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Bankruptcy Disclosures |
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| BAPCPA Disclosures DISCLOSURES REQUIRED UNDER
SECTION 527 AND 342 OF THE BANKRUPTCY ABUSE PREVENTION AND
CONSUMER PROTECTION ACT OF 2005.
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| NOTICE NO. 1 |
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| Notice Mandated by Section 342(b)(1) and 527(a)(1)
Of The Bankruptcy Code |
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| PURPOSES, BENEFITS AND COSTS OF BANKRUPTCY |
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| The United States Constitution provides a method whereby
individuals, burdened by excessive debt, can obtain a “fresh
start” and pursue productive lives unimpaired by past financial
problems. It is an important alternative for persons strapped
with more debt and stress than they can handle. |
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| The federal bankruptcy laws were enacted to provide good,
honest, hard-working debtors with a fresh start and to establish
a ranking and equity among all the creditors clamoring for the
debtor’s limited resources. |
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| Bankruptcy helps people avoid the kind of permanent
discouragement that can prevent them from ever re-establishing
themselves as hard-working members of society. |
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| To the extent that there may be money or property available
for distribution to creditors, creditors are ranked to make sure
that money is fairly distributed according to the established
rules as to which creditors get what. |
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| This discussion is intended only as a brief overview of the
types of bankruptcy filings and of what a bankruptcy can and
cannot do. No one should base his or her decision as to whether
or not to file bankruptcy solely on this information. Bankruptcy
law is complex, and there are many considerations that must be
taken into account in making the determination whether or not to
file. Anyone considering bankruptcy is encouraged to make no
decision about bankruptcy without seeking the advice and
assistance of an experienced attorney who practices nothing but
bankruptcy law. |
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| Types of Bankruptcy |
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| The Bankruptcy Code is divided into chapters. The chapters,
which almost always apply to consumer debtors, are chapter 7,
known as a “straight bankruptcy”, and chapter 13, which involves
an affordable plan of repayment. |
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| An important feature applicable to all types of bankruptcy
filings is the automatic stay. The automatic stay means that the
mere request for bankruptcy protection automatically stops and
brings to a grinding halt most lawsuits, repossessions,
foreclosures, evictions, garnishments, attachments, utility
shut-offs, and debt collection harassment. It offers debtors
breathing spell by giving the debtor and the trustee assigned to
the case time to review the situation and develop an appropriate
plan. In most circumstances, creditors cannot take any further
action against the debtor or the property without permission
from the bankruptcy court. |
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| Chapter 7 |
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| In a chapter 7 case, the bankruptcy court appoints a trustee
to examine the debtor’s assets to determine if there are any
assets not protected by available “exemptions”. Exemptions are
laws that allow a debtor to keep, and not part with, certain
types and amounts of money and property. For example, exemption
laws allow a debtor to protect a certain amount of equity in the
debtor’s residence, motor vehicle, household goods, life
insurance, health aids, retirement plans, specified future
earnings such as social security benefits, child support, and
alimony, and certain other types of personal property. If there
is any non-exempt property, it is the Trustee’s job to sell it
and help with secured debt (the secured creditor still has the
right to repossess the collateral if the debtor falls behind in
the monthly payments), the debtor will be discharged from the
legal obligation to pay unsecured debts such as credit card
debts, medical bills and utility arrearages. However, certain
types of unsecured debt are allowed special treatment and cannot
be discharged. These include some student loans, alimony, child
support, criminal fines, and some taxes. |
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| In addition to attorney fees, there is a filing fee that
must be paid to the Bankruptcy Court. |
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| Chapter 13 |
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| In a chapter 13 case, the debtor puts forward a plan,
following the rules set forth in the bankruptcy laws, to repay
certain creditors over a period of time, usually from future
income. A chapter 13 case may be advantageous in that the debtor
is allowed to get caught up on mortgages or car loans without
the threat of foreclosure or repossession, and is allowed to
keep both exempt and nonexempt property. The debtor’s plan is a
document outlining to the bankruptcy court how the debtor
proposes to dispose of the claims of the debtor’s creditors. The
debtor’s property is protected from seizure from creditors,
including mortgage and other lien holders, as long as the
proposed payments are made and necessary insurance coverages
remain in place. The plan generally requires monthly payments to
the bankruptcy trustee over a period of three to five years.
Arrangements can be made to have these payments made
automatically made through payroll deductions. |
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| In addition to attorney fees, there is a filing fee that
must be paid to the Bankruptcy Court. |
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| Chapter 11 |
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| By and large, chapter 11 is a type of bankruptcy reserved
for large corporate reorganizations. Chapter 11 shares many of
the qualities of a chapter 13, but tends to involve much more
complexity on a much larger scale. |
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| However, since chapter 11 does not usually pertain to
individuals whose debts are primarily consumer debts, further
information about chapter 11 will be provided by reference to
the following resource: The Bankruptcy Basics brochure prepared
by the Administrative Office of the United States Courts, dated
June 2000l, and which can be accessed over the internet by
visiting the following website:
www.uscourts.gov/bankruptcycourts.html.
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| Chapter 12 |
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| Chapter 12 of the Bankruptcy Code was enacted by Congress in
1986, specifically to meet the needs of financially distressed
family farmers. The primary purpose of this legislation was to
give family farmers facing bankruptcy a change to reorganize
their debts and keep their farms. |
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| However, as with chapter 11, since chapter 12 does not
usually pertain to individuals whose debts are primarily
consumer debts, further information about chapter 12 will be
provided by reference to the same “Bankruptcy Basics” brochure
referred to above, which can be accessed over the internet at
the same said website as mentioned for chapter 11. |
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| What Bankruptcy Can and Cannot Do |
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| Bankruptcy may make it possible for financially distressed
individuals to: |
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Discharge liability for
most or all of their debts and get a fresh start. When
the debt is discharged, the debtor has no further legal
obligation to pay the debt. |
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Stop foreclosure actions on their home
and allow them an opportunity to catch up on missed
payments. |
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Prevent repossession of a car or other
property, or force the creditor to return property even
after it has been repossessed. |
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Stop wage garnishment and other debt
collection harassment, and give the individual some
breathing room. |
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Restore or prevent termination of
certain types of utility service. |
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Lower the monthly payments and interest
rates on debts, including secured debts such as car
loans. |
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Allow debtors an opportunity to
challenge the claims of certain creditors who have
committed fraud or who are otherwise seeking to collect
more than they are legally entitled to. |
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| Bankruptcy, however, cannot cure every financial problem. It
is usually not possible to: |
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Eliminate certain rights
of secured creditors. Although a debtor can for secured
creditors to take payments over time in the bankruptcy
process, a debtor generally cannot keep the collateral
unless the debtor continues to pay the debt. |
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Discharge types of debts singled out by
the federal bankruptcy statutes for special treatment,
such as child support, alimony, student loans, certain
court ordered payments, criminal fines, and some taxes. |
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Protect all cosigners on their debts.
If relative or friend co-signed a loan which the debtor
discharged in bankruptcy, the cosigner may still be
obligated to repay whatever part of the loan not paid
during the pendency of the bankruptcy case. |
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Discharge debts that are incurred after
bankruptcy has been filled. |
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| Bankruptcy’s Effect on Your Credit |
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| By Federal law, a bankruptcy can remain part of a debtor’s
credit history for 10 years. Whether or not the debtor will be
granted credit in the future is unpredictable, and probably
depends, to a certain extent, on what good things the debtor
does in the nature of keeping a job, saving money, making timely
payments on secured debts, etc. |
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| Services Available From Credit Counseling Agencies |
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| If you’re not disciplined enough to create a workable budget
and stick to it, can’t work out a repayment plan with your
creditors, can’t keep track of mounting bills, or need more help
with your debts than can be achieved by merely having a few of
your unsecured creditors lower your interest rates somewhat, it
probably makes little sense to consider contacting a credit
counseling organization. |
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| If, on the other hand, you meet all or most of those
criteria, there are many non-profit credit counseling
organizations that will work with you to solve your financial
problems. |
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| But be aware that, just because an organization says it’s
“nonprofit,” there’s no guarantee that its services are free,
affordable or even legitimate. |
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| Most credit counselors offer services through local offices,
the Internet, or on the telephone. If possible, it probably best
to find an organization that offers in-person counseling. Many
universities, military base, credit unions, housing authorities,
and branches of the U.S. Cooperative Extension Service operate
nonprofit credit counseling programs. Your financial
institution, local consumer protection agency, and friends and
family also may be good sources of information and referrals. |
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| Reputable credit counseling organizations can advice you on
managing your money and debts, help you develop a budget, and
offer free educational materials and workshops. Their counselors
are certified and trained in the areas of consumer credit, money
and debt management, and budgeting. |
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| Legitimate counselors will discuss your entire financial
situation with you, and help you develop a personalized plan to
solve your money problems. An initial counseling session
typically lasts an hour, with an offer of follow-up sessions. |
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| If your financial problems stem from too much debt or your
inability to repay your debts, a credit counseling agency may
recommend that you enroll in what is known as a “debt management
plan” or “DMP”. A DMP alone is not credit counseling, and DMP’s
are not for everyone. You should sign up for one of these plans
only after a certified credit counselor has spent time
thoroughly reviewing your financial situation, has offered you
customized advice on managing your money, and has analyzed your
budget to make sure that the proposed DMP is one you can afford.
However, remember that all organizations that promote DMP’s fund
themselves in part through arrangements with the creditors
involved, which are called “fair share’, so you have to be wary
as to whose best interest the counselor has in mind. |
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| Even if a DMP is not appropriate for you, a reputable credit
counseling organization still can help you create a budget and
teach you money management skills. |
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| In a DMP, your deposit money each month with the credit
counseling organization, which uses your deposits to pay your
unsecured debts, like you credit card bills and medical bills,
according to a payment schedule the counselor develops with your
creditors. Your creditors may agree to lower your interest rates
or waive certain fees, but it’s always best to check with all
your creditors, just to make sure they offer the concessions
that a credit counseling organization is promising you. A
successful DMP requires you to make regular, timely payments,
and could take 48 months or more to complete. Ask the credit
counselor to estimate how long it will take for you to complete
the plan. You may have to agree not to apply for C or use C any
additional credit while you’re participating in the plan, and a
DMP is likely of little value if your problems stern from or
involve your secured creditors holding your car, truck or home
as collateral. DMP’s are also likely of little value if your
problems stem from alimony, child support or overdue taxes. |
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| The bottom line is this: If all you need is a little
lowering of your interest rates on some unsecured debts, a DMP
might be the answer. However, if what you really need is to
reduce the amount of your debt, bankruptcy may be the solution. |
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| NOTICE NO. 2 |
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| Notice Mandated By Section 527(a)(2) Of The
Bankruptcy Code |
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| NOTICE OF MANDATORY DISCLOSURE TO CONSUMERS WHO
CONTEMPLATE FILING BANKRUPTCY |
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| You are notified as followed: |
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All information that you
are required to provide with filing of your case and
thereafter, while your case is pending, must be
complete, accurate and truthful. |
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All your assets and all of your
liabilities must be completely and accurately disclosed
in the documents filed to commence your case. |
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Some Sections of the Bankruptcy Code
require you to determine and list the replacement value
of an asset such as a car or furniture. When replacement
value is required, it means the replacement value,
established after reasonable inquiry, as of the date of
the filing of your bankruptcy case, without deduction
for costs of sales or marketing. With respect to
property acquired for personal, family or household
purposes, replacement value means the price a retail
merchant would charge for “used” property of that kind
considering the age and condition of the property. |
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Before your case can be filed, it is
subject to what is called “Means Testing”. The Means
Test was designed to determine whether or not you
qualify to file a case under chapter 7 of the Bankruptcy
Code, and if not, how much you need to pay your
unsecured creditors in a chapter 13 case. For purposes
of means testing, you must state, after reasonable
inquiry, your total current monthly income, the amount
of all expenses as specified and allowed pursuant to
section 707(b)(2) of the bankruptcy code, and if the
plan is to file a Chapter 13 case, you must state, again
after reasonable inquiry, your disposable income, as
that term is defined. |
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Information that you provide during
your case may be audited pursuant to the provisions of
the Bankruptcy Code. Your failure to provide complete,
accurate and truthful information may result in the
dismissal of your case or other sanctions, including
criminal sanctions. |
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| NOTICE NO. 3 |
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| Notice Mandated by Section 527(b) Of The Bankruptcy
Code |
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| IMPORTANT INFORMATION ABOUT BANKRUPTCY ASSISTANCE
SERVICES |
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| 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 any one. |
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| The following information helps you understand what must be
done in a routine bankruptcy case to help you evaluate how much
service you need. |
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| Although bankruptcy can be complex, many cases are routine. |
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| Before filing for 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. |
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| 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 needs to be prepared correctly
and filed with the bankruptcy court. |
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| 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. |
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| 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. It may not be in your best interest to
reaffirm a debt. |
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| 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, if held, will be before
a bankruptcy judge. |
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| 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. However, please be advised that in most cases, you will
only be concerned with chapter 7 and chapter 13. |
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| 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. |
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| NOTICE NO. 4 |
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| Notice Mandated By Section 342(b)(2) Of The
Bankruptcy Code |
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| FRAUD & CONCEALMENT PROHIBITED |
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| If you decide to file bankruptcy, it is important that you
understand the following: |
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Some or all of the
information you provide in connection with your
bankruptcy will be filed with the bankruptcy court on
forms or documents that you will be required to sign and
declare as true under penalty of perjury. |
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A person who knowingly and fraudulently
conceals assets or makes a false oath or statement under
penalty perjury in connection with a bankruptcy case
shall be subject to fine, imprisonment, or both. |
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All information you provide in
connection with your bankruptcy case is subject to
examination by the Attorney General. |
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| ACKNOWLEDGMENT OF RECEIPT |
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| By using the Site and/or otherwise accepting this Agreement,
you acknowledge that you have received a copy of or been
provided with access to all of the following notices: |
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Notice Mandated By Section
342(b)(1) and 527(a)(1) Of The Bankruptcy Code |
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Notice Mandated By Section 527(a)(2) Of
The Bankruptcy Code
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Notice Mandated By Section 527(b) Of
The Bankruptcy Code |
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