Filing for Chapter 7 bankruptcy can be stressful enough, but then your Colorado bankruptcy lawyer informs you that you must attend something called a "Meeting of Creditors" before your debts can be discharged? That might be enough to make you wonder what you got yourself into. Good news! There is no reason to fear this hearing when you have an experienced bankruptcy attorney by your side.
What is a Meeting of Creditors?
When you file for Chapter 7 bankruptcy, the meeting of creditors is a short court proceeding where the bankruptcy trustee and your creditors can ask you questions about your finances and the information you supplied in your petition while you are under oath. This meeting, which is also known as a 341 hearing, is essential in determining whether the papers you filed are accurate and complete.
Who Will Be at Your Chapter 7 Meeting of Creditors?
Typically, the Chapter 7 bankruptcy trustee will moderate the meeting of creditors, which means there will be no judge present. In fact, most Chapter 7 bankruptcy filers don't see a judge unless they are facing an objection or reaffirming a debt. In any case, all of your creditors will be invited to attend this meeting but they rarely show up. This is because creditors have a very short period of time in which they will be allowed to ask questions so they don't benefit much from being there. However, if a creditor has reason to believe you are hiding assets or committing another form of bankruptcy fraud, they may show up to present such evidence.
What Happens at the Meeting of the Creditors?
In most cases, you will only be examined by the bankruptcy trustee, but remember, your meeting of creditors is open to the public and several hearings are held within the same time period so you may have other debtors observing your hearing as they await their case.
When your case is called, you will go before the desk of the trustee to be examined under oath. You will be asked to provide the trustee with your full name and provide identification as well as your social security number. Since Chapter 7 bankruptcy authorizes the court to sell your nonexempt assets, most of the trustee's questions will focus on these assets.
After the trustee questions you, your creditors are allowed to examine you as well. If a creditor comes to the hearing, you may be asked about the nature or location of your assets; however a creditor will not be allowed to conduct a lengthy investigation at this meeting.
After the trustee and creditors have finished their examination, the trustee will conclude your hearing. Unless the trustee requires more information, you won't have to come in for another hearing like this. You can expect to receive your discharge once all the other requirements are satisfied.
If you have more questions about the process of filing Chapter 7 bankruptcy in Colorado, schedule a consultation with a Colorado Springs bankruptcy attorney.
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This may be one of the most common questions I hear as a Colorado bankruptcy attorney, "Can I keep my house if I file Chapter 7?" But the answer isn't always so simple. In Colorado, keeping your home after Chapter 7 bankruptcy will depend on your answers to three questions. Do you really want to keep it? Do you have any equity in the home? And are you current on the payments?
Deciding whether you want to keep your house may be difficult, but if you owe more than it is worth it might not be an asset worth saving. Also, if your interest rate is too high or the house needs a lot of work it might be more than you can afford to keep. Some Colorado filers find they are better off letting it go in the bankruptcy and buying another home a few years down the road. The good news is that in Colorado, you can almost always keep your home if it makes financial sense to do so.
Secondly, the trustee in your bankruptcy case will want to know if you have any equity in the home. If the house is worth more than you paid for it, then you have equity. If you have equity, the trustee will determine if you have more equity than what is protected under the state's exemption statutes. These are the laws that determine what you get to keep in a bankruptcy. Unless you have exempt equity, the trustee is not going to come after your home. However if you have non-exempt equity there are some steps that can be taken to minimize it. This will be a topic for discussion with an experienced Chapter 7 bankruptcy lawyer.
Finally, if you are behind on your mortgage payments at the time of filing, your lender could either demand that you get caught up immediately or they could ask the court for permission to foreclose. This causes some risk and it might be better not to leave this decision up to the mortgager. When you speak with a bankruptcy attorney, find out if it makes more sense to get caught up before filing Chapter 7, or if a Chapter 13 bankruptcy makes more sense. Chapter 13 allows you to repay arrears on a mortgage over a three to five year period.
One of the benefits of filing for Chapter 7 bankruptcy in Colorado is how it wipes out all of your dischargeable debts. This will include not only credit cards and medical bills, but also the debt you still owe on your home and automobile. While you may no longer owe money on your home, keeping your home after bankruptcy will largely depend on you. Below are three common options for handling your home after a bankruptcy.
Reaffirm: This process allows the petitioner to request that the judge waive the discharge of a specific debt. With a mortgage or home-equity line of credit (HELOC), you agree to continue making payments on the house as agreed. As long as you continue to do this, the mortgagor cannot foreclose. However, if you become unable to pay, the lender can not only foreclose, they can sue you for the difference between what you owe on the home and what they sell it for at auction. One of the advantages to signing a reaffirmation agreement is it allows you to rebuild your credit score faster after bankruptcy.
Stay and Pay: This means you will continue paying the mortgage without a reaffirmation agreement. Essentially, this means you are paying a debt you no longer owe, but it keeps the lender from foreclosing because they are still receiving payments. Once you have paid the full amount that was owed before the bankruptcy, the lender signs the title over. This is a popular option because it even allows you to sell the property, but refinancing is impossible since there is no current debt left on the note. Along these same lines, if you were to go into foreclosure the lender cannot sue you for a deficiency.
Surrender: If you decide not to keep your home, or you don't feel that signing a reaffirmation agreement would be wise, you may simply hand the keys over to the lender and walk away. Chapter 7 bankruptcies free you from any associated debt with regard to your home, so there is no threat of the lender coming after you later on.
If you plan to file for bankruptcy in Colorado Springs you will no doubt meet with an attorney who will walk you through all your options, but most people want a little preview before they visit a law office. Unless you've been through the bankruptcy process before it's likely you have a long list of questions, such as "will I go to court?" or "will I be able to keep my house?"
In an attempt to prepare for the inevitable it is better to seek the advice of an experienced bankruptcy lawyer and avoid the temptation to just "Google it." While there is plenty of data available about different types of bankruptcy, few online sources will accurately summarize what to expect/
Below are five things you can expect when filing for bankruptcy in Colorado:
1. You will have to go to court. Before you start worrying about a long, drawn-out court process, in most cases you will only need to attend one hearing, known as the "meeting of creditors." This is a short and simple hearing where the trustee will ask you a few very basic questions. Creditors are also allowed to attend and ask questions but they must abide by certain state bankruptcy guidelines.
2. Your case will be complete within 4 to 6 months from the date of filing. This doesn't mean you should just go ahead and file right away. While bankruptcy can be very helpful in resolving financial woes, it is not always the best solution for everyone. In addition, it's important to choose the right time to file for bankruptcy relief. Most experts recommend you wait as long as possible to file because you can only do so one time every six years. Saving this option until you absolutely need it, but you may not even need to file. For example, if you have no "non-exempt" property or wages, there is nothing that the creditors can take from you.
3. There are some very specific things that bankruptcy can do. One of the most important things is the "discharge" or elimination of debts. It can stop a home foreclosure and allow you to catch up on missed payments, and it can stop the repossession of automobiles or other property, sometimes even forcing a creditor to return property that has already been repossessed. If your wages are being garnished or a creditor is harassing you for payment, filing for bankruptcy will put a stop to that right away. It can also prevent the termination of utility services.
4. There are some very specific things that a bankruptcy can't do. One of these is the discharge of debts that arise after the bankruptcy filing. It also cannot eliminate certain rights of secured creditors, particularly with car loans and a home mortgage, which means payments must be made on a regular basis in order to retain ownership of the property. In addition, certain types of debt are never discharged in a bankruptcy. These include alimony, child support, most student loans, criminal fines or restitution, and most taxes.
5. You will need to decide between Chapter 7 and Chapter 13 bankruptcy. It's not enough to show up a bankruptcy attorney's office and just "file for bankruptcy." You must know the differences between Chapter 7 and Chapter 13 as well as which one you prefer. Below is a description of each type of bankruptcy.
Is bankruptcy an option for you? Only you know the honest state of your finances and whether you are being threatened with foreclosure, repossession or garnishment. Bankruptcy is a great way to proactively deal with these problems, but everyone's situation is different. If you have questions about filing bankruptcy in Colorado, talk to a professional bankruptcy attorney at the Colorado Springs law offices of Stephen J. Swift.
Photo Courtesy of Ponsulak / FreeDigitalPhotos.net
According to federal law and the United States Bankruptcy Court, the rules concerning personal bankruptcy in Title 11 were passed by Congress in accordance with its Constitutional grant of authority. While states may pass laws that govern other aspects of a debtor-creditor relationship, they may not regulate bankruptcy itself. It is important to understand this as so many individuals are uninformed about bankruptcy laws.
If you are considering filing for personal bankruptcy, you will only need to be concerned with two types – Chapter 7 and Chapter 13. While it's certainly not required that people use an attorney, it is usually best to seek legal advice at some level and preferable to let a lawyer handle everything. Bankruptcy is one of those things that could be very costly if not done properly. In other words, the cost of your mistakes could far outweigh an attorney's fees.
Most bankruptcy lawyers will tell you; consider any realistic alternatives before filing for bankruptcy, such as reducing your debt or paying your bills. Filing for bankruptcy will be an irreversible step that will have a long term impact on your creditworthiness.
What are the two types of personal bankruptcy?
Chapter 7 and Chapter 13 are both named after the numeric title of its corresponding statute in the U.S. Bankruptcy Code.
Chapter 13 Bankruptcy
When one files under Chapter 13, it is possible to keep some property that might have otherwise been liquidated in a bankruptcy. It also allows you the chance to reduce the amount you pay toward your debts. Whenever possible, a Chapter 13 bankruptcy should be considered before any other type of bankruptcy.
The requirement for Chapter 13 bankruptcy is that the amount owed cannot exceed $250,000 in unsecured debt or more than $750,000 in secured debt. These limits were expanded in 1994, allowing Chapter 13 accessible to be more accessible to individuals.
Unsecured and Secured Debt
Unsecured debt, also known as "uncollateralized debt" includes credit card debt, medical bills and signature loans. When preparing a reorganization plan, your unsecured debt will be the lowest priority for payment.
Secured debt, which is often called "collateralized debt," is secured with the property itself, such as the house, car, boat or other big-ticket item. When a debtor defaults on secured debt, the lender can seize the property to recover what is owed.
How does Chapter 13 work?
Chapter 13 requires you to repay your debts over three to five years. You must begin paying on the plan 30 days after you file the petition with the court. It is customary for the petitioner to make one monthly payment to a trustee, who then distributes the funds to their creditors according to a payment schedule.
Chapter 7 Bankruptcy
When a person files for Chapter 7 bankruptcy protection, most of their debts are wiped out and will never have to be paid. However, once a Chapter 7 bankruptcy is filed one cannot file again for six years.
In Chapter 7 bankruptcy, petitioners provide the court with a full list of debts and a complete list of everything they own. They may also be required to answer questions about past financial dealings. Certain property is exempt and allowed to be kept by law but the trustee has the right to liquidate everything else, the proceeds of which are applied to repay debt.
For property that is excluded from liquidation, one must still purchase pay "purchase-money liens" or contractual payments in order to keep the car or house.
Which debts are not discharged in Chapter 7 bankruptcy?
While most of your major debts will be eliminated in a Chapter 7 bankruptcy, it may be impossible to get a fresh start from everyone.
Exclusions may include debts not listed on the petition, debts incurred by fraud, alimony or child support payments, or debts incurred from damages that occurred while intoxicated or in the course of a violent crime. Certain educational loans may also be excluded, as well as most types of taxes and debts from a prior bankruptcy. Some consumer debts may not be forgiven as well, such as purchases for more than $1,000 of luxury goods or services that were incurred within 60 days of a bankruptcy petition.
As you can see, it helps to know which type of bankruptcy is right for your situation. If you have questions about filing a petition for personal bankruptcy, consult with an experienced Colorado bankruptcy lawyer.
We've heard a lot in the course of our country's economic recession about how families have been affected: lost homes, lowered wages, unemployment, etc.
Colorado Springs Chapter 7 bankruptcy lawyers understand that any one of these things can cause a great deal of financial strain, but it's even tougher when you're trying to cope alone.
In fact, single people face more financial stresses than couples, according to a new report from the MetLife Mature Market Institute and the Society of Actuaries. In particular, women have an especially tough time when it comes to retirement savings.
A big part of it is simply coping with a single income. Married couples may have more expenses overall, but they can fall back on one income or the other if there is an unexpected financial crisis.
On average, singles have a lower income rate than any other family grouping in the country. On average, singles make about $32,000 a year and have asset levels that stand around $110,000. Their homeownership rate is currently only at slightly above 40 percent, and less than 20 percent said they were on track for an adequate retirement savings fund. Also, only about 20 percent of singles said they had even had the chance to START saving for retirement, and many worried that their standard of living was likely to drop of dramatically after retirement.
The study further found that couples were far more likely than their single counterparts to pay off debt or have met with a professional to help them map out their finances.
This is all particularly concerning because the population of singles is growing fast. The Census Bureau reports that between 2000 and 2010, the number of single-headed households shot up by about 15 percent (equaling more than 30 million nationwide).
The good news is that if you do get caught up in a personal debt crisis, a Colorado Springs bankruptcy can give you a clean financial slate.
One benefit to being single during the process is that you don't have to worry about jointly-held debts, as is often a concern with couples or recently-separated individuals.
A successful bankruptcy is unrivaled in terms of the freedom it offers, and we are here to help you obtain it.
A Colorado Springs bankruptcy is generally the result of circumstances beyond one's control: divorce, lay-off, medical crisis, etc.
However, our Colorado Springs Chapter 7 bankruptcy attorneys recognize that almost everyone can benefit from delving into their financial habits and breaking a few bad ones.
This is especially important for people after they have had a bankruptcy discharge, as this will be key to re-establishing credit.
Some of the biggest bad money habits include:
Many people wonder about every detail: What about the car? My antiques? My jewelry?
The answer is somewhat complex because every situation is different. The best way to get a gauge on what you can protect and what you can't is to consult with an experienced bankruptcy attorney who can help you analyze your individual situation, along with the laws that apply uniquely to Colorado residents.
That said, it's highly likely that your creditors aren't going to want to take the coat off your back or the ring off your finger. Unless you had a fairly sizable and expensive collection of jewelry, it's probably safe.
People may mistakenly think that they can protect these items by transferring them to family members prior to filling them. Not only could this be detrimental to your bankruptcy, it's illegal. The court wants to be able to consider all your assets when determining how the case will be handled. It doesn't want you shedding yourself of bad debt while hanging onto valuable assets. It's probable that if you have a vehicle that's paid off or an heirloom necklace that your attorney is going to be able to protect those items from creditors in a Chapter 7. However, if you start giving away or selling those things to friends or relatives, there's a strong likelihood that they might not be protected.
You'll also want to be mindful of taking out any large cash advances just prior to filing. For example, if you know you're going to be filing for bankruptcy and you go on a shopping spree with your credit card just a few weeks before, the bankruptcy trustee is going to see that. It is generally considered fraudulent and not only might you have to return those items if possible, but it may hurt your chances for a successful bankruptcy.
Likewise, you can't make payments to family just before you file. Family members and close friends to whom you owe money are considered creditors like anyone else, and you can't show favortism in this regard.
Bereaved family members have enough to contend with when someone passes away without having to shoulder the burden of left-over debts.
You should know that you aren't responsible for debts that weren't in your name or that you did not co-sign for. That doesn't mean widows and widowers especially won't suffer a financial blow.
Here are some things you need to know:
The credit card companies and other creditors have the right to collect their payments from the deceased person's estate. If it's a secured debt, such as a vehicle payment, the vehicle may be repossessed and resold, with the remaining balance, if there is any, billed to the estate.
However, if there is not enough to cover the debt from the estate, creditors are generally out of luck, and must eat that cost.
If it's unsecured debt, such as a student loan, creditors can still collect the remaining balance from the estate.
Of course, this may affect any beneficiaries of the estate as the amount they can collect will dwindle based on the debts owed. However, beneficiaries won't be held responsible for the remaining balances on bills if the estate won't cover it.
However, there are some exceptions. If your spouse passes away and you had multiple joint accounts, joint debts or had co-signed for some of those debts, you can still be held responsible for the entire amount. This is often a harsh reality when spouses die, particularly because your income has effectively been halved (or more) by your loss, but your expenses haven't decreased.
You may be able to offset some of that cost through any life insurance policies you may collect, but that may not cover everything.
This is why many widows and widowers end up filling for Chapter 7 bankruptcy in the wake of a death, particularly if the deceased was the primary wage-earner for the family. Adjustments must be made in your monthly costs in order for you to get by. Sometimes, the only way to get rid of that debt is to have it erased in a bankruptcy.
There's no doubt you've heard the phrase, "Bankruptcy should be a last resort."
For people who are in relatively good financial shape, that's probably a good mantra to keep. The whole idea of bankruptcy is not to make it easy for people to avoid debts they can easily pay off.
However, Colorado Springs Chapter 7 bankruptcy attorneys know that for people who are struggling with mountains of debt, waiting to file until you're out of all other options can be dangerous, and the reasons are numerous.
Often, we see clients who have dragged their financial burdens on far longer than was necessary - because they were seeing bankruptcy as the last option.
But the fact is, you save yourself an enormous amount of stress and further financial trouble by exploring it as an option sooner.
By not doing so, first of all, your health is likely to suffer. We have worked with countless clients who had become physically ill as a result of their financial woes. Not only is their stress high, but they don't sleep. Some drink alcohol or overeat or chain smoke. Others suffer from depression. The bottom line is it's not a healthy way to live your life.
Secondly, it's highly possible that you'll end up making some costly, and maybe even irreversible, financial mistakes. This is easy enough to do. For example, some people cash out their retirement in order to pay off their credit cards, only to later realize they'll have to file for bankruptcy anyway. They'll never get that retirement money back, and the credit card debt would have been forgiven.
Thirdly, you may think you don't need to file because you're treading water with your finances. But the fact is, that's all you're doing, and without the relief that bankruptcy provides, you won't get any farther. That means you won't ever be able to save up enough for retirement or pay off your student loans or have any savings cushion. Again, it's not a healthy way to live your life - and you have options.
A nationwide drought that has prompted authorities to declare a natural disaster in 1,000 counties in 26 states (including Colorado) has left many farmers abandoning acreage, filing insurance claims and, in some cases, contemplating bankruptcy.
Our Colorado Springs Chapter 7 bankruptcy lawyers know that while this drought is currently affecting farmers and those in the agriculture business, it won't be long before food prices start to soar, which will inevitably affect everyone.
When even basic expenses like food become difficult to afford, many people will be forced to choose between continuing to pay down existing debts and eating. For most, that isn't a choice at all.
A Chapter 7 bankruptcy can help by allowing you to unburden yourself from those existing debts, particularly if you are so deep you have little hope of ever being able to repay it anyway.
According to officials, this is the worst drought to slam the country in nearly 25 years.
In addition to farmers, reports indicate that restaurants, the boating industry and others will be affected as well.
So far, the U.S. Department of Agriculture has approved roughly 280 disaster loans relating to the drought, which equal more than $28 million.
But that's only a temporary fix, and those loans can be tough to get.
The dryness is a major factor for states in the south and west - and Colorado is right in primary dry zone.
What makes it especially worse for farmers is that the lack of rainfall follows record heat waves, fatal storms and raging wildfires. In fact, the last 12 months have been hotter than any other since 1895 - when we first started maintaining weather records in the U.S.
An official with the Drought Monitor reports that half of all U.S. ranges and pastures are in either poor or very poor condition, which is a spike of nearly 30 percent in just a matter of weeks.
Factoring in the recent wildfires in Fort Collins, the nationwide acreage torched by brushfires shot up from 1.1 million to 3.1 million.
While we can't adjust the temperatures or make it rain, we can help you find financial relief.