Thinking About Filing Bankruptcy Under the New Law

We expect that very few bankruptcy petitions will be filed during the period of October 17, 2005 and February 1, 2006. The filing requirements will take time to acquire and few will be ready. (The number was about 75,000 nationwide - an 83% drop from the previous two year average).
  • The means test provided online here is a rough example. If your family earns over the median income, generally, you MUST file Chapter 13, you will be unable to file Chapter 7. If you are close to the median, you will need a more extensive review of your situation prior to determining which Chapter you will have to file under.

    If you prefer to file under Chapter 13, or need to file under Chapter 13 for protection of assets, the means test will give you an idea of how much you can expect to pay in a Chapter 13 ( your income minus the allowed expenses is a starting point).

  • Consumer Counseling: Now required in just about every district. The cost appears to be $50 for the pre-filing briefing and somewhat less for the post-filing training.

    BEFORE you file, you will be required to attend a briefing (although it may be offered by phone or internet) that explains the various types of bankruptcy and what the pros and cons of each is. This can not be offered by your attorney. AFTER filing, you will be required to attend financial management courses. Initially these will be provided by the Credit Counseling Services...the same ones that get paid by the Credit Card Companies. You must complete the courses - and pay for them - before getting any bankruptcy discharge.

  • There will be no emergency filings to stop foreclosure, repossession, garnishment, lawsuits or evictions. Failure to provide the required documentation with a filing will get it dismissed. Bankruptcy must be planned for in advance. We expect the average consumer will take 2 to 3 months to prepare.

    We will offer regular classes for those planning bankruptcy to assist you in getting all the required documentation for filing. We will offer classes on the first Saturday of month for new clients and the second, third and fourth Saturdays for existing clients. These classes ARE NOT a substitute for the Consumer Counseling requirements. They are to assist you in preparing for filing.

    Classes have started.

  • If you are represented by another attorney, our client assistance project, CLIENT AID is available.

  • Among other items, you will need the following before filing a bankruptcy:

    • four years of tax returns, not your copy, the transcript from the IRS (we can order this for you);
    • at least one year of bank statements, credit card statements, loan statements;
    • at least 6 months of pay stubs (for all employers) - start saving them NOW;
    • an appraisal on your home and vehicles (we can recommend appraisers);
    • a comprehensive list of personal property (we have forms you can use);
    • a year of utility bills (a printout from your utility providers will work);

  • If you have children in private or religious schools and pay more than $1500 per student, per year tuition, under a Chapter 13, you will be UNABLE to keep your children in that school. If you have already paid the tuition for the current year, you will be able to leave your children in the school til the end of the school year. If you have not, you will be unable to do so inside a Chapter 13, plan on moving them BEFORE the school year starts.

    If you have children in daycare, the cost can not exceed the average for the area. Paying a relative for daycare will be very difficult.

  • If you purchased a vehicle in the last 910 days, consider surrendering it. If you purchased any furniture on credit in the last year, plan on surrendering it.

  • With recent court rulings and the requirements of the new law, we will be unable to provide clients with payment plans that extend into the period AFTER filing a bankruptcy petition. However, we will establish a payment plan that coincides with the planned classes for documentation assistance.

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