BANKRUPTCY

FAST FILE PROGRAM

Don't stress this tax season.
 
Ask us how you can apply your tax refund toward your bankruptcy.
 
The first step in the bankruptcy process is to think about what you own and what you owe. Determine your monthly net take home pay and living expenses. Checkett & Pauly will need all of this information to advise you about bankruptcy as a possible solution to your credit problems. We provide a five or ten minute initial telephone discussion to determine if we can assist you as well as face to face consultations (by appointment only) which are completely free. The meeting will be more productive if you complete our bankruptcy questionnaire before the first appointment. If you wish to take advantage of our Fast File Program be sure to tell the receptionist, so that you come to the office with all the necessary documents. We look forward to working with you.
 
Checkett & Pauly is pleased to be the only area law firm to offer same day bankruptcy. To be eligible for this new service you must bring the following to your appointment:

CHAPTER 7

Frequently Asked Questions

The Bankruptcy Reform Law, which went into effect October 17, 2005, was the most dramatic change in bankruptcy law since 1978. There are now several requirements debtors must now comply with before and after filing their case.

Why do I have to take a credit counseling course?

Debtors are required to take a credit counseling and a debtor education course. The pre-filing course is an evaluation of your income, expenses, and debts and must be taken within 180 days before filing. It is important to understand this certificate will expire 180 days after you take the course. If you do not file your case before the certificate expires, you will need to take the course again. The post-filing, or debtor education course, aims to teach debtors how to handle their finances. This class must be taken and your certificate filed with the Court before you are able to obtain your discharge of debt.

Why do I have to provide all of my paystubs?

The bankruptcy is an evaluation of your income during the six months prior to filing your case. The Court looks at your average income to assess whether you are eligible to file a Chapter 7 or a Chapter 13 case. Checkett and Pauly conducts an analysis of your income based on the six-month time frame. In order to complete this analysis, we must have six months of paystubs. (Tips For Collecting Payroll)

What if I don’t receive a paycheck?

If you haven’t received a paycheck at any time during the six-month time period, you will file an affidavit stating same with the Court. If you received some paychecks but not every month during the six months prior to filing, we will need copies of all paychecks received during the six-month time period. If you have received unemployment during the six months prior to bankruptcy, unemployment compensation also must be included.

Why do I need a credit report?

A credit report is an excellent way to make sure all of your creditors are listed in your bankruptcy.

Will I be getting rid of all of my debts?

The majority of debts are dischargeable. Credit cards, medical debts, repossessed vehicles, and foreclosed residences are just a few examples. However, debts such as student loans and certain tax debts are not dischargeable and you will be required to continue to pay them after your bankruptcy is finalized. Our attorneys can answer any questions you have regarding these types of debts.

See our Bankruptcy Client Resources page for helpful links.

CHAPTER 13
Many clients ask us about Chapter 13. They know Chapter 13 is a way to pay some or all of their bills, essentially a reorganization for the working man and woman.
 
However, for all its good intentions, Chapter 13 has its problems. It is more expensive, more complicated, and takes longer than the Chapter 7 bankruptcy—all a difficult recipe for people already in financial trouble. Attorney fees are higher for Chapter 13 than they are for Chapter 7. Instead of taking a few months, Chapter 13 cases persist for three to five years. You are not allowed to take on new credit while in Chapter 13 and have to get court permission to purchase a car or obtain a loan.
 
Chapter 13 is a good alternative for people who find themselves in one of the following categories:

  • You are behind on your home loan and want to keep your house. If you have had problems and have missed the loan installment payments on your home, you can catch up the payments over a period of time in Chapter 13 and still keep the house. Of course, while in Chapter 13, in addition to the catch-up payment, you must also stay current on your regular monthly home loan.
  • Income. You have what the court considers high income. This means, for your household size, the income your household received during the six-month time period was more than the average household income and you do not qualify for a Chapter 7 bankruptcy.
  • You have received a Chapter 7 discharge within the previous eight years. You cannot file another Chapter 7 until at least eight years have passed. However, you can file a Chapter 13, right after Chapter 7, but it must be done in good faith. In fact, there are some times when for strategic reasons we file a Chapter 13 immediately after Chapter 7 (known in the business as a "Chapter 20") to get our clients very good results.
  • You have assets that would be lost in a Chapter 7. In a Chapter 13 bankruptcy you are entitled to keep certain exempt items; in Missouri, that means $15,000 equity in a home, $1,000 for each person in automobile equity, unlimited amounts in pensions and retirement, and other items too numerous to mention. If you would lose some or all of these assets in a regular bankruptcy, a Chapter 13 will allow you to keep the assets, pay your creditors, and at the end of the case have all of your bills wiped out. Please read two articles on our website "Missouri's Unlimited Bankruptcy Exemption" and "Missouri's Bankruptcy Exemptions."
  • You have a vehicle worth substantially less than what you owe on it. Under Chapter 13 you are allowed to keep a vehicle by paying its value, not necessarily the amount of the lien, over a term of up to five years at a low rate of interest. This can be a substantial advantage to people who are "upside down" on a vehicle loan.
  • You have non-dischargeable tax debt. If you have more tax debt than you can pay and it cannot be wiped out in a regular bankruptcy proceeding, Chapter 13 is a good way to pay the taxes over five years without any penalty and hold off the tax collector.
  • You want to pay your bills. We often hear from people who have tried working through credit counseling firms, even the so-called nonprofit organizations, and find that after paying for years they have gotten absolutely nowhere. The problem with the credit counseling companies is that in many cases the beginning payments go entirely to the counselor's fee and even after that, part of your remaining installments still go to the credit counselor and not to the credit card company. It is common for the credit card companies to refuse to reduce interest while you are working with a counselor, all of which leads to the dilemma of people trying their best to pay their bills and getting nowhere. Chapter 13 stops the interest and the credit card companies have no choice but to go along with your payment plan.

How to Calculate Your Chapter 13 Payment
The next logical question is how much will you have to pay in Chapter 13? The payment plan will vary and is often a subject of dispute between the trustee and the attorneys at Checkett & Pauly. While there are a number of factors more complicated than we can discuss in this article, as a general idea, plan on the following:

  1. Add up the total amount of the assets you would lose in Chapter 7. This is where it gets tricky. As we said, in Missouri you are entitled to $15,000 equity in a home, $1,000 for each bankruptcy debtor in a vehicle, and $1,000 in household goods. There are also some wild cards and a few other exemptions, but the homestead, the household goods, and the cars usually play the most important part. (See the article on our website on Missouri bankruptcy exemptions.)
  2. Determine the higher of the amount you would lose in Chapter 7 against priority debts such as taxes or child support, which must be paid in full in Chapter 13.
  3. Factor in any past due payments on your home mortgage. Add to your arrearage the specified interest rate specified in your mortgage contract.
  4. Determine the amount of your disposable income for at least three years. This is calculated using a worksheet we will file with the Court showing all of your income and wage deductions, as applied to your regular monthly expenses.

 
After you have calculated all of that, add 10% to cover the fee that is going to be charged by the Chapter 13 trustee. (You don't work for free and neither does the trustee.)
 
Now, take the final number and divide by as short as 36 or as long as 60 payments.
 
Frequently Asked Questions
How long do I have to stay in a Chapter 13 bankruptcy?
The minimum amount of time is three years and the maximum amount of time is five years. We adjust the length according to your plan payment.
 
What if I need to purchase a new vehicle or want to do a loan modification while in the Chapter 13?
You are eligible to incur debt while in a Chapter 13; however, it has to be court approved. If this happens during your bankruptcy, please contact our office and we will walk you through this process.
 
In Conclusion
When a potential client visits us at Checkett & Pauly, we always discuss both Chapter 7 and Chapter 13, and help you compare the pros and cons of each. Hopefully, this article can help you consider Chapter 13 as an important alternative before your first appointment with Checkett & Pauly.
 

FREE BANKRUPTCY CONSULTATION

To discuss your bankruptcy needs with our Carthage bankruptcy attorneys, call (417) 358-4049 or fill out the contact form on this website.

 

We are a debt relief agency. We have helped help people file for bankruptcy relief under the Bankruptcy Code since 1977.