Published Tuesday, July 28, 2009 @ 6:21 am

Before the deservedly unpopular 2005 reforms to the Bankruptcy Code, it was rare that an innocent mistake could cause your discharge to be denied or revoked. It used to be that trustees and the courts reserved this harsh measure for those situations where it was clear that a person filing for bankruptcy had engaged in serious, persistent and intentional misbehavior. Now, in the aftermath of the reforms, it is even more important than ever to hire a competent bankruptcy attorney to help you navigate a bankruptcy filing, not just because the reforms made declaring bankruptcy much more complicated, but also because a mistake could cause your discharge to be revoked or denied. And what’s the point of declaring bankruptcy if you don’t get your debts discharged? That bankruptcy isn’t going to help you at all, probably, and it will almost certainly hurt you.

There are several situations you must be on the lookout for to avoid having your discharge denied or revoked. First of all, under the reforms, a prerequisite for receiving the discharge is the completion of a financial management course. This course is one hosted locally in your area and approved by your bankruptcy case trustee. You will only be exempted from completing this course if a good one isn’t available nearby. Although the educational value of these courses is questionable, all debtors must fulfill the requirement or forfeit their discharge.

The bankruptcy trustee can demand a great deal of information from you over the course of your bankruptcy. One of the more onerous demands is the production of your last four years of tax returns. If the Trustee demands the returns and you fail to produce them, your discharge could get dismissed outright. If you’re bothered by this requirement, well, who can blame you? It seems like your tax returns are private financial information that should remain so, even during bankruptcy. There is a little bit of latitude for protecting your privacy: you can opt to send transcripts of the returns (also known as summaries) instead of the full filings; these contain less personal information. Avail yourself of this option by requesting summaries from the IRS.

And we’re not done yet! If you’re filing for bankruptcy under Chapter 13 and you owe child support or alimony, it’s time to get caught up. In order for your debts to be discharged at the end of the process, you must be completely up to date on your support payments. The good news is that if you are behind, the arrears can be caught up in your Chapter 13 plan. Your ongoing payments must continue to be paid over the course of your bankruptcy. It would be a real shame to get to the end of the process, having made all of the required plan payments, only to have a problem because you missed a few support payments along the way. Protect your discharge by paying these on time.

Finally, it should hardly need to be stated that you must tell the truth and avoid fraudulent activity during your filing. Remember that even if your intention isn’t to commit fraud, an innocent mistake could be interpreted as such if the effect is to obscure some part of the process or misrepresent your position in any way.

With all of these potential quagmires, it’s imperative that you consult with an experienced bankruptcy attorney. In North Carolina, contact the Law Offices of John T. Orcutt- helping families since 1985. 1-800-899-1414.

Durham bankruptcy attorney. Raleigh bankruptcy attorney. Wilson bankruptcy attorney. Fayetteville bankruptcy attorney.

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Published Tuesday, July 14, 2009 @ 8:21 am

We all make mistakes, but some are more costly than others. So how costly is it if you forget to list a debt in your bankruptcy paperwork? There’s no need to panic; forgetting to list a debt isn’t the end of the world. However, depending on what kind of bankruptcy you file, it can cause some problems in your bankruptcy. Here’s a quick rundown of the different scenarios in which you might forget to include a debt and what the consequences might be if you’re not able to fix the problem.

Let’s look at Chapter 7 first. If you’re like 96% of people who file for bankruptcy under Chapter 7, your case is a no-asset case. This means that you don’t have any non-exempt assets that will be liquidated to pay off creditors. Basically, your creditors aren’t going to get any money anyway, so it doesn’t really matter to them, practically speaking, if you list the debt or not. Thus, most courts will simply say that the debt was discharged, too, along with all the others, although you forgot to list it. However, this is no reason to give your attorney incomplete information. If you’re going to file for bankruptcy protection, it pays to do it right, so don’t count on a flexible rule like this one to clean up after you.

One important benefit of getting everything right is that you’ll have a straightforward set of paperwork to deal with the credit bureaus and new creditors in the future. If you forget to list a debt, it won’t appear in your bankruptcy schedules, which is what you will need to send to the credit bureaus once you’re ready to re-establish your credit.  Having to iron out the issue in post-bankruptcy will only case you unnecessary trouble, not to mention potential lawyer’s fees. Another reason to to get the list right is to allow you to take advantage of the 60 day bar rule, should it apply to your case.

What if you are in that rare 4% of Chapter 7 filers with asset cases? This one is a little trickier. In order to have the debt discharged, you will have to prove that the creditor knew or should have known that you were filing for bankruptcy, and that he had adequate notice to prepare a proof of claim for his share of the liquidated assets. Creditors usually have 90 days after the 341 meeting of the creditors to file a proof of claim. As you can see, this is a bit more involved than a no-asset case, so you want to be especially careful to track down all your debts and list them; otherwise you might get stuck with a debt even though your bankruptcy filing went smoothly otherwise.

As for Chapter 13 cases, if you don’t correctly list the debt, it won’t get discharged. For this reason, it is extremely important that you provide your attorney with a complete and accurate list of all of your debts, even those you don’t agree that you owe. If it’s not listed, it doesn’t get discharged, and the creditor can come after you to collect on the debt even after you have completed your Chapter 13 plan.

It pays to be careful with your bankruptcy filing and to work with an expert who can help you catch mistakes. Make sure to work with an experienced bankruptcy attorney who will help you make bankruptcy the smartest financial decision of your life.

The Law Offices of John T. Orcutt have helped thousands of families with bankruptcy relief. Call 1-800-899-1414 for your free initial debt consultation.

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Published Thursday, July 9, 2009 @ 11:23 am

But you must resist!

You’ve caught on to the fact that certain kinds of debts are “better than others.” Knowledge is a good thing, but don’t get confident that you’ll be able to pull a fast one by trading off a non-dischargeable debt for a dischargeable one. The consequences simply aren’t worth it. Here again is another great reason to count on an experienced bankruptcy attorney when filing your case; he will help you act strategically to maximize the benefits of bankruptcy while helping you avoid the pitfalls and mistakes.

Most loans are unsecured and will thus be discharged altogether in most Chapter 7 cases, and discharged after successful completion of the payment plan in a Chapter 13 bankruptcy. With this knowledge, some people get the bright idea to, for example, take out a new credit card, max out the cash advance, and use that to pay some non-dischargeable debt. They then file for bankruptcy hoping nobody will catch on. Huge no-no.

If you file for bankruptcy and the person who made that loan to you can prove that you were already contemplating the bankruptcy, he can petition the court to have the discharge denied on the basis of fraud. Even worse, he may be able to persuade the court to deny discharge altogether, not just for his debt but for all your debts. A Chapter 7 or 13 bankruptcy can be outright dismissed on bad faith grounds if the creditor can prove what you did.

To prove a fraud claim, the creditor will need to show that, at the time you took out the unsecured loan, you did not intend to pay it back, so obviously the court is going to consider things like the interval between the loan and your bankruptcy filing. This is a huge headache you don’t want for your case.

Yet another reason you want to avoid one of these shady deals is that some of the debts you are trying to pay off may be priority debts, and if left unpaid, they could help you pass the means test. In other words, by paying down the priority debt with an unsecured line of credit, you might make yourself ineligible for a Chapter 7 altogether or make a Chapter 13 much more costly than it needs to be. Examples of priority debts include taxes, child support, alimony or personal injury claims arising from driving under the influence.

You might also want to keep in mind that the trustee can take back payments made to non-dischargeable unsecured creditors made within 90 days of the bankruptcy. So let’s say you take out a cash advance, use the money to make a big payment on your non-dischargeable student loan, and then file for bankruptcy. If your trustee decides to take the payment back, you still owe the original creditor, PLUS now you owe a new guy you took out the cash advance with. What a waste!

Trickery looks inviting, but it can land you in big trouble. Play it safe and stay away from anything that looks like fraud.

If you’re in North Carolina and considering filing for bankruptcy, contact the Law Offices of John T. Orcutt today. With convenient offices in Raleigh, Durham, Fayetteville and Wilson, call 1-800-899-1414 to set up your free initial debt consultation.

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Published Tuesday, June 30, 2009 @ 2:15 pm

There are at least three excellent reasons why should be very circumspect about reporting your assets accurately when you file for bankruptcy. The failure to list assets can have a serious impact on your case and your future ability to file. Be careful to advise your bankruptcy attorney of all assets, regardless of how insignificant the asset may seem. Consider these important reasons to accurately list your assets:

First, and perhaps most importantly, inaccurately reporting assets could land you in jail. Since almost everything you turn in in connection with your bankruptcy will bear your signature, fraudulent misrepresentation on these forms is perjury. At a guess, you’re not trying to go to jail, right? Thus, make sure those forms are accurate!

Second, if your bankruptcy trustee catches on to any funny business with your assets, he could ask the court to deny your discharge. This one doesn’t sound much better than jail time: you’ll have a bankruptcy on your record, you’ll lose the ability to declare bankruptcy for the next several years, and you get nothing for your troubles. Remember that a lot of the actions you take in connection to your assets can easily be discovered by a prudent trustee; a fraudulent transfer of title, for example, will probably be on the public record, where anyone, including your trustee or one of your creditors, could look it up. Playing games here is both wrong and foolish.

Third, accurately reporting an asset could actually help you keep it in the end. Remember that legal technicalities can shape the broad strokes of your case, and make those technicalities work for you! Here are a couple of situations in which your accurate reporting of assets can help you keep them:

One scenario involves an asset you claim as exempt. When you claim an asset as exempt and accompany it with an accurate description, the trustee and your creditors only have 30 days following the 341 meeting of the creditors to raise an objection. If they miss this deadline, the property becomes exempt even if the court could have challenged the exemption of that asset by objecting in a timely manner. This one can really turn out in your favor, and it is not a trick, it’s the way bankruptcy is supposed to provide efficient, workable solutions both for creditors and borrowers.

Even if you’re not claiming an asset as exempt, accurately describing it and listing it could help you keep it if your trustee fails to sell it while your case is still open. If this happens, the asset is considered “abandoned,” and it means that when the case closes,  the asset becomes yours once more. This is a great possibility you definitely want to reserve for yourself, but on the other hand, not reporting accurately could really hurt you. If you do not accurately describe an asset, your case could be reopened even years down the line. Imagine getting all the way through the bankruptcy process and beginning to rebuild your life only to have the case barge back into play years down the line. What a headache! Thus, keep this rule of thumb close when you file: make sure you accurately list your assets. Hire a bankruptcy attorney who will assess your total financial situation and advise you on protecting all of your assets.

From: The Law Offices of John T. Orcutt, with convenient office locations in Raleigh, Durham, Fayetteville, and Wilson. Call (toll free) 1-800-899-1414, to set up a free, confidential debt consultation. Visit www.billsbills.com for more information.

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