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Chapter 7 Bankruptcy Procedure (How it works)

BANKRUPTCY PRODECURES

ATTORNEY RICHARD NAZARETH takes great pride in providing a quality, accurate, and most of all, an affordable solution for low-cost bankruptcy by providing legal form typing and preparation services for individuals interested in filing bankruptcy and retaining the services of an attorney.

We realize that filing Chapter 7 or Personal Bankruptcy is an important and difficult decision. Please take a moment to familiarize yourself with our procedures and the bankruptcy laws of the U.S. Bankruptcy Court. 

Step One: Consultation

It is a common misconception that the new bankruptcy laws enacted in August 2005 made filing for bankruptcy very difficult. Most individuals, who qualified to file a Chapter 7 bankruptcy prior to the changes in the law, still qualify to file today.  The Bankruptcy Court also provides an explanation of the six basic types of bankruptcy cases provided for under the Bankruptcy Code here.

Step Two: Means Test

Before filing for Chapter 7 bankruptcy, you will have to qualify through a Chapter 7 means test. Although there was a lot of media hype about the Chapter 7 bankruptcy means test disqualifying people from filing for Chapter 7 bankruptcy when it was introduced in 2005, the truth is that more than 96% of potential Chapter 7 petitioners still qualify.

The Chapter 7 means test is a two-step process which begins with a median income comparison. If your income is at or below the median income, you qualify for Chapter 7 bankruptcy. If the debtor’s “current monthly income” is more than the state median, the Bankruptcy Code requires application of a “means test” to determine whether the chapter 7 filing is presumptively abusive. Abuse is presumed if the debtor’s aggregate current monthly income over 5 years, net of certain statutorily allowed expenses, is more than (i) $10,000, or (ii) 25% of the debtor’s non-priority unsecured debt, as long as that amount is at least $6,000. The debtor may rebut a presumption of abuse only by a showing of special circumstances that justify additional expenses or adjustments of current monthly income. Unless the debtor overcomes the presumption of abuse, the case will generally be converted to chapter 13 (with the debtor’s consent) or will be dismissed. 11 U.S.C. Section 707(b)(1).

Step Three: Pick Up A Bankruptcy Information Packet From The Nazareth Law Firm

The Nazareth Law Firm will provide you with a bankruptcy questionnaire, which you must fill out completely in order for us to type your forms accurately. You may pick up a questionnaire in person by scheduling an appointment at our office, you can download one or we can email one to you.  Please fill out this packet NEATLY and ACCURATELY. It is better to provide us with MORE information, rather than less.  THESE DOCUMENTS ARE FOR OUR OWN RECORDS ONLY AND WILL NOT BE SUBMITTED TO THE U.S. BANKRUPTCY COURT.

If you would like us to proceed, return the completed information packet to us, with a $100.00 retainer. The remaining balance will be due before filing, when your papers are typed.

Step Four: Credit Counseling

The Bankruptcy Court also provides Credit Counseling and Debtor Education Information here. While we are typing your papers, please complete the required pre-bankruptcy course requirement: click link Consumer Credit Counseling 4-digit firm code 4057. After you complete your credit counseling course, you will receive a Certificate of Course Completion and one will be emailed to us if you put in our four digit code 4057.

Step Five: Review Typed Papers

We will call you when your papers are typed and ready for you to review they will be emailed. If information needs to be changed or added, we will go ahead and make the changes that information to your forms. Remember, we are only typing the information that YOU provided to us. We strongly suggest that you take your time and review each and every page VERY CAREFULLY, as you will swear under penalty of perjury that the information presented to the Court is truthful and correct.

Step Six: Filing the Petition Papers

When the balance of the fees are paid we will electronically file the petition with the Bankruptcy Court. The Orlando Division bankruptcy Courthouse is located in the Fairwinds Building, 135 West Central Boulevard, Orlando, Florida 32801. The Intake Clerk is located on the 9th floor in suite 950. For driving directions, click here. After this, your case will be in the hands of the United States Bankruptcy Court and we as your attorney and counselor at law will be there to represent you throughout the entire process. For your convenience, we have provided a time line outlining their normal procedures below.

Your Case is Filed:

Click here for a map of where the court is located. Your case is formally commenced when you file your bankruptcy petition with the appropriate bankruptcy court. As soon as you file your petition, the court will enter an “Automatic Stay” order prohibiting your creditors from taking or continuing any collection or legal action against you. This means no more harassing letters or phone calls while your case is in progress. Next, the court will send a notice of your case to all of the creditors listed in your petition.

Additionally, the bankruptcy court will assign a bankruptcy trustee to oversee your case. The trustee is a federal employee appointed by the court to monitor your case and make sure you are eligible for bankruptcy. The trustee will review your petition, make sure that it is complete, and then schedule a meeting of your creditors.

Within 20 Days After Your Case is Filed:

The Clerk of the Bankruptcy Court will mail to you and to all of the creditors listed on your petition the notice to your Meeting of Creditors, which will provide the date, time, and location of your meeting. This notice will also contain other important information regarding your case, including the name of the trustee assigned to your case and the deadline for your creditors to object to your case and file their claims against you. Notices mailed to your creditors will have your address in the sender section of the envelope so that mail that is incorrectly addressed to your creditors will be returned to you. The address the clerk will use for your creditors will be the addresses supplied by you on your papers.

If you do not receive this notice within 20 days, you are responsible for notifying the court that you did not receive the notice by immediately contacting the Noticing Supervisor, under the judge assigned to your case by calling (407) 648-6365. You may also call the court's Voice Case Information System (VCIS), available 24 hours a day, at 1-866-879-1286 before the 20 day time period is over to determine if the date has been set in the computer.

AS SOON AS YOU RECEIVE YOUR MEETING NOTICE, (in the event we have not collected the following) you must send a copy of your last two years of tax returns AND copies of your last 6 months of bank statements to your trustee. Your trustee’s name and address will be listed on your meeting notice. DO NOT send copies to the court. If your trustee does not receive these items at least seven days before the meeting date, he or she may postpone your meeting or dismiss your case. There are no exceptions. Your trustee may also request that you provide additional information.

Approximately 40 Days After Your Case is Filed:

The court will hold the Meeting of Creditors (341 Meeting) approximately 40 days after your bankruptcy case is filed. The meeting must be held no more than 60 days after the order for relief pursuant to Federal Rule of Bankruptcy Procedure 2003(a) and will be held in the same building where you filed your papers.

The court-appointed trustee will preside over this meeting and will ask you several questions about your case. At the meeting, which you are required to attend, you will be asked to testify under oath as to the accuracy of the statements in your petition. If any of your creditors appear (very rare), they will be permitted to ask you questions as well. Most of your creditors will not appear at the meeting, and you will not be before a judge. The meeting is very informal, and in most cases will last no more than 10 minutes. If you do not attend the meeting, your case will be dismissed. You may decide to arrive early at your 341 Meeting and observe how the hearings are conducted.

You must bring your driver’s license and social security card to your mandatory meeting. Some trustees require additional documentation. Please call your trustee if you are not sure about your required documentation as the trustee may postpone your meeting. IF YOU FAIL TO APPEAR, YOUR CASE MAY BE DISMISSED. If you need to reschedule your meeting (only in emergency cases), please contact your trustee immediately (see the meeting notice for your trustee’s name and phone number).

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 imposes one last hurdle before you are eligible for your discharge by completing the post-bankruptcy class: Personal Financial Management, which MUST be completed. The certificate of course completion along with Official Form 23 MUST be filed with the clerk within 45 days after your bankruptcy case was filed to avoid a dismissal. We will file one copy of the certificate along with the original signed Official Form 23 to the bankruptcy court.

Reaffirmation Hearing

If a debtor wishes to keep certain secured property (such as an automobile or home), he or she may decide to “reaffirm” the debt. A reaffirmation is an agreement between the debtor(s) and the creditor that the debtor(s) will continue to make regular payments and remain liable for the money owed, even though the debt would otherwise be discharged in the bankruptcy. In return, the creditor promises that it will not repossess or take back the automobile or other property so long as the debtor continues to pay the debt. If the debtor decides to reaffirm a debt, he or she must do so before the discharge is entered. The debtor must sign a written Reaffirmation Agreement and file it with the court pursuant to 11 U.S.C. Section 524(c). The Bankruptcy Code requires that Reaffirmation Agreements contain an extensive set of disclosures described in 11 U.S.C. Section 524(k). Unless the debtor is represented by an attorney, the bankruptcy judge must approve the Reaffirmation Agreement. The Bankruptcy Code requires a reaffirmation hearing if the debtor has not been represented by an attorney during the negotiating of the agreement to ensure the agreement does not create an undue hardship and was entered voluntarily.

Sixty Days After Your Meeting of Creditors:

Your creditors have 60 days after the date first set for the Meeting of Your Creditors to object to the discharge of any of the debts listed in your petition and schedules. You will receive your discharge as soon as the 60-day time period for objecting to discharge or moving to dismiss your case expires.

Once you receive a copy of your Discharge, it is probably a good idea to make several copies of this notice, as you will need it when applying for credit in the future, or when dealing with credit reporting agencies. Contact the clerk’s office if you ever need additional copies of your Discharge or bankruptcy papers. You may purchase a copy of any original document at the cost of fifty cents per page with a five-page limit or by contacting the contract photocopy service, Judicial Research and Retrieval Services, by calling (407) 999-7717 for Orlando, (813) 228-7200 for Tampa, and (800) 529-6226 for Jacksonville, and (561) 659-7677 for West Palm Beach.

 
 
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