BANKRUPTCY This firm does consumer bankruptcy. We restrict this practice to Chapter 7 bankruptcy. Chapter 7 bankruptcy is called “straight” or “liquidation” bankruptcy. It is different from other forms of bankruptcy in that you can receive relief from your debt without having to pay them. This is called a “discharge” of debt. In other forms of bankruptcy you will be required to have a plan (and stick to it) for several years to pay back your creditors. If you have secured debts (where your creditor can repossess or foreclose on your property and take it away from you), your creditors can seize them and take them away from you, even in a Chapter 7 case. The New Bankruptcy Law. In October of 2005, the federal government changed the bankruptcy law. The changes made it more complicated. There are many parts of the new law that are ambiguous and remain unclear. These confusions will eventually become clear as the courts interpret the law. There is some uncertainty about how the new bankruptcy law may impact your case. For example, you must take and certify to the Court that you have had consumer counseling within six months of the time your case is filed with the Court. If you fail to do so, the case can be dismissed. The Courts are considering how to enforce this rule. So far, it is applied very strictly. If you are being evicted by your landlord, or if your house is being foreclosed on, that process cannot be stopped by filing a bankruptcy case. If you have a child support obligation, you must be current on your payments or suffer some severe restrictions. If you are not current in your income tax filings, you will not be allowed to file your bankruptcy case. Your income for a household of your size must meet the federal guidelines for income, or you will have additional trouble getting your case through the Courts. You must pass a “Means Test,” which is intended to decide if your bankruptcy filing is fraudulent. However, despite the many changes in the bankruptcy law, there are still many rules that have not changed. Exemptions. Bankruptcy law in Colorado permits a debtor to take advantage of many exemptions. This means that some of your assets can’t be touched by your creditors, and you will get to keep them as long as you can pay for them. For example, if you own your own house, and you have less than $45,000.00 in equity in the house, you won’t have to worry about your house being lost as long as you are current on your mortgage. You get an exemption of $3,000.00 on your household goods, of all of your ERISA-qualified retirement assets, $3,000.00 on your motor vehicle ($6,000.00 if you are disabled or over the age of 65, or have a spouse who is over 65 or disabled). There are many other exemptions. To take advantage of the Colorado exemptions, you have to lived here for at least 730 days. If you haven’t, your exemptions will be calculated by the state you lived in prior to that time for at least 180 days. The legislature of the State of Colorado is considering increasing the number and the value of the Colorado exemptions, but it hasn’t happened yet. Debts That Cannot Be Discharged. Certain debts can’t be discharged in a bankruptcy action. Among them are child support payments, alimony/maintenance payments, federally-subsidized student loans, most taxes, court-imposed fines or restitution, and some personal injury damages (where you were drunk or under the influence of drugs). Advantages. If you are debtor who became disabled while on active-duty military service or while you were working for Homeland Security, you will not be required to undergo a Means Test if your debts were incurred while you were doing that duty. You have to provide your attorney with six months’ worth of pay stubs and bank statements, so that your attorney can develop a “Current Monthly Income” to use in your Means Test. It is to your advantage, if you can, to use any six-month period in which you were not making money, as that will lower your income. Reaffirmation Agreements. You can agree to pay a debt that you could have discharged. Most commonly, people reaffirm the debts on their houses and automobiles. Your attorney must be able to certify that you can afford to pay a debt that you have reaffirmed. There are time limitations on reaffirmation agreements, so if you plan to reaffirm a debt, be sure to inform your attorney as soon as possible. Unfair Debt Collection. Both Colorado and the United States government have a Fair Debt Collection Practices Act. These laws prohibit unfair collection of consumer debts. Collection companies sometimes violate these acts. In summary, prohibited debt collection actions include: Calling you before 8:00 a.m. or after 9:00 p.m. local time; Contacting you directly after you have told the creditor you have an attorney representing you; Telling your employer or co-worker that you owe money to the creditor; Calling you at work after you have told them not to do that; Intentional and continuous harassment or abuse in connection with a debt; A creditor or collection agent telling you he is an attorney when he is not; Threatening you with arrest or imprisonment for failing to pay a debt.
These rules are complicated, but you can put a stop to unfair collection practices under the right circumstances. Once your Chapter 7 case has beenfiled, the Court issues an automatic stay to all of your listed creditors telling them to cease all attempts to collect the debt. The automatic stay acts as a shield between you and your creditors. Get a Credit Report. You must obtain a credit report. If you retain this firm, we do that for you. If you have recently been denied credit, you can obtain a free credit report from the credit reporting agency. You can also get a free credit report once a year under Federal law. Use of Credit Cards. Don’t use any credit cards after you have consulted with the office. Your creditors can file what is called an adversary proceeding against you claiming that you used credit cards with fraudulent intent and without the ability or intent to repay the debts. Once Your Bankruptcy Case is Filed. The Bankruptcy Court will give the case a number and set it for a Meeting of Creditors (sometimes called a “341 Meeting”). It will appoint a bankruptcy trustee, whose job it will be to make sure that all of your assets that are not exempt are sold and the proceeds from sale paid to your creditors. We will give you a questionnaire that will help you organize your thoughts and give us enough information to fill out the necessary court papers. We will prepare the court papers for you, basically a Petition and Schedules that you will be expected to review in detail and confirm their accuracy. You must reveal EVERY asset, every liability, and every one of your debts. If you fail to do so, you are exposing yourself to a dismissal of your bankruptcy action, and possibly a criminal action for fraud. All information you provide to your attorney must be provided to the bankruptcy court upon demand. So be sure to be completely truthful and do not try to hide anything. You will meet with the trustee at your 341 Meeting. He will ask you about the schedules we prepared for you and that you reviewed. You must be able to swear under oath that they are complete and true. This is a short meeting, and is not done in court, though it is done under oath. Creditors may attend your meeting with the trustee, that is why it’s called a Meeting of Creditors. They have the power to ask you about your debts and your assets in order to try to collect on what you owe them. You must provide the Trustee with your last three years’ tax returns, with your most recent pay stub, with your most recent bank statement, and WITH YOUR SOCIAL SECURITY CARD AND A PICTURE IDENTIFICATION. Failure to have your Social Security card and/or a picture ID will result in a delay of your case. After about 60 days, creditors’ rights to file a claim to payment expires. They can also object to your discharge based on several grounds. After 60 days has passed, if the trustee believes that your case justifies a discharge, a written discharge will issue from the Court. That discharge wipes out your debts. Your case can stay alive for a while after that, but eventually, in most cases, you will receive a notice telling you that your case is closed. This means that your bankruptcy case is over. Contact us for an initial consultation at a small fee. Evening and weekend appointments are available. We accept Visa, American Express, MasterCard and Discover.
The Law Firm of William C. Speers
21 East Monument Street
Colorado Springs, CO 80903
(719) 634-2218 The Law Firm of William C. Speers, located in Colorado Springs, Colorado, serves clients in El Paso County, Pueblo County, Douglas County, and Teller County; and the cities of Colorado Springs, Cripple Creek, Castle Rock, Pueblo, Cañon City, Peyton, Calhan, and Ellicott.
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