Phone: 717-304-1841   Email: cutaialaw@gmail.com

 

You will start to get mail from the bankruptcy court, with important information and notices.

 The notice for the small conference with the Trustee you have to attend will be one of those notices This conference is called the "341 Meeting of the Creditors." The "341" comes from the section in the bankruptcy code that discusses the requirement of the conference.  Remember that even though that conference is called the “Meeting of the Creditors,” your creditors won't show up. To learn more about the Meeting of the Creditors go here.

 

 Automatic Stay:  Once you file bankruptcy, the automatic stay kicks in

 This prevents creditors from contacting you or taking any action to collect a debt.  It stops lawsuits, foreclosures, sheriff sales, IRS action (including IRS wage attachments) and collection calls.  If you are facing imminent collection action, such as a sheriff sale, we will contact that creditor immediately with the bankruptcy notice and contact the sheriff’s office.  However, your credit card companies will get notice in the mail that you filed.  They will continue to call you until they get official notice - but if you provide them with your bankruptcy petition number when they call you, they must stop calling you even if they have not received the notice in the mail.  If a creditor continues to call, you must take down that creditor’s name and phone number and contact us with that information.

 

Payments for Secured Debts

 Your car loan company, or mortgage company, may no longer allow you to pay online through their websites and may even send you a letter with a special address for you to send your payments.  This is not uncommon and nothing to be worried about it. Remember, if you want to keep your car or house, you should be making your regular payments. If you do NOT want to keep your house or car, then you should not be paying these loans unless we discussed something different prior to your bankruptcy being filed. If you are not sure if you should be making these payments, CONTACT US immediately. Do not guess as to whether you are to be making these payments or not.

 

Security Deposits

Rarely, a utility company may require a security deposit from you for future services, generally only if you listed a past due amount in your bankruptcy but this is possible even if you have not listed a utility company as a creditor on your petition.  Usually, this deposit is less than $300, and you may be given two months to pay it.

 

Reaffirmation Agreements

Car companies always want debtors to “reaffirm” their car loan - this means that it is as if this debt was not discharged. As we discussed during your consult, a bankruptcy discharges ALL debts that are not otherwise excluded (like some taxes and student loans for example). This means that secured debts, like a mortgage note or car loan, are also discharged. However, in most circumstances, if you want to keep the property you will need to continue to pay on the debt, even though it is discharged. You don't always have to reaffirm the debt to do that. Other secured creditors, such a jewelry or furniture companies, may also request reaffirmation or the return of the collateral (often you can make these creditors an offer in compromise - a lump sum cash payment that is significantly less than the amount of the outstanding balance - if you want to keep the collateral). Reaffirmation agreements are complex, and if we do get one, we will forward it to you with a detailed explanation about your options and we can discuss it at that point in time.  Note that you are not required to reaffirm your mortgage to keep your house.

Adding Creditors

You can add creditors right up to the discharge in a Chapter 7 bankruptcy (and in most Chapter 7 bankruptcies you can add a PRE-PETITION creditor that you forgot to list by opening up your bankruptcy (there is a cost to do this). In a Chapter 13 there is a deadline to add creditors but generally you can add creditors until your Plan is confirmed.   Please note that we would prefer you not wait until the last minute to add creditors.  There is a $30 fee to add creditors each time you do it, and you will have to make that payment in advance or within five days of us adding the creditors.  If you do not make the payment within that time, the Court will “kick out” your amendment and those creditors will not be added.

 

 As we discussed when we were completing your petition, all of your creditors needed to be listed on your petition if you owed them any money at all.  However, even if you have a credit card that does not have a balance, that credit card company will eventually find out you have filed bankruptcy (they routinely pull credit on their customers) and that card will be closed.  When you file bankruptcy you will no longer have any credit cards or lines of credit that you can continue to use (except sometimes if you have a line of credit on your house (second mortgage), you may be able to draw from that after you file bankruptcy).  

You WILL get credit again; often within 6 to 12 months after your chapter 7 is complete (which is usually about five months).  If you are in a chapter 13 you will get credit card normally offers in about 2 years after you file your petition but in a Chapter 13 you have to ask the Court for permission to incur additional debt. BE CAREFUL of credit cards with very high annual fees (sometimes as high at $200) and high-interest rates.  You will likely get offers for secured credit cards, where you pay a security deposit and are given credit of twice your deposit.  To improve your credit score, you should make sure the balances on any credit cards are LESS THAN 50% of the available credit on that card.  It is better to have two cards, with a $1000 credit limit on each, and a $500 balance on each, than to have two cards, with a $1000 credit limit on each, and a $1000 balance on one and a $0 balance on the other.  It is also better to maintain that small balance on a credit card and make payments on it - more than the minimum payment but less than paying it all off - to improve your credit score.

 

CHAPTER 13 CLIENTS ONLY

You will get a notice from the Trustee as to where you should send your payments.  You will also get a coupon booklet that will have a BLANK space where the dollar amount of the payment should be. You will write in the amount that we discussed with you at the time we filed your Plan. Please keep in mind that just because you are an in a Chapter 13 it does not mean you have to stay in a Chapter 13 if your circumstances change.  If your income decreases significantly, you may be entitled to have your payment decreased, or you may even qualify for a conversion to a Chapter 7. If you do not make your Chapter 13 payment to the trustee on time, or if you fail to make it, the Trustee will file a motion to dismiss with the Court.  We can sometimes amend your Plan and roll that past due amount into the Plan. Please keep in mind there is an additional fee of $500 for doing this if we are amending your Plan after it is confirmed, and you must pay for postage because amending a confirmed Plan requires the filing of a Motion and the bankruptcy court does not mail out that motion to all of your creditors; we do.  Also, rolling in past due payments will obviously increase your overall payment for the rest of your Chapter 13.  

 

Finally, the Trustee ALWAYS requires a wage attachment if you fail to pay and have to amend your Plan or otherwise catch up on a past due amount. Incur Debt: You cannot take out a loan or credit card that you have to pay back during your Chapter 13 without the Court's permission. Loans that are not required to be paid back during that time can be incurred, for example, student loans that are deferred. Note that there have been some changes to the student loan laws regarding how long graduate school loans can be deferred.