Presentation on theme: "Legal Aid of Nebraska Lea Wroblewski (402) 435-2161"— Presentation transcript:
Legal Aid of Nebraska Lea Wroblewski (402)
Introduction to Bankruptcy Consumer Bankruptcy Who files and why? Assets and debts Automatic Stay Discharge
Consumer Bankruptcy Chapter 7 – straight bankruptcy or liquidation Chapter 13 – wage earner’s bankruptcy or repayment – also special structuring of debts Different requirements and outcomes
Process for Clients Collect a LOT of documents (paystubs, tax returns, bills, bank statements, etc.) Meet with attorney to answer questions (my questionnaire is 50 pages long) Wait while we draft everything Meet to review and sign For a Chapter 7 bankruptcy it takes three months once the case is filed and the client will probably never see a bankruptcy judge; a Chapter 13 lasts 3-5 years
Pre and Post Bankruptcy Counseling Part of the Great Bankruptcy Reform Clients are required to take credit counseling prior to filing bankruptcy Clients are required to take financial management prior to getting a discharge $20-$50 a class
Means Test Another solution to the great Bankruptcy Problem You can’t file a Chapter 7 bankruptcy if your average income over the six months prior to filing is over the median income for a family of your size Deductions are allowed
341 Hearing/First Meeting of Creditors Debtor’s SideCreditor’s Side Represented by the Trustee Trustee and his office have read and analyzed all the bankruptcy documents prior to the hearing May ask to inspect property May object to objections May seize property to sell and distribute to creditors
Why do people file? 42% of personal bankruptcies are due to medical expenses (78% of those who filed had insurance!) 22% of personal bankruptcies are due to job loss or change (credit cards, payday loans, nagging creditors) 15% of personal bankruptcies are due to over spending – credit cards, mortgages, expensive cars, etc.
Giant Pause Button Everything stops Start over Establish a financial plan
Wait. What about my stuff?
Real Estate Homestead up to $60,000 You have to reside in the house You have to be married, have a dependent or be 65 years of age Trailers included Proceeds of the sale of your homestead for up to six months
Life Insurance Proceeds
Immediate Personal Possessions Wedding rings
Burial Plots, tombs, crypts
Personal Injury Awards No limit Must not be comingled or lose it’s identity
Retirement Benefits Vary based on profession and source Reasonable and age based
Professionally Prescribed Health Aids No limit Wheelchairs, oxygen tanks, etc.
Furniture and Household Goods $1500 per debtor Fair market value
Public Benefits Worker’s compensation Aid to blind, aged, and disabled
Tool of the Trade $2400 per debtor Tools for work (hair dresser and mechanic) Vehicle used for transportation to and from work
Wildcard $2500 per debtor Can be any kind of property but real estate Bank accounts, a second vehicle or equity, Mickey Mantle baseball, etc.
What about the debt?! Secured Unsecured Nondischargeable
Co-Debtors Automatic Stay does not apply in a Chapter 7 but does in a Chapter 13 Can collect from the co-debtor in most cases Property settlements will not stop creditors in state court
Mortgages Can cure a defaulted mortgage in a Chapter 13 Can strip off an unsecured mortgage Modify terms of mortgage
Unsecured Debts Medical bills, credit card bills, student loans, personal loans, child support Being unsecured does not guarantee that the debt is discharged
Repo Man for the Department of Education
Nondischargeable Some tax debts Child support Alimony Fraudulently obtained debts – ex: unemployment overpayment or personal loans Property Settlements from a divorce
Why file? Advantages Protection Assistance Clear debts Peace of mind Rebuilding Quality of life Time Disadvantages Fees Restrictions Business closure Hard to get credit Still have debts Career Income Assets
Discharge Order Does not list specific debts discharged If there is not a specific order regarding fraud or value or the treatment of a secured claim, then the debt is generally discharged Sent to all creditors and codebtors Violation of the discharge order can result in sanctions
Resources National Consumer Law Center Surviving Debt: Counseling Families in Financial Trouble US Bankruptcy Court for the State of Nebraska website Local consumer bankruptcy attorneys