Congressional Bankruptcy Disclosures
The following documents and disclosures are required by legislation adopted by Congress in 2005.
Please rest assured that as long as you are honest and meet the requirements set out under the law, you are entitled to debt relief. We can guide you through all the requirements of filing for bankruptcy, as long as you provide us accurate and complete information.
Disclosure required by 11 U.S.C. 527(a)
Rule #1 – If you decide to file a bankruptcy case, the information you give to an attorney, a staff member of the law firm, the Bankruptcy Trustee, or the Bankruptcy Court that is provided with your petition and during the case must be complete, accurate, and truthful.
Rule #2 – If you decide to file bankruptcy, everything you own and every debt you owe must be completely and accurately disclosed in the documents filed to commence this case. Bankruptcy is not a “pick and choose” proceeding. You cannot put some debts in and leave some debts out. Same thing with your assets. Everything must be included. You must value each item you own at the rate it would cost you to replace the item with one of the same condition, age, and usefulness.
Rule #3 – You will be required to complete a current monthly budget. This will be performed with your attorney. This budget will be based on your Current Monthly Income and your regular monthly expenses. This Current Monthly Income is more than just what is paid to you by your employer and will include any income received in the past 6 months commencing with the first full month before your bankruptcy filing. This could include government assistance, social security, unemployment, or side jobs or any other sources. The regular expenses should be as close as possible and should be based on a reasonable inquiry.
Rule #4 – Information that you provide during your case may be audited pursuant to the provision of the Bankruptcy Code. Failure to provide such information may result in dismissal of your bankruptcy case or other sanctions, including jail time and other criminal sanctions. These rules are given as a warning and not as an attempt to scare you from filing bankruptcy. Bankruptcy is a right provided to you under Federal Law. These Rules are only given to prevent people from intentionally abusing this by cheating and being dishonest. This notice is required by law under the Bankruptcy Reform Act enacted by Congress under intense lobbying by the credit industry and should not intimidate you from filing bankruptcy.
IMPORTANT INFORMATION ABOUT BANKRUPTCY ASSISTANCE SERVICES
FROM AN ATTORNEY OR BANKRUPTCY PETITION PREPARER
(Required by Section 527(b))
If you decide to seek bankruptcy relief, you can represent yourself, you can hire an attorney to represent you, or you can get help in some localities from a bankruptcy petition preparer who is not an attorney. THE LAW REQUIRES AN ATTORNEY OR BANKRUPTCY PETITION PREPARER TO GIVE YOU A WRITTEN CONTRACT SPECIFYING WHAT THE ATTORNEY OR BANKRUPTCY PETITION PREPARER WILL DO FOR YOU AND HOW MUCH IT WILL COST. Ask to see the contract before you hire anyone.
The following information helps you understand what must be done in a routine bankruptcy case to help you evaluate how much service you need. Although bankruptcy can be complex, many cases are routine.
Before filing a bankruptcy case, either you or your attorney should analyze your eligibility for different forms of debt relief available under the Bankruptcy Code and which form of relief is most likely to be beneficial for you. Be sure you understand the relief you can obtain and its limitations. To file a bankruptcy case, documents called a Petition, Schedules and Statement of Financial Affairs, as well as in some cases a Statement of Intention need to be prepared correctly and filed with the bankruptcy court. You will have to pay a filing fee to the bankruptcy court. Once your case starts, you will have to attend the required first meeting of creditors where you may be questioned by a court official called a ‘trustee’ and by creditors. If you retain NoWorriesBankruptcy.com this will all be explained to you.
If you choose to file a chapter 7 case, you may be asked by a creditor to reaffirm a debt. You may want help deciding whether to do so. A creditor is not permitted to coerce you into reaffirming your debts. A bankruptcy petition preparer is prohibited by law from helping you in any way to resolve this problem.
If you choose to file a chapter 13 case in which you repay your creditors what you can afford over 3 to 5 years, you may also want help with preparing your chapter 13 plan and with the confirmation hearing on your plan which will be before a bankruptcy judge. Again, a bankruptcy petition preparer is prohibited by law from assisting you in any way to do this; only an attorney may help you prepare and confirm your plan.
If you select another type of relief under the Bankruptcy Code other than chapter 7 or chapter 13, you will want to find out what should be done from someone familiar with that type of relief. The only other type of relief available to you under the Bankruptcy Code is under Chapter 11, and only an attorney may assist or represent you in these matters; it is recommended that you retain an attorney specifically qualified to deal in Chapter 11 matters if you choose to file under this chapter.
Your bankruptcy case may also involve litigation. You are generally permitted to represent yourself in litigation in bankruptcy court, but only attorneys, not bankruptcy petition preparers, can give you legal advice, as noted above.
REQUIRED NOTICE TO INDIVIDUAL CONSUMER DEBTORS UNDER §§ 342(b) & 527(a) OF THE BANKRUPTCY CODE
In accordance with section 342(b) of the Bankruptcy Code, this notice: (1) briefly describes the services available from credit counseling services in California; (2) describes the purposes, benefits and costs of the four types of bankruptcy proceedings; and (3) informs you about bankruptcy crimes and notifies you that the Attorney General may examine all information you supply in connection with any California bankruptcy case. Be advised that bankruptcy law is complicated and not easily described. Therefore, you may wish to seek the advice of an attorney to learn of your rights and responsibilities should you choose to file a bankruptcy petition. Court employees are prohibited from giving you legal advice under federal and California law.
SERVICES AVAILABLE FROM CREDIT COUNSELING AGENCIES
With limited exceptions, section 109(h) of the Bankruptcy Code requires that all individual debtors who file bankruptcy to receive credit counseling. The credit counseling requirement must be fulfilled within 180 days before the bankruptcy filing. The briefing may be provided individually or in a group (including briefings conducted by telephone or over the Internet) and must be provided by a nonprofit budget and credit counseling agency approved by the United States trustee or bankruptcy administrator. In California, the bankruptcy court’s clerk has a list of approved credit counseling agencies.
In addition, after filing bankruptcy in California, an individual debtor generally must complete a financial management instructional course before he or she can receive a discharge. Again, in California, the bankruptcy court’s clerk has a list of approved financial management instructional courses.
THE FOUR CHAPTERS OF BANKRUPTCY AVAILABLE TO INDIVIDUALS AND FAMILIES IN CALIFORNIA
Chapter 7: Liquidation
In California, Chapter 7 bankruptcy is designed for debtors who do not have the ability to pay their existing debts. Debtors whose debts are primarily consumer debts are subject to a “Means Test,” which is designed to determine whether the bankruptcy case should be permitted to proceed under Chapter 7. If your income is greater than the median income for California families of your size, creditors have the right to file a motion requesting that the court dismiss your case under section 707(b) of the Code. It is up to the bankruptcy court to decide whether the case should be dismissed.
Under Chapter 7 bankruptcy, you may claim certain of your property as exempt under the limits outlined in California state law. Any remaining property, which is not exempt, may be sold by the bankruptcy trustee and paid to your creditors.
The purpose of filing a Chapter 7 case is to obtain a discharge of your existing debts. If, however, you are found to have committed certain kinds of improper conduct described in the Bankruptcy Code, the court may deny your discharge, and the purpose for which you filed the bankruptcy petition will be defeated.
Even if you receive a general discharge, some particular debts are not discharged under the law. Therefore, you may still be responsible to repay:
− Most taxes and student loans;
− Debts incurred to pay non-dischargeable taxes;
− Domestic support and property settlement obligations;
− Most fines, penalties, forfeitures, and criminal restitution obligations;
− Certain debts which are not properly listed in your bankruptcy papers; and
− Debts for death or personal injury caused by your operation of a motor vehicle, vessel or aircraft while under the influence of alcohol or drugs.
Also, if a creditor can prove that a debt arose from fraud, breach of fiduciary duty or theft, or from a willful and malicious injury, the bankruptcy court may determine that the debt is not discharged.
Chapter 13: Repayment of All or Part of the Debts of an Individual with Regular Income
In California, Chapter 13 bankruptcy is designed for individuals with regular income who would like to pay all or part of their debts in installments over a period of time. You are only eligible for Chapter 13 if your debts do not exceed certain dollar amounts set forth in the Bankruptcy Code.
Under Chapter 13, you must file a plan with the bankruptcy court that explains the way you will repay your creditors all or part of the money that you owe them out of your future earnings. In California, the period allowed by the court to repay your debts may be three years or five years, depending upon your income and other factors. The bankruptcy court must approve your plan before it can take effect.
After successfully completing your Chapter 13 payments, most debts are discharged with some exceptions. A list of some of those exceptions are:
− Domestic support obligations;
− Most student loans;
− Certain taxes;
− Most criminal fines and restitution obligations;
− Certain debts which are not properly listed in your bankruptcy papers;
− Debts for death or personal injury caused by your operation of a motor vehicle, vessel or aircraft while under the influence of alcohol or drugs; and
− Certain long term secured obligations.
Chapter 11: Reorganization
In California, Chapter 11 bankruptcy is usually used to reorganize businesses, but it is also available to consumer debtors. Its provisions are extremely complicated, and filing a Chapter 11 bankruptcy petition should be reviewed closely with an attorney.
Chapter 12: Family Farmer or Fisherman
In California, Chapter 12 bankruptcy is designed to permit family farmers and fishermen to repay their debts over a period of time. In this regard, it is similar to Chapter 13 bankruptcy. Chapter 12′s eligibility requirements are restrictive and limit its use to individuals and families, whose income arises primarily from a family-owned farm or commercial fishing operation.
BANKRUPTCY CRIMES AND AVAILABILITY OF BANKRUPTCY PAPERS TO LAW ENFORCEMENT OFFICIALS
A person who knowingly and fraudulently conceals assets or makes a false oath or statement under penalty of perjury, either orally or in writing, in connection with a bankruptcy case is subject to a fine, imprisonment, or both. All information supplied by a debtor in connection with a bankruptcy case is subject to examination by the Attorney General, acting through the Office of the U.S. Trustee, the Office of the U.S. Attorney or Department of Justice.
WARNING: Section 521(a)(1) of the Bankruptcy Code requires that you promptly file detailed information regarding your creditors, assets, liabilities, income, expenses and general financial condition. Your bankruptcy case may be dismissed if this information is not filed with the court within the time deadlines set by the Bankruptcy Code, the Bankruptcy Rules, and the local rules of the U.S. Bankruptcy Court where your case is filed.
In accordance with section 527(a)(2) of the Bankruptcy Code, be advised that all information you are required to provide in your bankruptcy petition and during a bankruptcy case must be complete, accurate and truthful.
Regardless of whether your property is located in California or elsewhere, all of your assets and all liabilities must be completely and accurately disclosed in the documents filed in your case, and the replacement value of each asset must be stated in those documents where requested after reasonable inquiry to establish such value.
Current monthly income, the amounts specified in the Means Test under section 707(b)(2), and disposable income in Chapter 13 cases must be stated after reasonable inquiry.
Information that you provide during your bankruptcy case may be audited, and the failure to provide such information may result in dismissal of the case or other sanction, including a criminal sanction.