER….IT IS NOT REALLY A HEARING! It has that name because it is held under oath (see below.) It is scheduled about 30‐45 days after your case is filed. Though it is called a “Meeting of Creditors,” creditors rarely attend. But the Trustee is there and HE represents the creditors! You, your attorney, and the trustee attend this meeting. It can seem quite intimidating if you do not know what to expect, but the 341 hearing is actually a fairly informal meeting designed to help the Trustee better understand what’s happening in your bankruptcy. A NOTE ON TIMING OF TRUSTEE PAYMENTS FOR CHAPTER 13 CLIENTS: Remember that your first payment to the Trustee is due THIRTY (30) DAYS AFTER YOUR PETITION IS FILED, irrespective of when the 341 is held.  WHAT TO EXPECT:  There will be a pile of Bankruptcy Information Sheets at the front of the room. Take one and read it.  You will be asked if you did (see below.) You will sit at a desk or table with your bankruptcy lawyer and the Trustee. Other people will be in the room with you, generally other bankruptcy filers and their lawyers. You will be asked first off to state your name and address and verify your identity by providing your social security card and drivers license. IF YOU DO NOT HAVE YOUR ORIGINAL SOCIAL SECURITY CARD AND SECOND FORM OF ID, THE MEETING WILL NOT BE HELD AND EVERYONE’S TIME WILL HAVE BEEN WASTED SO DON”T LEAVE IT AT HOME OR EXPECT A COPY TO DO. BRING THAT TATTERED ORIGINAL AND IF YOU DON”T HAVE ONE ORDER IT FROM THE SS OFFICE. The meeting will be recorded. The Trustee will start a tape recorder going. You will be sworn in; i.e. raise right hand solemnly swear and affirm to tell the truth. Dress is business casual for you. Be well groomed. I will be in my “lawyer suit” as will the Trustee, but you are not expected to wear one.  Be on time.  It may appear that I am running late but that is because I have a better idea of when the 341 will start than you do! Try to relax! WHAT CAN THE TRUSTEE ASK AT THE 341 MEETING? The trustee will ask you some basic questions about your bankruptcy.  Here are some of the common questions that trustees ask during the meeting. They are in no particular order. These are not all of the questions that the Trustee could ask, and he/she will not ask every question on this list. In other words, this is a very generic list. The items that are almost always asked are highlighted.

  • Did you sign the petition and the schedules your attorney is showing you?
  • Have you read the bankruptcy information sheet?
  • Did you review the bankruptcy petition and each of the schedules and the statement of financial affairs (SOFA). Is the information correct? The answer is always an assured “YES” because you will have typically signed the documents in my office and we will have gone over all of them in detail at that time.
  • Are there any corrections that need to be made to the Schedules?  There should be none.  See my piece on the importance of full disclosure within the Bankruptcy  Petition.
  • Did you list all income, assets, and debts on the Schedules? The answer is always an assured “YES” because you will have typically signed the documents in my office and we will have gone over all of them in detail at that time.
  • Have you filed all your taxes? Are the tax returns you supplied to the trustee true, correct and complete, including all schedules and W2s? (Typically we will have filed these beforehand.)
  • Are you entitled to any tax refunds?  This one is VERY popular around tax time. You and your Attorney should have discussed this one and its ramifications before the 341.
  • Have you previously filed bankruptcy? If so when?
  • Why are you filing bankruptcy?  You can be a bit creative here but see below.
  • Do you expect to receive an inheritance or property?
  • Are you a party to any law suits?
  • Do you have any domestic support obligations?
  • Have you have sold, transferred, or given away any property in the prior four years?
  • How long have you lived in Pennsylvania?
  • What do you plan to do with your house, cars, or other personal property?
  • Are you employed? What do you do?
  • How much do you earn?
  • Is your employment the same as when you filed?
  • Do you own your own home?
  • Do you own any motor vehicles? What are these?
  • Please provide appraisals for your cars and home. (Typically we will have filed these beforehand.)
  • Please provide insurance declaration pages for your home if owned and cars. (Typically we will have filed these beforehand.)
  • Do you have any retirement funds (IRA, Roth IRA, 401K etc.)?
  • Does anyone owe you money?
  • Is anyone holding money for you?

GENERAL TIPS AND CAVEATS: It is normal to be a bit nervous going into the 341 but just answer the questions put to you fully and honestly and be courteous to one and all! Do not over answer, the Trustee does not need to hear your life story. All of you financial information should be properly presented in the bankruptcy petition and there is no sense in trying to hide something from the Trustee. If you are uncooperative it may motivate the Trustee to investigate or scrutinize your petition further which will only mean more time and effort for you and your attorney. Always remember that the Trustee may act friendly but he is NOT your friend.  He represents the unsecured creditors and his job is to maximize their return from the bankruptcy (not your own). He gets paid a commission on assets he recovers from Debtors for them. I am on a first name basis with the Trustee but that does not mean we are friends! The time to report undisclosed assets, that big tax refund, debts to family or friends, that new job or the 1000 shares of Google.com or that partnership you forgot about is NOT at the 341. If you wear a big diamond ring to the 341 and didn’t disclose it, expect trouble! Other than that type of thing you have nothing to worry about! Should you have concerns about such matters you should be asking me about them NOW! See my piece on the importance of full disclosure within the Bankruptcy Petition.

 

Law Offices of Christopher C. Carr, MBA,  P.C., is a quality bankruptcy and debt relief practice, located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Christopher Carr, a Chester County bankruptcy attorney, who has over 30 years if diversified ;egal experience, concentrates on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester,  Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!  

Not Legal Advice. Copyright © 2010, 2014 by Christopher C. Carr, Esq., All rights reserved. You may reproduce materials available at this site for your own personal use and for non-commercial distribution. All copies must include this copyright statement.

Web:westchesterbankruptcyattorney.orgBlog: christophercarrlaw.wordpress.com Member: National Association of Consumer Bankruptcy Attorneys, Phi Beta Kappa & Beta Gamma Sigma.*************************************** “WE SAVE HOMES”

This is a Federally Designated Debt Relief Agency which is proud to assist individuals in need in filing for bankruptcy protection.


[1] Up to ½ hour.

Prepared 2‐25‐2014.

Gamblers & Bankruptcy

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By Christopher C. Carr, Esq. Chester County bankruptcy attorney.

Why do some people already in dire economic shape gamble?  Prudence suggests that they should not do so but gamblers are notoriously imprudent. Well ironically they often do so because they foolishly believe that they can gamble their way out of debt.  Other gamblers think they can win enough money to pay back their gambling debts– debts they may have rung up on their credit cards, money owed to casinos or riverboats, loan debt, and even home equity debt all associated with gambling problems–but quite the opposite happens. You only end up creating more gambling debt to repay. And even if you actually did win enough money to pay off your debt, you would most likely gamble that money away too, thinking if you won once you could win again. GA and other organizations can help to cure the addiction but the debt that persists is a slippery slope tempting the gambler to return to the game of choice and chance.  So oftentimes it is necessary to cure the debt problem to alleviate the addiction. And there is only one way to effectively do so, a Chapter 7 (or 13) bankruptcy, which if successful can wipe the slate clean in one fell swoop.  Thus, Bankruptcy may be the only option for dealing with gambling debt.

If you owe bookies or loan sharks, you may be forced to borrow money from a friend or family member to pay the gambling debt, especially if you’re being threatened with reprisals if you do not pay up . But borrowing money from a loved one, while perhaps better than having your legs broken, may not be such a good idea because all such debts will be discharged in a Chapter 7 bankruptcy leaving them high and dry.

I tell such clients that they should pay some of the money they are gambling away to me instead.  Gambling is risky and the “odds are stacked in favor of the house” but I am a sure thing, or nearly so.  What stands in the way of a fresh start in Bankruptcy for the gambler?

  1. Fraud: Gambling debt, including debt incurred from casinos or charged on credit cards and loans, can be discharged in bankruptcy. It’s important to know that any creditor can object to the bankruptcy filing by claiming you incurred the debt under false pretenses or through fraud. For example, if you took out a credit card cash advance knowing you didn’t have the money to repay the advance when you borrowed it, the creditor can ask the court not to discharge the debt. Creditors owed gambling debts may file “adversary proceedings” to challenge the dischargeability of their debts under Bankruptcy Code section 523(a)(2)(A) provides an exception to discharge for debts obtained by “false pretenses, a false representation, or actual fraud.”  These suits, historically filed by casinos, are rare today. They are expensive, cast the casino and its entire industry in a bad light and with the rise of legalized gambling, are no longer favored by the courts.  The gambler’s creditor has the burden to prove that the gambler actually committed fraud, in other words that you had the intent not to repay the debt when incurred and that is barring some lucky (or more likely stupid) admission, very difficult to do.
  2. Reporting Requirement: All gambling losses within the previous year must be reported on the Statement of Financial Affairs which is part of every bankruptcy filing.  This is required so the bankruptcy trustee and court can determine whether any fraud was involved in the bankruptcy filing.  Bankruptcy trustees have broad powers to avoid transfers which appear fraudulent because they are transfers for which the debtor received “less than reasonably equivalent value,” which is the basic benchmark for determining fraud under the Bankruptcy Code. This requirement may pose obvious difficulty for the gambler who has been dealing with loan sharks who may act aggressively to keep from having their names become a matter of public record.
  3. Luxury Debts: However unlikely it is that the casino will win an adversary action, there is another bar standing in the way of clearing very recent gambling debt. Bankruptcy Code section 523(a)(2)(C) makes a debt non-dischargeable if the debts was for a “luxury good or service” over $1,225 and purchased within 60 days of the filing of the bankruptcy.  That section also precludes discharge of cash advances over $1,225 obtained within 60 days of the filing of the bankruptcy.  In most cases, the exception can be avoided by simply waiting the requisite 60 day period of time
    to file the bankruptcy.  However, this may not be as easy as it sounds for the compulsive gambler. Often the lawyer must demand a turnover of all credit cards, etc. so that the problem is cut off at the source.
  4. Chapter 13: Impossibility of fulfilling the plan because of compulsive gambling:  oftentimes a gambler who is behind in house or car payments because of money diverted to gambling will have no choice but to file a Chapter 13.  This requires a 3-5 year plan wherein the gambler promises to repay some of his debts.  But the plan must be funded by the gambler’s income and little threatens income as effectively as compulsive gambling.  Thus, may trustees and courts (tipped off by the required gambling disclosures…see above) will closely scrutinize such a plan and may demand that the gambler be under the treatment of a psychiatrist and/or regularly attending GA meetings before they will give it the go ahead. A clean recent bank and/or credit card statement(s), not showing large withdrawals, can also be very helpful in showing that the gambler has the self control needed to suceed with a plan in a Chapter 13.

It is clear that the cure of the gambling addiction and its economic fallout go hand in hand.  One cannot easily be repaired without the other. We are experienced in dealing with the problems of and in counseling gamblers and would be happy to discuss the issues facing you or a loved one challenged by this affliction.

Law Offices of Christopher C. Carr, MBA,  P.C., is a quality bankruptcy and debt relief practice, located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Christopher Carr, a Chester County bankruptcy attorney, who has over 30 years if diversified legal experience, concentrates on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester,  Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!  


Now that you Have Your Bankruptcy Discharge: 10 (actually 11) Things to Do to Make the most of it!

 

By Christopher C. Carr, Esq. Chester County bankruptcy attorney.

So You Finally Got that Bankruptcy Discharge
Congratulations!
You’re on your way to a fresh start.
Now you’ve got more to do? See why below:
1. Check debts that didn’t get discharged: Child or spousal support, student loans, or taxes for years for which you did not file a return (unless the IRS exceptions are met) are not dischargeable in bankruptcy. The discharge order will not tell you which debts survive and which do not, nor will the Court provide this information so you may continue to require the services of a knowledgeable bankruptcy lawyer to help you to assess this.
2. Verify lien balances: The discharge eliminates your personal liability for dischargeable debts; liens survive. If you plan to keep a house or car encumbered with liens, find out what you owe and resume payments. Otherwise, the creditor can enforce its lien by foreclosure or repossession.
3. Reset Banking Priveleges: Online banking and automatic bill pay may have been disabled while you were in bankruptcy but can be restarted at your request now..
4. Do Some Record Keeping: Save your bankruptcy papers and keep a copy of your discharge paper handy: You’re likely to encounter efforts by buyers of to collect debts that have been discharged in your case, or so called “zombie debt”. You need to be able to show that the debt was discharged in your case. Creditors with notice of the bankruptcy, and likewise those who buy up their worthless accounts and try to collect on them, were discharged (unless they fall within Rule #1 above). The services of a knowledgeable bankruptcy lawyer may be necessary to stop these collectors, or even under some circumstances to sue them for unfair practices and potentially turn the tables by collecting from them, including your legal fees.
6. Join a credit union: Credit unions are owned by their members. They are in the business of extending credit to members (hence the name, “Credit Union’: “Credit” stands for what they do and “Union” for the members they lend to) and the profits from such loans flow to members. Rates are almost always lower and terms better than the commercial banks, savings and loans and private lenders. Start out with a savings or checking account. Sooner or later you will probably need a car loan or even a home loan. Joining now will give you the longevity that adds credibility to a credit union.
7. Maintain insurance coverage: Even though you may have elected to surrender property through the bankruptcy that still stands in your name, make sure that you are insured for liability. Liability insurance covers you for claims of anyone injured on your property. Electing to surrender property doesn’t take you off title until someone else goes on title. Post bankruptcy claims arising from property you’re trying to offload can potentially ruin the fresh start.
8. Get a credit report: Several months after your discharge, check your credit report to make sure all discharged debts reflect a zero balance. The bankruptcy history can properly remain on your credit for up to 10 years, but you are entitled to a showing that you now owe nothing on all discharged accounts (but see Factor #1 above) This is crucial because your debt to income ratio (“DTI”),one of the primary if not THE primary factor lenders look to in extending credit. Getting erroneous entries corrected may be facilitated using the services of a knowledgeable bankruptcy lawyer. You are entitled to a truly free credit report annually from each of the 3 major credit bureaus which you can get by clicking here and credit experts recommend that you check it at least once a year.
9. Budget and Learn to Spend Within Your Means: Studies have shown that people who go bankrupt only do so ONCE in their lives. WHY? Well debt relief is only one side of the coin. On the flip side are the lessons people take from bankruptcy. So, like these now money wise people, take advantage of the fresh start that bankruptcy has provided, and make lifestyle changes so that it does not happen again. Follow Rule # 10 below and stop using trade credit (AKA: Credit Cards). Get a debit card instead and be you own bank, there is no interest that way!
10. Use credit Wisely. Once Lenders see that you have received a discharge, they may well start sending you “preauthorized” credit card applications. However, if you start to load up on credit again, you will soon be right back where you started. So the rule of thumb is to have just one credit card that you keep in a drawer somewhere for emergencies; If you do use it, make it “free credit”, that is: plan to pay it all back in the same month as incurred so that you are not left carrying a balance ant interest. That way you are living within your means. See Rule # 9 above. The only other credit to use generally speaking is for major purchases such as car or home loans.
11. Build up a reserve for emergencies and start saving again. Set up automatic savings Bankruptcy probably brought home to you how little net worth you have and how thin the safety net is. Arrange for automatic savings for both an emergency fund and for retirement.
Since you no longer have trade credit, it will be easier to devote some of your income to savings…follow the rule “Pay yourself first”. Experts recommend a reserve of 6 months salary and at least a 10% savings rate. Contributions toward your IRA or 401K at work count as you can withdraw these funds (with penalty if applicable) in an emergency.
If you follow these rules, you are more likely to take full advantage of your fresh start and not ever be back to see your friendly local bankruptcy lawyer!

Law Offices of Christopher C. Carr, MBA,  P.C., is a quality bankruptcy and debt relief practice, located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Christopher Carr, a Chester County bankruptcy attorney, who has over 30 years if diversified ;egal experience, concentrates on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester,  Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!  

Z is for “Zealous”, How far can your Lawyer go in representing you in Bankruptcy?

By Christopher C. Carr, Esq. Chester County bankruptcy attorney.

Tel: 610-380-7969 Email: cccarresq@aol.com Web: westchesterbankruptcyattorney.org

“Have Gun, Will travel”

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Richard Boone as Paladin

Z is for Zealous.

Subsection 2 of the preamble to the Pennsylvania Rules of Professional Conduct: (“RPC”) “A Lawyer’s Responsibilities” states thatas advocate for his/her clients, “a lawyer zealously asserts the client’s position under the rules of the adversary system”.

Sounds simple enough but of course, the RPC nowhere gives any guidance as to the meaning of the word “Zealous”. Encarta defines the term simply as: “actively and unreservedly enthusiastic”. It is a sort of “boundary” term in the law in that we come to understand what it means more by understanding what we as lawyers serving bankruptcy clients can and cannot do in its name.  So let’s approach it from that angle.

A prerequisite for zealous representation is competence: RPC Rule 1.1 states that a lawyer shall provide competent representation to a client. Competent representation requires the legal expertise, skill, thoroughness and preparation reasonably necessary for the representation. In the bankruptcy context this means that a lawyer must have studied and understood the aspects of the Bankruptcy Code that are implicated in any representation.  Even if this requirement is met in general, should he or she not be well versed in a particular sub-area, there is a duty to seek the assistance and mentoring of another attorney who has the requisite skill set. For example, the implications of divorce for bankruptcy are so complex and localized/varied to the laws of each of the several United State as to be beyond the ken of most bankruptcy lawyers and equally so for most divorce specialists…cross disciplinary expertise must often be sought to answer these questions.

However, it is clear that the lawyer who is competent is not thereby necessarily zealous.  Zealous representation, which is not defined in the RPC, serves for most as the benchmark for excellence. Perry Mason may not have had all it its legal points correct but it does stand in the eyes of the public as the more dinified epitome of this attribute. For those who consider law practice more a profession than a business, it evokes the image of a crusader for justice. To others, however it suggests a fanatical, “no-holds-barred” advocate, willing to do anything for a client (for a fee). A hired gun… Have gun, will travel. 

Thus, being overly “zealous” clearly can land a lawyer in deep trouble.  Some attorneys have attempted to use it to justify unacceptable conduct even though it may have disciplinary or malpractice liability consequences (or both).  For example, we bankruptcy lawyers frequently are asked clients for advice on what might be called “pre-bankruptcy asset protection planning.”  While the ethical dangers associated with advice in this area are very real [See, for example, Ohio Rules of Professional Conduct (“ORPC”) Section 8.4(c), prohibiting a lawyer from engaging in conduct involving fraud], the consequences can reach beyond the realm of ethics and involve actual criminal liability for both transgressing client and counsel. This will reach to knowingly assisting a client who wishes to perpetrate a fraud on the bankruptcy court.  See my blog on the topic of Bankruptcy Fraud for more information. For example, in a recent West Virginia case a bankruptcy lawyer was criminally indicted for advising his clients to transfer a mobile home to a relative before bankruptcy so as to attempt to “remove” the asset from the reach of the Trustee in Bankruptcy.

Thus while lawyers clearly have an obligation to advance their clients’ cases with competence and enthusiasm, they also have an obligation as officers of the bankruptcy court they serve to refrain from knowingly counseling or assisting a client to commit a crime or fraud. RCP 1.2 (d).

Picture credit: Wikpedia:  http://en.wikipedia.org/wiki/Have_Gun_%E2%80%93_Will_Travel

Law Offices of Christopher C. Carr, MBA,  P.C., is a quality bankruptcy and debt relief practice, located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Christopher Carr, a Chester County bankruptcy attorney, who has over 30 years if diversified ;egal experience, concentrates on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester,  Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!  


I also provide Mortgage Modification Services.

©Christopher C. Carr, Attorney at Law 2012, All Rights Reserved

Picture credit: Wikpedia:  http://en.wikipedia.org/wiki/Have_Gun_%E2%80%93_Will_Travel

How Do Creditors Manage to Find Debtors with Such Seeming Ease?

By Christopher C. Carr, Esq. Chester County bankruptcy attorney.

One of the prime indicators that someone may need to file bankruptcy is when they start to get bombarded by calls and letters from creditors.

Well, just how do creditors manage to locate debtors? Especially in our mobile society where that have moved to a different city or even state, with no forwarding address.

  1. Social Media: Think creditors (and others) are not monitoring the information you post publicly?  Think again, virtually any information you might post, such as where you work, live, shop, etc., can unwittingly provide vital clues as to your whereabouts.
  2. Credit Card Applications: This is one of the most fruitful resources for your creditors. Not only is your residential address and contact information listed, so are references, contacts and acquaintances that creditors can use to track you down if you have relocated. Banks, credit references or relatives may also be detailed on the application and these also can provide promising leads.
  3. Relatives, Friends, Acquaintances, Neighbors, Etc.  These types of contacts are still acceptable if done properly. Collection agents may contact any number of people to get information on you, though there are some restrictions as to how/when they can do this under the Federal Fair Debt Collection Practices Act (FDCPA) and correlative state laws regarding debt collection, such as Pennsylvania’s Fair Credit Extension Uniformity Act.
  4. Self supplied information such as Phone Numbers. If a collection agency has or obtains your phone numbers, they may be able to then get your address using a reverse lookup. This is one reason why creditors will so frequently ask if they can add a phone number to your information on file.
  5. Voter Registration Forms: Any time you register to vote in a new area, that information can potentially be accessed by your creditors. Even if you move, your old county retains these records.
  6. Department of Motor Vehicles: These records are available to registered collection agencies in many states across the country. So when you get your license and register your car  in that new state, you may be automatically giving them the information they need to find you.
  7. USPS Change-of-Address forms: Many major credit agencies receive change of address forms when you move from your previous location. They may also take the initiative to check with the post office themselves.  Obviously, this is one of the best ways for creditors to track you down because you thereby tell them exactly where you are going.
  8. Skip Tracers:  Creditors also employ skip tracers.   These are professionals whose job it is to locate a person’s whereabouts for any number of purposes. The term “skip” refers to the person being searched for, and is derived from the idiomatic expression “to skip town”, meaning to depart (perhaps in a rush), leaving minimal clues behind to “trace” the “skip” to a new location. Records that “skiptracers” use may include phone number databases, credit reports (including information provided on a loan application, credit card application, and in other debt collector databases), job application information, criminal background checks, utility bills (electricity, gas, water, sewage, phone, Internet, and cable), social security, disability, and public tax information.  Much of this information is not available or not easily obtainable by the general public or comes from data bases that are not widely known.  Source: Wikipedia: http://en.wikipedia.org/wiki/Skiptrace

Once credit agencies do locate a debtor, their contacts are supposed to be in conformity with the Federal Fair Debt Collection Practices Act (FDCPA) and correlative state laws regarding debt collection, such as Pennsylvania’s Fair Credit Extension Uniformity Act (PFCEUA), both of which prohibit debtor harassment.  (The PFCEUA extends the requirements of the FDCPA to direct creditors.) However, many collectors are now evading the law by setting up shop in foregn countries and then calling in to the US.

©Christopher C. Carr, Attorney at Law 2012, All Rights Reserved

Law Offices of Christopher C. Carr, MBA,  P.C., is a quality bankruptcy and debt relief practice, located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Christopher Carr, a Chester County bankruptcy attorney, who has over 30 years if diversified ;egal experience, concentrates on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester,  Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!  

I also provide Mortgage Modification Services.

WHAT YOU NEED TO KNOW ABOUT CHAPTER 7 BANKRUPTCY

By Christopher C. Carr, Esq. Chester County bankruptcy attorney.

WHAT IS CHAPTER 7 BANKRUPTCY?

Lucky Number 7 by ganesha.isisThe avowed goal of bankruptcy is to give debtors a “fresh start.” What is a Chapter 7 bankruptcy and how does it go about accomplishing this? The “automatic stay” in bankruptcy applies immediately once a Chapter 7 case is filed and generally halts all collection activities, foreclosures, repossessions, sheriffs’ sales, and etc. while in effect. Let’s first look at the different types of bankruptcy proceedings.

The United States Bankruptcy Code offers two primary paths for consumers:

  • A Chapter 7 Bankruptcy: In a so called “straight” bankruptcy, the Trustee in bankruptcy seeks to liquidate the debtor’s non exempt property and distribute the proceeds to the creditors in order of priority, in exchange for discharge of all eligible debt. (Exemptions for various property classifications are set out in federal and state law.) However, certain debts such as guaranteed student loans and domestic support obligations are non-dischargeable in bankruptcy. Most 7’s are “no asset” bankruptcies.

Certain higher income debtors who do not meet the new Means Test must instead file a Chapter 13 Bankruptcy. If you think you might be a candidate for a 13, you might wish to visit my article on the topic.

  • A Chapter 13 “debtor in possession” Bankruptcy: Here, unlike in Chapter 7 proceedings, the debtor retains possession of the assets (hence its nickname). In order to be confirmed by the court, the debtor must prove sufficient income to support a 3-5 year plan wherein payments on secured debt such as mortgages and auto loans (including arrears) and non-dischargeable items continue and unsecured creditors typically get paid a small portion of their debts. For debtors facing mortgage foreclosure, Chapter 13 may be the only choice to halt the process while seeking other remedies within or outside of bankruptcy. However, recent statistics indicate that only about 35% of all 13 plans are ever completed.

There are overall limits as to how much unsecured and/or secured debt a debtor may have and still utilize Chapter 7 or 13.  For those who do not qualify, there is only one option:

  • Chapter 11, a third type of Bankruptcy, is primarily used to help in debt businesses restructure. An example is the bankruptcy from which GM has successfully emerged with the help of a massive US bailout. It is much more complex, time consuming and expensive than Chapter 7 or 13, but is the sole resort for individual debtors with debt which exceeds the limits mentioned above.

Other than consumer perceptions that bankruptcy is somehow unethical or “wrong”, the primary issue with filing bankruptcy is that it remains on the debtor’s credit for up to 7 (Chapter 17) or 10 years (Chapter 13) from filing and may interfere with efforts to obtain credit, purchase or refinance a home or even obtain employment. However, it should be noted that most who seek this relief already have impaired credit and, more importantly, in reality new credit is generally extended to debtors who keep their payments current for a year or two following discharge. So, in effect bankruptcy can work to “repair” credit.

In summary, the automatic stay provides an effective if temporary refuge from foreclosure and other debt collection activities and many debtors ultimately do obtain the permanent solution to their debt problems, the “fresh start” which is the ultimate objective of the US bankruptcy laws.

©Christopher C. Carr, Attorney at Law 2009, All Rights Reserved

Law Offices of Christopher C. Carr, MBA,  P.C., is a quality bankruptcy and debt relief practice, located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Christopher Carr, a Chester County bankruptcy attorney, who has over 30 years if diversified ;egal experience, concentrates on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester,  Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!  

I also provide Mortgage Mod Services.

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N is for Negative Impact of Bankruptcy on Credit and How to Overcome it.

N by procsilas in Bankruptcy is for the Negative Impact of Bankruptcy on Credit and How to Overcome it.

By Christopher C. Carr, Esq. Chester County bankruptcy attorney.

Most people are aware that filing bankruptcy can hurt their credit and it is well known that this can take its toll for up to ten years. But then why is it that the credit card apps start arriving again just a few weeks after a discharge in bankruptcy? Is it really true that a bankrupt is doomed to being deemed uncreditworthy for ten years? We will explore these questions below but first a bit of background.

The information contained within your credit report is generally governed by the Fair Credit Reporting Act. This federal law specifies how long a bankruptcy can appear on your credit report. This in turn varies based on type of bankruptcy as well as disposition of the case. Chapter 7 and 11 bankruptcies will appear on the report for up to 10 years from the filing date. Non-discharged or dismissed Chapter 13 and 12 bankruptcies also appear on a credit report for up to 10 years. Discharged Chapter 12 and 13 bankruptcies can remain on the report for up to seven years.

Does this mean that your credit will be impaired for 7 or 10 years? Does it mean you will not be able to purchase critical items on credit?    Certainly not, at least for the debtor who learns from past errors.

Note that the period starts running from the date of filing not discharge so, for example, if you filed a a Chapter 13 bankruptcy petition 4 years ago and completed a 3 year plan 6 months ago, you only have three years to go. And during this time, you will, with persistence, be able to get credit for the things you really need (see below.)

You can begin to rebuild your credit rating immediately upon the date of your discharge order.  In a Chapter 7 this will be granted 3-4 months after your petition is filed, typically.   If you are in a Chapter 13 your plan payments will be reported even while still in bankruptcy.

Don’t even think about hiring a “Credit repair” agency. The money you might pay them can actually be used directly to repair your credit in the one way the experts agree really works.  The crucial thing you can do to rebuild your credit quickly and at no added cost is to pay all your bills on time. No exceptions.  It is not uncommon to see former clients who have rebuilt their ratings within 2 to 3 years after a bankruptcy. Their secret?  They paid their mortgage and car loans ON TIME and didn’t miss a payment. Some ideas: Send the checks EARLY in case the mail is delayed. Set up an emergency fund, perhaps in a short term CD, say with your tax refund to give yourself the “float” needed to make the payments in case you are short one month and then replenish it in flush months. Have the mental discipline to reserve it just for this purpose! If worse comes to worse, borrow against your IRA, 401K at work, life insurance policy  or pension.

As an example, a recent Chapter 7 client finished his case; obtained his discharge order and exactly 30 months later (2 years and 6 months), purchased a new home and obtained a competitive mortgage rate for a 30 year fixed mortgage.

You will be able to get a new credit card after your bankruptcy case has been completed.   It is true that you are likely to be rejected once or twice, but you should be able to obtain approval for a small credit card as long as you are persistent. Your best bet may be to talk to that friendly bank manager you have known for years. And you may need to ask more than once.

There are also ways to surrender that car you are driving now and its high rate loan and purchase a new car even while in bankruptcy, believe it or not.  You will pay a somewhat higher interest rate but rates are at historically low levels now anyway.

You will also be able to obtain student loans, for yourself or for a child, the Bankruptcy Code (11 U.S.C. Section 525) specifically prevents the government from discriminating against individuals on the grounds that they have filed for bankruptcy relief.  I have yet to hear of anyone being denied a student loan on bankruptcy grounds.

There are in addition certain “tricks of the trade” that a competent and compassionate bankruptcy attorney can impart to you once you have retained him or her which will speed up the process of restoring your credit even further.   Be sure to ask!

In conclusion, your payment history will be crucial after (and in a Chapter 13 even during) a bankruptcy discharge, because prospective lenders really will  be looking  to see that you have paid attention to the mandatory debtor counseling sessions and have well and truly learned the lesson of how to use credit responsibly. It often will be easier to rebuild credit after a bankruptcy discharge because you will no longer have debts that hopelessly exceed your credit limits.  In this way and in general (certainly, not in every individual case) over the long haul, the consumer bankruptcy laws prove their worth. This writ large then is why the “fresh start” offered to debtors by our system of bankruptcy is a necessity to a healthy capitalistic system.

Law Offices of Christopher C. Carr, MBA,  P.C., is a quality Chester County Bankruptcy Practice, located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Carr, who has over 30 years if diversified experience as an attorney, concentrates his practice on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester,  Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!


I also provide Mortgage Modification Services.

©Christopher C. Carr, Attorney at Law, 2011, 2012, All Rights Reserved.

Other Bankruptcy Lawyers writing on the letter N include:

California Northern Bankruptcy Court  Marin County Bankrupttcy Lawyer, Cate Eranthe http://marin-bankruptcy-law.com/803/bankruptcy-a-to-z-n-is-for-california-northern-bankruptcy-court/ NACBA Wisconsin Bankruptcy Lawyer, Bret Nason http://nasonlawfirm.com/archives/813 Naked New York Bankruptcy Lawyer, Jay S. Fleischman http://www.consumerhelpcentral.com/bankruptcy-alphabet-naked/ Negative Notice Jacksonville Bankruptcy Attorney J. Dinkins G. Grange http://jacksonville-bankruptcy-grange.blogspot.com/2012/02/n-is-for-negative-notice-local-rule.html Never Cleveland Bankruptcy Attorney William Balena http://ohiobankruptcysource.com/?p=2418 No Asset Metro Richmond Consumer and Bankruptcy Attorney, Mitchell Goldstein http://www.morethanbankruptcy.com/bankruptcy-a-z-n-is-for-no-asset-case.html No Asset Report Honolulu Bankruptcy Lawyer, Stuart T. Ing http://www.bankruptcyhi.com/2012/01/n-is-for-no-asset-report/ Non-exempt Property Miami Bankruptcy Attorney, Dorota Trzeciecka http://dorotatrzeciecka.com/2012/02/05/bankruptcy-a-z-n-is-for-non-exempt-property/ Nondischargeable Metro Richmond Consumer and Bankruptcy Attorney, Mitchell Goldstein http://www.morethanbankruptcy.com/bankruptcy-a-z-n-is-for-nondischargeable.html Nondischargeable Northern California Bankruptcy Lawyer, Cathy Moran http://www.bankruptcysoapbox.com/bankruptcy-alphabet-n-for-nondischargeable/ Nondischargeable Debt Omaha and Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell http://bankruptcyblog.caldwell-lawfirm.com/2011/11/16/bankruptcy-alphabet-n-is-for-nondischargeable-debt.aspx Notice Colorado Springs Bankruptcy Attorney Bob Doig http://springsbankruptcylaw.com/?p=1227 Notice San Francisco Bankruptcy Attorney, Jeff Curl http://www.jclawgroup.com/blog/bankruptcy-alphabet-n-is-for-notice/ Notice Taylor, Michigan Bankruptcy Attorney, Chris McAvoy http://downriverbankruptcy.com/n-for-notice-creditors/#axzz1mtGwtQjh Notice of Rights to Claim Exemptions Charlotte Bankruptcy Attorneys, Collum & Perry http://www.collumperry.com/firm-news/notice-of-rights-to-claim-exemptions Numbers and New Bankruptcy Laws Los Angeles Bankruptcy Attorney, Mark J. Markus http://www.bklaw.com/bankruptcy-blog/2012/03/numbers-and-new-bankruptcy-laws/ Non-Attorney Bankruptcy Livonia Michigan Bankruptcy Attorney, Peter Behrmann http://www.livoniamichiganbankruptcy.com/n-is-for-non-attorney-bankruptcy-livonia-michigan/