In 2008 a man by the name of Halsey Minor was making the sale of a lifetime. He was selling his company “CNET Networks, Inc.” to CBS for $1.8 billion. After all was said and done Mr. Minor netted $200 million in the sale of his company. Even before this sale took place Halsey Minor was doing well financially. In 2001, Fortune ranked Minor as the 34th wealthiest American under the age of 40, with a net worth of $180.2 million. After the sale in 2008 Mr. Minor began investing in large real estate ventures that unfortunately for him, went sour.
Fast forward to 2013 and Halsey Minor has filed Chapter 7 bankruptcy because he is $100 million dollars in debt and does not have the money to pay it back. How could this possibly happen? That’s the question that thousands of Americans ask themselves every day when they sit down and calculate their income vs. the amount of debt they are in. Overwhelming debt does not happen overnight, but don’t let that get you down; there are solutions that can finally give you a light at the end of the tunnel.
Mr. Minor is the exception to the typical type of individual who needs to and eventually files Chapter 7 bankruptcy. In most cases it filing Chapter 7 is beneficial for individuals or families with low incomes and high amounts of unsecured debt such as credit cards and medical bills. Because Mr. Minor has luxury items like vehicles the court will most likely liquidate them in order to pay back some of the creditors that he owes. Granted, he does not have the entire $100 million that he apparently owes so there will be some creditors that are empty handed.
Most debtors who file Chapter 7 bankruptcy do not have an assortment of luxury items that the court can sell to give money back to the creditors and these cases are called “no asset bankruptcies.” In most cases the debtor that files a Chapter 7 bankruptcy can keep their vehicle and home safe from liquidation by staying current on the payment.
Chapter 7 bankruptcy is sometimes referred to as the “fresh start” bankruptcy because in most cases it can completely eliminate the common types of unsecured debt, thus giving the debtor a fresh financial start. Chapter 7 bankruptcy is the most common form filed in America today not only because of its simplicity, but also because the majority of Americans in debt do not have the excess monthly income to pay their debts back each month.
If this blog reminds you of anything, let it be that you are not alone in your struggle with debt. As you can see debt issues happen to everyone, even billionaires! The important key to remember is that even when you feel like you’ve let the debt go too far, there are still solutions. Call a local bankruptcy attorney today so ask about how a Chapter 7 bankruptcy could help you!
During my time as a bankruptcy paralegal I had the pleasure to see hundreds of successful cases come across my desk and I was quickly able to pinpoint trends in each of them. Once I knew which trends to look for it was easy to assume which of the other clients were on their way to a quick and painless case versus those clients who looked like they were going to see some trouble. Based on that experience I have put together what I think are the top 3 tips for clients who want to achieve a successful bankruptcy:
1. Communicate with your attorney
This tip is #1 for a reason; if you hire a bankruptcy attorney to help you file your personal bankruptcy case then communication with them is absolutely vital. This communication isn’t just a phone call to check in every week or two, but instead a steady dialogue between you and your attorney’s office in order to keep everyone involved with your case on the same page. If your attorney needs something from you don’t procrastinate; make it your first priority to get it to them as quickly as possible. Remind yourself that without financial information from you, your attorney cannot move forward with the filing of your case.
2. Gather necessary documents early
Filing bankruptcy requires specific financial information from you regarding all sorts of things and even the best bankruptcy attorney can’t produce that information. It solely comes from you, the debtor. Begin gathering those necessary financial documents early so that you can quickly produce them whenever your attorney requests them from you. Here are a few items that are regularly required by personal bankruptcy attorneys: paystubs, bank statements, tax returns, mortgage statements, vehicle registration, insurance information, and if applicable child support and/or alimony court orders.
3. Make sure your bankruptcy paperwork is correct
The paperwork filed with the bankruptcy court is called a “petition”. It can range from 15-100+ pages depending on your financial situation. When you are presented with your petition before your case is filed it may seem daunting, but if at all possible you should find the time to go through the paperwork to make sure that everything is correct. Some people choose to do this page by page with their attorney, but it can also be done alone since the information pertains to you. If you see mistakes on the petition then they can be fixed by your attorney’s office.
There can, and probably will be, hiccups with any bankruptcy case, but by utilizing these 3 tips you may be able to avoid some of the common slip ups. These tips will not only lead to a successful bankruptcy, but a more stress free bankruptcy. Think about it this way, if you and your attorney are effectively communicating with one another then you will be aware of exactly what is going on and have no reason for extra worries during the process.
Although filing bankruptcy is a legal process there is a way for individuals and/or married couples to file the paperwork themselves without the aid of an attorney. This is called filing “pro se” and in most cases it is not recommended. However, if you are going to file without an attorney then you should only do so in the case of Chapter 7 bankruptcy and not Chapter 13. This is mainly because Chapter 13 bankruptcy is much more complex and the paperwork involved requires more than just filling in the blank.
If you decide to file Chapter 7 bankruptcy on your own then you should start by gathering your paperwork that you will need to complete the petition (bankruptcy form). This paperwork will consist of your recent pay stubs, bank statements, vehicle registration, mortgage or lease documents and the last few years of tax returns. With this information handy you will be able to fill out the necessary petition paperwork. The Chapter 7 bankruptcy forms you need can be acquired online or from your local federal courthouse.
Once you have correctly completed the forms you will need to complete the 2 courses necessary to file bankruptcy. Registration for those courses can be found online at www.bkcert.com. These courses can be taken online or over the phone and are not graded for correct answers, but rather for completion. The first course known as the Credit Counseling Course must be taken before your paperwork is filed with the courts. The second course called the Debtor Education course must be completed after your case is filed with the courts.
In order to file your Chapter 7 bankruptcy forms with the court you will be required to pay a filing fee of $306. This is typically a non negotiable fee, but if you feel that it will be a hardship for you to pay it then you can request a waiver from the court. Once your paperwork has been filed you will be notified by mail about the time and date of your bankruptcy hearing. The hearing is a requirement for anyone filing bankruptcy and must be attended. During the hearing you will be asked questions by your bankruptcy trustee about your financial situation and statements on your paperwork. The bankruptcy hearing normally lasts anywhere from 10-15 minutes.
Once you have completed your hearing you will wait 60-90 days before receiving your discharge paperwork in the mail stating that your bankruptcy case has been completed and it was successful. You are the only person that can decide whether or not a do it yourself bankruptcy is for you, but if you have any hesitation at all it may be best to consult with an attorney. Don’t let the attorney’s fees intimidate you, in most cases bankruptcy attorneys are willing to work with you on a monthly payment plan. Hiring an attorney could mean the difference between your bankruptcy being successful and clearing away your debts, or being incorrect and dismissed from court.
If you are looking into filing bankruptcy for the first time you may realize quickly that there is some vocabulary tossed around that doesn’t really make sense. One of many legal words is “discharge” and it is a crucial part of filing personal bankruptcy. So what is it and what does it mean for you? Here is some key information to know about a bankruptcy discharge:
1. What is it?
Technically a bankruptcy discharge is a legal order stating that the debtor who has just filed bankruptcy is no longer responsible for paying back certain unsecured debt. The discharge also prohibits any debt collection attempt against the debtor including letters, phone calls or legal action. Put simply, a bankruptcy discharge is the a piece of paper signifying that your bankruptcy has been completed and it was successful.
2. When is it received?
The timeline on when a bankruptcy discharge is received depends on which type of personal bankruptcy is filed. If a Chapter 7 bankruptcy is filed then the discharge is typically received 2-3 months after the debtor’s bankruptcy hearing. If a Chapter 13 bankruptcy is filed then the discharge will not be received until the 3-5 year repayment plan is complete. Under the current bankruptcy code the discharge paperwork is mailed to the debtor via the US Postal Service.
3. Can all debts be discharged?
Receiving your bankruptcy discharge in the mail does not instantly wipe away any and all debts you have. There are certain types of debt that cannot be discharged such as student loans, child support, alimony, and debts owed to the government like back taxes and parking tickets. Before going bankrupt you should have a chance to review what debts you will still be left with after you receive your discharge. If the debt you are struggling with is mainly nondischargeable debt, then filing a Chapter 13 bankruptcy may be your best option.
3. Can it be denied?
The bankruptcy court has the right to revoke any debtors discharge if they find that fraud has taken place within the case. Committing fraud when filing bankruptcy can happen in many different ways. Some common fraud findings are: deliberately omitting information from the bankruptcy paperwork, falsely obtaining a discharge, and not admitting to any additional income expected in the next few years. In most cases hiring a bankruptcy lawyer will help you avoid simple mistakes that the court views as fraud.
A bankruptcy discharge is the light at the end of the bankruptcy tunnel for most debtors. The process of filing for bankruptcy may be difficult and complex at times and in some cases it can take longer than you wanted it to, but in the end the financial fresh start that it provides is absolutely worth the wait. If you are dealing with large amounts of unsecured debt, like credit cards or medical bills, that you cannot see yourself paying off alone then filing bankruptcy may be an option you need to consider.