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Please be advised that the FAMILYLEGAL is a Debt Relief Agency under 11 U.S.C. § 527 of the United States Bankruptcy Code and is required to provide certain mandatory disclosures. To the extent that you are seeking bankruptcy assistance from FAMILYLEGAL by accessing our website you are hereby notified of the following mandatory disclosures. If you would like a paper copy of the mandatory disclosures or have any questions about these disclosures please call our office at (877) 725-0004.
MANDATORY DISCLOSURE PURSUANT TO 11 U.S.C. §§342(B)(1) AND 527(A)(1): PURPOSE, BENEFITS AND COSTS OF BANKRUPTCY
Bankruptcy is a federal court preceding that provides relief to people and businesses that are having financial difficulty. The relief comes in the form of an "automatic stay" which generally stops most collection proceedings and harassment from creditors. The cost of filing a bankruptcy consists of a filing fee which varies depending on the type of case you are filing (see below) and if you choose to hire a lawyer to represent you, the lawyer will likely charge you a fee for the representation. Additionally, there may be costs to obtain necessary information and documentation required by the bankruptcy code, bankruptcy rules and local rules. The discussion here is meant only as a brief overview and no one should base their decision as to whether to file or not to file bankruptcy solely on this information. Bankruptcy is complex and a number of factors and considerations must be taken into account in making a determination to file or not. Anyone considering bankruptcy is encouraged to seek the advice and assistance of experienced counsel who practices bankruptcy law.
Bankruptcy may be able to help financially distressed people to:
• Discharge (eliminate) liability for most or all of their debts and a get a fresh start. When the debt is discharged, the debtor no longer has any legal obligation to pay it.
• Stop foreclosure proceedings. The automatic stay in bankruptcy can freeze a foreclosure proceeding and provide an opportunity to catch up on missed payments.
• Prevent repossession of a car or other property. The automatic stay can prevent a finance company from exercising its repossession rights, or might even be able to force a creditor to return a vehicle that has already been repossessed.
• Prevent utility shut-offs. The automatic stay in bankruptcy can prevent a utility company from terminating service because of non-payment and can even force the company to reconnect service that has already been terminated.
• Stop wage garnishments and creditor harassment. The automatic stay in bankruptcy can suspend wage deduction proceedings and other types of debt collection efforts.
• Lower monthly payments. The automatic stay in bankruptcy can alter your contractual relationships with your creditors by lowering or eliminating interest and can allow payments to creditors for less than the outstanding balance.
• Can provide an opportunity for debtors to challenge then claims of certain creditors who might be seeking to collect more than they are entitled.
Bankruptcy, however, may not be the cure-all for every financial problem. There are limitations. For instance, a debtor usually cannot:
• Eliminate certain liens of secured creditors. Although it is possible to force secured creditors to take payments over time and although it is possible to modify the terms of payments in some cases, a debtor usually cannot keep the collateral unless the debtor continues to pay the debt.
• Discharge types of debts identified in the bankruptcy code. The most common exceptions to discharge are domestic support orders (child support, maintenance, or alimony), most student loans, criminal fines, and most taxes.
• Discharge debts incurred after the bankruptcy is filed. Bankruptcy only helps with debts already existing at the time of filing; it doesn't provide relief for future debts.
• Protect co-signors. If someone co-signed for you, the co-signor is usually going to be liable to pay the creditor whatever part of the loan you don't pay or that isn't paid through a bankruptcy case.
MANDATORY DISCLOSURES PURSUANT TO 11 U.S.C. § 342 (B)
(1)(A) Four Chapters of the Bankruptcy Code Available to Individual Consumer Debtors:
Chapter 7: Liquidation:
Chapter 7 is designed for debtors in financial difficulties that do not have the ability to pay their existing debts. Debtors, whose debts are primarily consumer debts, are subject to a “means test” designed to determine whether the case should be permitted to proceed under chapter 7. If your income is greater than the median income for your state of residence and family size, in some cases, creditors have the right to file a motion requesting that the court dismiss your case under § 707(b) of the Code. It is up to the court to decide whether the case should be dismissed.
Under chapter 7, you may claim certain of your property as exempt under governing state law. A trustee may have the right to take possession of and sell the remaining property that is not exempt and use the sale proceeds to pay 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, if it does, 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 for most taxes and student loans; debts incurred to pay nondischargeable 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 operating a motor vehicle, vessel, or aircraft while intoxicated from 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:
Chapter 13 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 with the court a plan to repay your creditors all or part of the money that you owe them, using your future earnings. 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 court must approve your plan before it can take effect.
After completing the payments under your plan, your debts are generally discharged except for 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; certain debts for acts that caused death or personal injury; and certain long term secured obligations.
Chapter 11: Reorganization:
Chapter 11 is designed for the reorganization of a business, but is also available to consumer debtors. Its provisions are quite complicated, and any decision by an individual to file a chapter 11 petition should be reviewed with an attorney.
Chapter 12: Family Farmer or Fisherman:
Chapter 12 is designed to permit family farmers and fishermen to repay their debts over a period of time from future earnings and is similar to chapter 13. The eligibility requirements are restrictive, limiting its use to those whose income arises primarily from a family-owned farm or commercial fishing operation.
(B) Services Available from Credit Counseling Agencies: With limited exceptions, § 109(h) of the Bankruptcy Code requires that all individual debtors who file for bankruptcy relief on or after October 17, 2005, receive a briefing that outlines the available opportunities for credit counseling and provides assistance in performing a budget analysis. The briefing must be given within 180 days before the bankruptcy filing. The briefing may be provided individually or in a group (including briefings conducted by telephone or on the Internet) and must be provided by a nonprofit budget and credit counseling agency approved by the United States trustee or bankruptcy administrator. A list of approved budget and credit counseling agencies that you may consult is posted on the United States trustee program’s website at www.usdoj.gov/ust. It is also available in the bankruptcy clerk’s office. Each debtor in a joint case must complete the briefing.
In addition, after filing a bankruptcy case, an individual debtor generally must complete a financial management instructional course before he or she can receive a discharge. A list of approved financial management instructional courses is also available on the United States trustee program’s website (www.usdoj.gov/ust) and the bankruptcy clerk’s office. Each debtor in a joint case must complete the course.
(2) Debtors must be notified that:
(A) A person who knowingly and fraudulently conceals assets or makes a false oath or statement under penalty of perjury in connection with a case under this title shall be subject to fine, imprisonment, or both; AND
(B) All information supplied by a debtor in connection with a case under this title is subject to examination by the Attorney General.
MANDATORY DISCLOSURES PURSUANT TO 11 U.S.C. § 527 (A)(2)
You are notified that:
(1) All information that you are required to provide with a petition and thereafter during a case under the Bankruptcy Code is required to be complete, accurate, and truthful.
(2) All assets and all liabilities are required to be completely and accurately disclosed in the documents filed to commence the case.
a. Some places in the Bankruptcy Code require that you list the replacement value of each asset. This must be the replacement value of the property at the date of filing the petition, without deducting for costs of sale or marketing, established after a reasonable inquiry.
b. For property acquired for personal, family, or household use, replacement value means the price a retail merchant would charge for property of that kind, considering the age and condition of the property.
(3) The following information, which appears on Official Form 22, Statement of Current Monthly Income, is required to be stated after reasonable inquiry: current monthly income, the amounts specified in § 707(b)(2), and, in a case under Chapter 13 of the Bankruptcy Code, disposable income (determined in accordance with § 707(b)(2)).
(4) Information that you provide during your case may be audited pursuant to provisions of the Bankruptcy Code. Failure to provide such information may result in dismissal of the case under this title or other sanctions, including criminal sanctions.
market value as of the date your case is filed and the value is the cash value of what the stock could sell for in the market, or the amount a bond could be redeemed for at the time of filing.
Before you file a case, you are subject to a "means test." The "means test" is a statutory test 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 to your unsecured creditors in a chapter 13 cases. You must therefore state, after reasonable inquiry, your current monthly income, the amount of all expenses as specified in § 707(b)(2), and, in a case under chapter 13 of this title, disposable income(determined in accordance with § 707(b)(2), are required to be stated after reasonable inquiry.
Any information you provide during the case may be audited pursuant to Title 11 of the United States Code and failure to provide information may result in dismissal of the case or other sanction, including criminal sanctions!
MANDATORY DISCLOSURES PURSUANT TO 11 U.S.C. § 527 (B)
IMPORTANT INFORMATION ABOUT BANKRUPTCY ASSISTANCE SERVICES FROM AN ATTORNEY OR BANKRUPTCY PETITION PREPARER
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 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.
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.
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.
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. Mandatory Disclosures Pursuant to 11 U.S.C. § 527 (c)
(1) How to Value Assets at Replacement Value: Replacement value under 11 U.S.C. § 506(2) means the value determined based on the replacement value of such property as of the date of the filing of the petition without deduction for costs of sale or marketing. With respect to property acquired for personal, family or household purposes, replacement value shall mean the price a retail merchant would charge for property of that kind considering the age and condition of the property at the time value is determined.
(2) How to Determine Current Monthly Income: Your current monthly income includes all income you have received from any source in the last 6 months. This includes wages, salary, tips, bonuses, overtime, commissions, income from operation of a business, profession or farm, rents and real property income, interest, dividends, royalties, unemployment, pension and retirement income. Income also includes regular contributions to your household expenses, including from a child, roommate or spouse. Income includes income from any other source not listed above.
(3) The Amounts Specified in § 707(b)(2): You will be required to complete a “means test” to determine the bankruptcy chapter you can file. This test will be applied based upon your monthly income as explained herein. This test will also be applied based upon monthly expenses. Some of these expenses will be based upon applicable monthly expense amounts specified under National Standards and Local Standards, and some on your actual monthly expenses. Your actual monthly expenses include your average monthly expenses for payments to secured creditors on your automobile, amounts actually incurred for taxes, mandatory payroll deductions, life insurance premiums, money required to be paid by court order, including spousal or child support, education expenses required for work, child care, health care not otherwise reimbursed and the amount you pay for telecommunication services.
(4) In a Chapter 13 Case, How to Determine Disposable Income in Accordance with § 707(b)(2) and Related Calculations: In a Chapter 13 case, your income and expenses also include Chapter 13 administrative expenses of up to 10% of your required plan payment.
(5) How to Complete the List of Creditors, Including How to Determine What Amount is Owed and What Address for the Creditor Should be Shown: You will be required to provide a list of all your creditors. This list must include the name and address of the creditor as well as your account number with this creditor. If, within 90 days before you file bankruptcy, a creditor supplies to you in at least 2 communications the account number and an address that the creditor request to received correspondence, you must use this address and account number. The creditor may also file with the court a notice of address to be used to provide notice to such creditor.
(6) How to Determine what Property is Exempt and How to Value Exempt Property as Replacement Value as Defined in § 506: You can exempt certain property from property of your bankruptcy estate. You may use the exemptions available under California Law if you have lived in California for 730 days prior to the bankruptcy filing. If you have not lived in California for the last 730 days, you will have to use the exemption laws under the state that you lived in prior to California, if you lived there for at least 180 days. If you did not live in that state for 180 days, you will have to use the Federal Exemptions available under 11 U.S.C. § 522. You value your exempt property under the replacement value that is listed previously herein.