It is ALWAYS important to know your financial position. Your Consumer Credit Report is where others find out information about you. It lists your creditors and other information about you (and more times than not, it is WRONG!). If you're not certain who might be listed as a creditor, you should get a copy of your report. Everyone is allowed one free credit report per year (click on the link above). Otherwise, the cost is $8.50 for a copy (unless you have been denied credit within 30 days based on their report), and it is available immediately on-line (Experian, Equifax and Trans-Union) or through regular mail. When you receive/view your copy, you may forward it to us (1) to ensure all of your creditors are listed, should a bankruptcy be necessary in your case, (2) for an explanation of the comments/codes used, and (3) for information on how to correct mistakes. NOTE: a Consumer Credit Report sent to us for evaluation/bankruptcy creditor inclusion will NEVER be shared with anyone and is considered confidential information.

Three main companies provide Consumer Credit Reports. You should only need one. Experian should be your first choice, but it really doesn't matter.

• Get your Credit Report from Experian.
• Get your Credit Report from TransUnion.
• Get your Credit Report from Equifax.

• Click Here to get your credit report.
• Click Here FOR INFORMATION REGARDING CREDIT 
  COUNSELING AND DEBTOR EDUCATION REQUIREMENTS!!
• Click Here for an explanation of a Chapter 7 Bankruptcy.
• Click Here for an explanation of a Chapter 13 Bankruptcy.
• Click Here for an explanation of Discharing Personal Taxes in Bankruptcy.
• Click Here for an explanation of the "Creditor's Meeting."
• Click Here for an explanation of a Discharge in Bankruptcy.
• Click Here to be transferred to SPRINGBOARD -- an approved provider of the Credit Counseling Requirement (not affiliated with bankruptcyfacts.info).
  
  
  Remember: You MUST have a Credit Counseling Certificate (CCC) prior to filing your case. It only takes a bit of time on the phone or Internet, so click above to get your CCC with Springboard, or feel free to use any other United States Trustee approved Agency such as Abacus, etc.

EXACTLY How does a bankruptcy work? First, you need to click on the "pdf" icon above to download the information questionnaire. Fill it out as completely as possible, including obtaining copies of all requested information. Next, either call for an appointment and bring (or mail, if you prefer) the completed questionnaire to the Law Offices of David A. Pomeranz, the legal staff who operate bankruptcyfacts.info. The information is processed and entered into a computer program, then printed out for your signature. Once it is signed, it is electronically filed. Approximately thirty days after filing, you and your attorney will meet with a randomly appointed "Trustee" who will ask some basic questions. This is called a "Creditor's Meeting" though in practice, creditor's rarely attend. If there are no objections, motions, or adversary proceedings, etc., a Discharge is granted by the Court 8 to 10 weeks later. Not too complicated, right?

For most of us (consumers), filing a bankruptcy involves electing either a Chapter 7 (Liquidation) or a Chapter 13 (Reorganization). Businesses have those options, too, as well as a Chapter 11 Reorganization. The remaining Chapters are for Farmers, Railroads, Cities and Municipalities, etc.

Chapter 7 is the easiest and least expensive. It is where you eliminate your unsecured debt and retain your exempt assets. Chapter 13 is where you you repay your creditors a lower amount over a 36 to 60 month period. This option is good for those people who have too high an income or too many non-exempt assets for a Chapter 7, and for those behind in their mortgage payments or with recent taxes.

What about the BANKRUPTCY REFORM ACT OF 2005? Doesn't this law make it harder to file for Bankruptcy Protection?

Not necessarily. In fact, in data analyzed in June, 2005 of 5,964 bankruptcies, more than 85% of Chapter 7 filers had incomes below the State medians and thus would not be subjected to any means test. What does this mean? Most people who could file before the law can file after the law. There are some new requirements, however, and terms such as "state median" and "means test" come into play. Below is an easy to understand breakdown of the impact of the Law. It is important for everyone planning to file a Bankruptcy Petition to read this material.

INFORMATION ABOUT THE 2005 LAW:

Provisions in the 2005 Law to Discourage Abuse of the Bankruptcy System:

General Provisions:

• Discourages bad faith repeat filings by extending time allowed between discharges. The court will not grant a Chapter 7 discharge if the debtor received a discharge during the previous eight years (vs. six years). For Chapter 13 cases, the court will not grant a discharge if the debtor filed under Chapter 7, 11,or 12 during the previous four years or under Chapter 13 in the previous two years.

• Expands nondischargeable consumer debts to include debts owed to a governmental unit, more student loans, loan repayments to a debtor’s savings/retirement plan, fraudulent debts, tax debts to state or local governments, condominium homeowners’association fees, and fines and penalties under Federal election law.

• Provides a new definition of household goods for purposes of lien avoidance – Limited to one radio, one TV, one computer, and one VCR. Excludes motor vehicles, art not created by debtor/relative, jewelry worth less than $500 (exc. wedding rings).

• Homestead Exemptions:

Limits state homestead exemption such that the debtor may not exempt any interest acquired within 3.3 years of filing which exceeds the aggregate of $125,000, unless the value in excess of that amount occurs from a transfer of residences within the same state.

Reduces homestead exemption for fraud if debtor disposed of the property with the intent to hinder, delay or defraud a creditor.

• Denies automatic stay for repeat filings, unless made in good faith, and denies automatic stay for certain evictions.

• Establishes random audits for at least every 1/250 individual filings, as directed by the Attorney General.

Counseling Provisions:

The new law mandates a credit briefing for the debtor within the 180 day period preceding the bankruptcy filing, either by telephone or over the Internet, by a nonprofit credit counseling agency. The briefing will introduce the debtor to the services of credit counseling and assist with a budget analysis. The debtor is required to submit a certificate from the credit counseling agency describing the services provided, and may not obtain a discharge until completion of a personal financial management instruction course.

Greater Burden on Attorney to Verify Info. Greater burden is placed on the attorney to verify the debtor’s information, stating that the signature of an attorney on a petition shall constitute a certification that the attorney has performed a reasonable investigation into the circumstances that gave rise to the petition, pleading, or written motion; that the petition is well grounded in fact and is warranted by existing law; and that the attorney has no knowledge after an inquiry that the information in the schedules filed with such petition is incorrect.

About the Means Test:

Under the bankruptcy reform act, debtors who seek relief under Chapter 7 will be scrutinized more closely. The intent of the law is to force debtors with available means to repay some of their unsecured debts. Their ability to clear some of their debts will be determined by the so-called “means test.”

First comes the “safe harbor test.” The debtor’s monthly income, averaged over the previous six months, will be compared with the median income in the debtor’s state, taking into account household size. If the debtor’s income is at or below the state median, the debtor can file under Chapter 7.

The “means test” comes into play only if the debtor’s income is above the median. If these debtors were to seek relief under Chapter 7, a creditor could file a motion for abuse. The means test will be used to determine if the debtor has enough excess income to repay some unsecured debt, and if so, to file Chapter 13 instead.

The means test starts with the debtor’s monthly income and subtracts:

• Recognized local and national IRS standard expenses for food, clothing, utilities, car and housing.

• Secured debt that will become due in five years

• All priority debts

• A few other expenses in recognized categories, such as continued charitable contributions, education expenses, and continued care of a sick or elderly relative who is unable to pay the expenses of care.

The net amount after deducting these expenses is considered “disposable income.” In the simplest terms, the means test works this way:

• If the debtor does not have at least $100 a month excess income, he can file Chapter 7.

• If the monthly disposable income is between $100 and $166.67 for five years ($6,000-$10,000 total), and this amount is at least 25% of the debtor’s unsecured debt, he fails the means test and has to file Chapter 13.

• If the debtor has at least $166.67 excess income per month, even if this is less than 25% of his unsecured debt, he must file Chapter 13.

• And furthermore, Chapter 13 debtors with income above the median must submit 5-year plans, while those with incomes below the median may submit 3-year plans. For debtors with income above the state median, and who are therefore subject to the means test, the excess income calculated in the test becomes the monthly payment that goes into the Chapter 13 plan.

THE BOTTOM LINE: Our job is to know proper application of the Means Test, the State or Federal Exemptions, the nature of your financial situation as it applies to the Bankruptcy Laws, etc., so that you can stop worrying. Remember, credit is only good for one thing: getting more credit. Filing a bankruptcy case will discharge debts by operation of law, so your debt to income ratio is reduced, thus actually starting to restore your credit immediately upon filing! Please allow us to show you how we can help.

I encourage you to call me anytime at (619) 741-3775 or contact me by email at bklawyer@cox.net. I look forward to serving your needs.

...David A. Pomeranz, Esq.