Mandatory Disclosures pursuant to 11 U.S.C 527 and 11 U.S.C. 342 and 11 U.S.C. 526
(a) A debt relief agency providing bankruptcy assistance to an assisted person shall provide—
(1) the written notice required under section 342(b)(1); and
(2) to the extent not covered in the written notice described in paragraph (1), and not later than 3 business days after the first date on which a debt relief agency first offers to provide any bankruptcy assistance services to an assisted person, a clear and conspicuous written notice advising assisted persons that—
(A) all information that the assisted person is required to provide with a petition and thereafter during a case under this title is required to be complete, accurate, and truthful;
(B) all assets and all liabilities are required to be completely and accurately disclosed in the documents filed to commence the case, and the replacement value of each asset as defined in section 506 must be stated in those documents where requested after reasonable inquiry to establish such value;
(C) current monthly income, the amounts specified in section 707(b)(2), and, in a case under chapter 13 of this title, disposable income (determined in accordance with section 707(b)(2)), are required to be stated after reasonable inquiry; and
(D) information that an assisted person provides during their case may be audited pursuant to this title, and that failure to provide such information may result in dismissal of the case under this title or other sanction, including a criminal sanction.
(b) A debt relief agency providing bankruptcy assistance to an assisted person shall provide each assisted person at the same time as the notices required under subsection (a)(1) the following statement, to the extent applicable, or one substantially similar. The statement shall be clear and conspicuous and shall be in a single document separate from other documents or notices provided to the assisted person:
“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, and 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.”.
(c) Except to the extent the debt relief agency provides the required information itself after reasonably diligent inquiry of the assisted person or others so as to obtain such information reasonably accurately for inclusion on the petition, schedules or statement of financial affairs, a debt relief agency providing bankruptcy assistance to an assisted person, to the extent permitted by nonbankruptcy law, shall provide each assisted person at the time required for the notice required under subsection (a)(1) reasonably sufficient information (which shall be provided in a clear and conspicuous writing) to the assisted person on how to provide all the information the assisted person is required to provide under this title pursuant to section 521, including—
(1) how to value assets at replacement value, determine current monthly income, the amounts specified in section 707(b)(2) and, in a chapter 13 case, how to determine disposable income in accordance with section 707(b)(2) and related calculations;
(2) how to complete the list of creditors, including how to determine what amount is owed and what address for the creditor should be shown; and
(3) how to determine what property is exempt and how to value exempt property at replacement value as defined in section 506.
(d) A debt relief agency shall maintain a copy of the notices required under subsection (a) of this section for 2 years after the date on which the notice is given the assisted person.
(Added Pub. L. 109–8, title II, §228(a), Apr. 20, 2005, 119 Stat. 69; amended Pub. L. 111–327, §2(a)(21), Dec. 22, 2010, 124 Stat. 3560.)
2010—Subsec. (b). Pub. L. 111–327 substituted “Schedules, and Statement of Financial Affairs, and in some cases a Statement of Intention,” for “Schedules and Statement of Financial Affairs, as well as in some cases a Statement of Intention” in third sentence of fourth undesignated par.
Section effective 180 days after Apr. 20, 2005, and not applicable with respect to cases commenced under this title before such effective date, except as otherwise provided, see section 1501 of Pub. L. 109–8, set out as an Effective Date of 2005 Amendment note under section 101 of this title.
What are the Purposes Costs and Benefits of Bankruptcy?
Under the Constitution of the United States of America, bankruptcy provides away for individuals with excessive debt to eliminate their debt and obtain a fresh start. This is so they go on and have a more productive life with their second chance and not live with the burden of heavy debt and have the pain of past financial problems. Federal bankruptcy laws were put in place to help honest hard-working debtors with a fresh start while also establishing a ranking system for creditors attempting to get back a portion of the debtor’s resources.
Bankruptcy is specifically designed to help people move out from under piles of debt so that they live a productive life.
Creditors are ranked according to established rules set forth in the bankruptcy code when it comes to determining if there is money or property available to pay off some or all of the debtors debt.
This is only a brief overview of the different types of bankruptcy filings that are available and only a brief outlay of what bankruptcy can and cannot do. Bankruptcy is complex, the law is confusing, and there are many things that must be taken into account in deciding whether or not to file bankruptcy. Anyone that may be considering bankruptcy should feel encouraged to speak with a bankruptcy lawyer before moving forward with a bankruptcy petition.
Different Types of Bankruptcy
The bankruptcy code is divided up into different chapters for different types of bankruptcy depending on whether you have certain types of assets or whether you are an individual or business entity. The most common types of bankruptcy for consumer debtors are Chapter 7 bankruptcy (“also known as “straight bankruptcy”) and Chapter 13 bankruptcy, which involves putting a debtor into a type of realistic payment plan to pay off all or a portion of a debtors debt.
One ting that needs to be mentioned about bankruptcy is the automatic stay provision which kicks in once any petition for bankruptcy protection is filed. The automatic stay means that foreclosures, garnishments, repossessions, evictions, lawsuits, collections, utility shut offs, and attachments must immediately cease. The purpose is to offer debtors a time where they can “catch their breath” and figure out where to go from here. Most creditors cannot continue any property collections without express permission from the bankruptcy court.
When a Chapter 7 case is filed, the court will appoint a “trustee” to inspect the debtors assets to determine if there are any that are not protected under the various exemptions available under the bankruptcy code. Many things can be exempt, such as a debtors residence, health care plans, insurance, vehicles, household furnishings, retirement plans, etc. If there is non-exempt property, it is up to the trustee to determine how it will be sold or disposed of to pay back certain creditors according to a special ranking system developed by the court rules. Some types of unsecured debt cannot be discharged, including some types of student loans, alimony, child support, maintenance, criminal fines and restitution, and certain taxes. In addition to attorney fees, there are filing fees that must be paid to the bankruptcy court. Click here for the most up to date fee schedule: Chapter 7 Bankruptcy Court Fees.
In a chapter 13 case, a debtor files a bankruptcy petition and puts forth a plan to pay off some or all of their debt over a period of years. This is so that the debtor does not lose all their property, allowing them to oftentimes save their car, home and other personal property from being foreclosed or repossessed. A chapter 13 case allows a debtor to catch up on back mortgage payments and car loans without the threat of repossession or foreclosure. The debtor’s property, under a chapter 13 plan, is protected from creditor seizure so long as they continue the plan payment schedule to the bankruptcy court trustee. In additon to attorney fees for filing a chapter 13 there are filing fees that must be paid to the bankruptcy court. Click here for the most up to date fee schedule: Chapter 13 Bankruptcy Court Fees.
Chapter 11 is a form of bankruptcy that is for large corporations trying to reorganize their debt. Chapter 11 is very similar to a Chapter 13 plan, but is often extremely complex and is on a much larger scale. For more information, please follow this link: http://www.uscourts.gov/services-forms/bankruptcy
Chapter 12 is a newer provision of bankruptcy enacted in 1986 by Congress to work with distressed family farmers. The point of this chapter was to give family farmers a chance to reorganize their debts and keep their farms, similar to a chapter 13. For more information, please follow this link: http://www.uscourts.gov/services-forms/bankruptcy
What Bankruptcy Can and Cannot Do
Bankruptcy can make it possible for people to do some of the following:
· Discharge most if not all of an individual’s qualified debt to get them a fresh start. When the debt is discharged through bankruptcy, no further legal obligation exists to repay the debt.
· Stop foreclosure and give them an opportunity to catch up on payments they may be behind on.
· Prevent repossession of a car or other secured debt property, or even force the creditor to return said property.
· Stop garnishment of wages and collection harassment.
· Restore and prevent some utility shut offs.
· Reduce monthly payments and interest rates that exist on debts, even including some secured debts like car loans.
· Give debtors an opportunity to challenge claims made by certain creditors that have committed fraud or are trying to collect more than they are legally allowed to collect.
Bankruptcy cannot do some things, normally bankruptcy cannot:
· Erase some rights by secured creditors. A debtor can force a creditor to accept payments over a period of time, but they cannot keep the property if they stop making the payments.
· Discharge some debts specifically mentioned in the federal bankruptcy statutes to get special treatment, such as child support, alimony, maintenance, court ordered payments, criminal fines, some student loans, and some taxes.
· Protect cosigners on debts. If a relative or a friend was a cosigner on a loan that was discharged in bankruptcy, the cosigner can possibly still be obligated to repay whatever part of the loan has not yet been paid.
· Discharge debts that are incurred post filing of your bankruptcy petition.
Bankruptcy Effects Your Credit
Under applicable federal law, bankruptcy is allowed to stay on a persons credit report for up to 10 years. Whether they are given credit in the future can not be predicted, and depends on what things the debtor does going forward such as rebuilding their credit, keeping a job and saving money.
Service Available from Credit Counseling Agencies
Sometimes it is difficult to create a realistic budget and stick with it. In these instances, it is a good idea to work with a credit counseling organization.
However, if you are able to stick to a realistic budget, you may be able to work with a non-profit credit counseling service. Just because a company is non-profit, does not mean its services are free.
Many credit counseling agencies offer to provide services locally, over the internet or on the phone. In person counseling can be the best if possible in your area. Many universities, military bases and housing authorities operate nonprofit credit counseling. Explore these options.
Finding a reputable credit counseling agency can help advice you on how to manage your money and debts in a realistic way. The counselors should be certified and trained in the areas of consumer credit, money management, and debt management. Real legitimate counselors will go over your entire financial situation with you to develop a personalized plan. A consultation lasts an hour, and usually has follow ups as necessary.
If your money problems are because you have too much debt or your lack of means to repay debt, credit counseling agencies may make a recommendation for you to enroll in a debt management plan or DMP. DMP’s are not for everyone. You should work with a DMP plan only after a credit counselor has recommended you to seek this assistance. Keep in mind that DMP’s work with creditors closely, so be cautious that they have your best interest in mind, not the creditors best interest.
A DMP allows you to deposit money each month with the credit organization which then uses your deposits to pay your unsecured debts according to a payment schedule the counselor has worked out with your creditors. Your creditors may agree to lower interest rates or even waive certain fees, but check with them to make sure they actually make these concessions with you particular debt agency. DMP’s are of little value to people whose problems come from secured creditors holding onto your vehicle or house as collateral. DMP’s are also not a good value for individuals that have a problem with child support, alimony, maintenance or past due taxes.
Notice Mandated by Section 342(b)(2) of the Bankruptcy Code
Fraud and Concealment Prohibited
If you decide to file for bankruptcy, it is essential for you to understand the following:
· Some or even all of the information that you provide in connection with bankruptcy will be filed with the bankruptcy court on forms that you may be required to sign and declare as true under penalties of perjury.
· An individual who knowingly and fraudulently conceals assets or makes false oaths or statements under penalties of perjury in connection with a bankruptcy case shall be subject to fine, imprisonment or both.
· All information you provide in connection with your bankruptcy case is subject to examination by the Attorney General.
(a) There shall be given such notice as is appropriate, including notice to any holder of a community claim, of an order for relief in a case under this title.
(b) Before the commencement of a case under this title by an individual whose debts are primarily consumer debts, the clerk shall give to such individual written notice containing—
(1) a brief description of—
(A) chapters 7, 11, 12, and 13 and the general purpose, benefits, and costs of proceeding under each of those chapters; and
(B) the types of services available from credit counseling agencies; and
(2) statements specifying 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.
(c)(1) If notice is required to be given by the debtor to a creditor under this title, any rule, any applicable law, or any order of the court, such notice shall contain the name, address, and last 4 digits of the taxpayer identification number of the debtor. If the notice concerns an amendment that adds a creditor to the schedules of assets and liabilities, the debtor shall include the full taxpayer identification number in the notice sent to that creditor, but the debtor shall include only the last 4 digits of the taxpayer identification number in the copy of the notice filed with the court.
(2)(A) If, within the 90 days before the commencement of a voluntary case, a creditor supplies the debtor in at least 2 communications sent to the debtor with the current account number of the debtor and the address at which such creditor requests to receive correspondence, then any notice required by this title to be sent by the debtor to such creditor shall be sent to such address and shall include such account number.
(B) If a creditor would be in violation of applicable nonbankruptcy law by sending any such communication within such 90-day period and if such creditor supplies the debtor in the last 2 communications with the current account number of the debtor and the address at which such creditor requests to receive correspondence, then any notice required by this title to be sent by the debtor to such creditor shall be sent to such address and shall include such account number.
(d) In a case under chapter 7 of this title in which the debtor is an individual and in which the presumption of abuse arises under section 707(b), the clerk shall give written notice to all creditors not later than 10 days after the date of the filing of the petition that the presumption of abuse has arisen.
(e)(1) In a case under chapter 7 or 13 of this title of a debtor who is an individual, a creditor at any time may both file with the court and serve on the debtor a notice of address to be used to provide notice in such case to such creditor.
(2) Any notice in such case required to be provided to such creditor by the debtor or the court later than 7 days after the court and the debtor receive such creditor’s notice of address, shall be provided to such address.
(f)(1) An entity may file with any bankruptcy court a notice of address to be used by all the bankruptcy courts or by particular bankruptcy courts, as so specified by such entity at the time such notice is filed, to provide notice to such entity in all cases under chapters 7 and 13 pending in the courts with respect to which such notice is filed, in which such entity is a creditor.
(2) In any case filed under chapter 7 or 13, any notice required to be provided by a court with respect to which a notice is filed under paragraph (1), to such entity later than 30 days after the filing of such notice under paragraph (1) shall be provided to such address unless with respect to a particular case a different address is specified in a notice filed and served in accordance with subsection (e).
(3) A notice filed under paragraph (1) may be withdrawn by such entity.
(g)(1) Notice provided to a creditor by the debtor or the court other than in accordance with this section (excluding this subsection) shall not be effective notice until such notice is brought to the attention of such creditor. If such creditor designates a person or an organizational subdivision of such creditor to be responsible for receiving notices under this title and establishes reasonable procedures so that such notices receivable by such creditor are to be delivered to such person or such subdivision, then a notice provided to such creditor other than in accordance with this section (excluding this subsection) shall not be considered to have been brought to the attention of such creditor until such notice is received by such person or such subdivision.
(2) A monetary penalty may not be imposed on a creditor for a violation of a stay in effect under section 362(a) (including a monetary penalty imposed under section 362(k)) or for failure to comply with section 542 or 543 unless the conduct that is the basis of such violation or of such failure occurs after such creditor receives notice effective under this section of the order for relief.
Notice Mandated by Section 527(a)(2) of the Bankruptcy Code
You are notified that:
· All information that you may be required to provide when filing your case and while your case is ongoing, must be complete, accurate and honest.
· All assets and liabilities must be complete and accurately disclosed in the petition and documentation. The replacement value of each asset, as defined in Section 506 of the bankruptcy code, must be provided in those documents when requested.
· Some sections in the code require individuals to determine and list replacement value of an asset like a car or household furniture. When replacement value is asked for and required, they specifically mean replacement value as of the date of the filing of your case. Replacement value is what a retailer would charge for said property on a retail level. In many cases, such as used clothes, furniture, computers, etc., it may be possible to discuss garage sale value, as the property is old and or used and has a depreciated value. You have to make a reasonable inquiry into the value of the property when filing your petition.
· Prior to the filing of your case, you must first complete a “Means Test.” The means test was designed to see whether you qualify for bankruptcy under chapter 7 or instead under chapter 13. Section 707(b)(2) of the bankruptcy code discusses the amount of expenses, and your current monthly income.
· The information that you provide during your case may be checked and audited. If you fail to provide truthful, accurate and honest information, it may result in a dismissal of your case or other sanctions, including criminal sanctions.
Acknowledgement of Receipt
By using this site and all affiliated sites, you acknowledge that you have read and understood and received a copy of this agreement and have been provided the following notices:
· Notice mandated by Section 342(b)(1) and 527(a)(1) of the bankruptcy code
· Notice mandated by Section 527(a)(2) of the bankruptcy code
· Notice mandated by Section 527(b) of the bankruptcy code