Wallace Law Office - Step by Step Through Your Case

Anastasia L. Karson

Elizabeth C. Wallace

Attorneys at Law

Suite 101

801 East Second Avenue

Spokane, WA 99202

(509) 326-3600

STEP BY STEP THROUGH YOUR CASE

1. Chapter 7 or Chapter 13
2. Information Gathering
3. Preparing Your Court Documents
4. Stopping Harassment, Lawsuits, and Garnishments
5. The Trustee and the Meeting of Creditors
6. Completing Your Bankruptcy - Discharge

Free Initial Consultation Information

Ask the Attorney a Question

Return to the Table of Contents

Step 1. CHAPTER 7 OR CHAPTER 13?

Chapter 7 (Fresh Start). Most people who have to file a bankruptcy want to get a fresh start and get it over with. You will not be allowed to file a chapter 7 (fresh start), however, if you have excess income.

Excess Income. One of the documents you have to file with your bankruptcy is a budget which demonstrates to the court how much income you have each month and how much you need to pay your taxes and living expenses. If your budget shows that you have income you do not need to pay taxes and live on, the court will require that you pay that excess income over to a trustee for a three year period in partial payment of the creditors. The plan under which you make those payments to the trustee is known as a "chapter 13" or "wage earner" plan. The attorney's will help you determine whether or not you have excess income based upon the information you provide at your free initial consultation. If you would like information regarding the free initial consultation, click here.

Means Test. Even though you may not really have any excess income, you may be forced into a chapter 13 case by an artificial calculation called the “means test” which is required under the new bankruptcy law. The means test is a projection of your future income, but it is not based upon your real income. It is based upon your income in the six calendar months before the month in which you file your case. For example, you may have lost your job this month and have no income now but the means test will pretend you have income based upon what you made in the past 6 months. The calculations in the means test are 6 pages long and make your tax return look like a coloring book. In some cases, you can avoid a chapter 13 by waiting a month or two to file your case. In other cases, you need to file before the end of the month in order to avoid being forced into a chapter 13. Only an experienced bankruptcy attorney can do your means test and advise you when to file your case. Anastasia L. Karson, attorney at law, will calculate your means test for your and advise you when to file based upon the information you provide at your free initial consultation. If you would like information regarding the free initial consultation, click here.

Chapter 13 (Wage Earner). In a chapter 13, your attorney prepares a plan which sets out how much money you will be paying to the trustee each month and how you want the trustee to apply the funds. If the judge agrees that your plan is feasible, it will be approved (confirmed). Then you make the monthly payments to the trustee for 36-60 months, and the trustee applies the funds as provided in the plan. The creditors receive a portion of the amount owed to them while you pay into the plan. When you finish making the plan payments the amounts not paid to the dischargeable creditors are discharged (wiped out). The means test may require that your chapter 13 plan be 60 months long and that you pay a certain amount of money, so it is very important that your means test is prepared by an experienced bankruptcy attorney.

Benefits of a Chapter 7 (Fresh Start). A chapter 7 is usually over in about 3 months, and there are no monthly payments to make. Most people get to keep all their property, and most debts are wiped out.

Advantages of a Chapter 13. A chapter 13 can do several very important things that a chapter 7 cannot. A chapter 13 can spread your delinquent taxes out over 3-5 years and protect you from the IRS while you pay. A chapter 13 can stop a foreclosure on your house and let you pay off the arrearage over 3-5 years. A chapter 13 can also wipe out certain debts which would not be wiped out in a chapter 7. The attorney's will advise you whether you should file a chapter 13 or a chapter 7 at you free initial consultation based upon the information you provide. If you would like information regarding the free initial consultation, click here.

Free Initial Consultation Information

Ask the Attorney a Question

Return to the Table of Contents

Step 2. INFORMATION GATHERING

This is the most important step, and it is not difficult. The information you gather will assist the attorney in protecting your property and stopping lawsuits and garnishments. Without the correct information the attorney cannot answer your questions or protect you and your property. You must include income information as well as information about your property and debts and about your financial affairs during the past year.

Property. In order to preserve your property, you must disclose its existence and claim it as exempt. Whatever you do not claim as exempt will be taken by the bankruptcy trustee, liquidated, and distributed to the creditors in partial payment of their claims. If you leave out an IRA, real estate, vehicle, bank account, or some other property, you may get a real shock later when the trustee seizes it for the creditors! You must correctly describe all your property in order to claim it as exempt. Anastasia L. Karson, or Elizabeth C. Wallace will advise you about how to protect your property based upon the information you provide at your free initial consultation. If you would like information regarding the free initial consultation, click here.

Debts. When your papers are filed with the court, the court will send a letter to all the creditors you have listed at the addresses you have provided. That letter will put the creditor on notice that you have filed bankruptcy and that the creditor will have to cease trying to collect from you. Only the creditors who get the notice will have to leave you alone, however, so it is very important to list all creditors with correct addresses. If you do not list a creditor with a correct address, that creditor may be able to sue you even though you have filed bankruptcy!

Help Gathering Information. Anastasia L. Karson, or Elizabeth C. Wallace will help you list all your property based upon the information you provide at your free initial consultation. If you would like information regarding the free initial consultation, click here.

Free Initial Consultation Information

Ask the Attorney a Question

Return to the Table of Contents

Step 3. PREPARING YOUR COURT DOCUMENTS

The bankruptcy court has mandatory forms which must be filled out in order to get you the protection of the Bankruptcy Act. If you want to protect your property and get protection from your creditors, your case must be filed using these mandatory forms.

Washington State. The mandatory forms are meant to be uniform throughout the United States, but each court may require specific forms which are not required in other courts. For example, the forms required in Eastern Washington are slightly different from the forms required in Western Washington. Anastasia L. Karson, or Elizabeth C. Wallace will select and prepare the appropriate forms for your case. If you would like information regarding the free initial consultation, click here.

Free Initial Consultation Information

Ask the Attorney a Question

Return to the Table of Contents

Step 4. STOPPING HARASSMENT, LAWSUITS, AND GARNISHMENTS

When your attorney files your properly prepared bankruptcy petition at the bankruptcy court, a federal court order automatically comes into effect which stops (stays) most types of collection actions against your property. This court order is called the "automatic stay."

The Automatic Stay. The automatic stay is a very powerful order which is designed to stop creditors from seizing your property while the bankruptcy case is going on. It affects credit card companies, medical bill collectors, landlords, mortgage companies, and even the IRS. Creditors who are affected by the automatic stay must immediately stop harassment, lawsuits, garnishments, and all other attempts to make you pay them money. If they fail to cease collection efforts, they can be held in contempt of court and fined. Certain special types of debt collection are not stopped by the automatic stay, such as child support or alimony garnishments. At your free initial consultation Anastasia L. Karson, or Elizabeth C. Wallace will advise you regarding which of your creditors will be stopped by filing a bankruptcy. If you would like information regarding the free initial consultation, click here.

Notice of the Automatic Stay. The time at which the creditors must cease collection is when they receive notice of the filing of the bankruptcy. The bankruptcy court normally sends out the notice about a week after the filing, but sometimes the notices go out late. There are ways you can stop garnishments and lawsuits faster than waiting for the court notice to come out, and Anastasia L. Karson or Elizabeth C. Wallace will advise you about this.

Foreclosures. The automatic stay also applies to home foreclosures. In a chapter 7 case the automatic stay only lasts for about three months, however, and the foreclosure can resume after the automatic stay is lifted. In a chapter 13 case the automatic stay can stay in place long enough for you to make up the past due payments.

Free Initial Consultation Information

Ask the Attorney a Question

Return to the Table of Contents

Step 5. THE TRUSTEE AND THE MEETING OF CREDITORS

The Trustee. When your case is filed a bankruptcy trustee is appointed to administer any non-exempt property you may have. The trustee begins by looking at the papers which your attorney has prepared to make sure that your attorney has properly listed all your property and claimed the appropriate exemptions. If the trustee finds any non-exempt property, the trustee will liquidate it and distribute the proceeds among the creditors in partial payment of the amounts owed to them.

Property Transferred to Relatives. The trustee also has special powers to get back any property which you have transferred to relatives or other "insiders" before you filed bankruptcy. Once the trustee has retrieved the property, the trustee will liquidate it and distribute it to the creditors. This is why you should NEVER try to save your property by putting it in someone else's name. In most cases there is a legal way to protect your property. Hiding property actually makes it more likely that you will lose it! Anastasia L. Karson or Elizabeth C. Wallace, will advise you about the best way to protect your property based upon the information you provide at your free initial consultation. If you would like information regarding the free initial consultation, click here.

The Meeting of Creditors. Your meeting of creditors will be held about a month after your bankruptcy petition is filed. At the meeting you will be sworn in and you will have to testify under penalty of perjury that you have listed all your property and have told the truth about the other matters in your court documents. The trustee will ask about any property which the trustee believes may not be exempt, and any creditors who are present will also be given a chance to ask you questions. The documents prepared by our attorneys, are so complete that meetings of creditors for her clients average less than a minute long. It is possible for any meeting of creditors to drag out because of questions from the trustee or creditors, however, and that is another reason why you should have an attorney present with you at the meeting of creditors. Anastasia L. Karson and Elizabeth C. Wallace attend all meetings of creditors with his clients. If you would like information regarding the free initial consultation, click here.

Free Initial Consultation Information

Ask the Attorney a Question

Return to the Table of Contents

Step 6. COMPLETING YOUR BANKRUPTCY - DISCHARGE

Discharge. In a chapter 7 case the bankruptcy court will usually send you a "discharge" approximately 60 days after your meeting of creditors. The discharge is your notice that your case is complete and that all dischargeable debts have been discharged (wiped out). So, after your meeting of creditors, you just wait for 60 days and hope nothing happens. Unfortunately, a lot of things can occur before the end of that 60 day period to interfere with your discharge.

Substantial Abuse. If you file a chapter 7 case but your budget is improperly prepared, a motion will be filed to dismiss your case for what is called "substantial abuse." This means that the United States Trustee believes that you have the ability to repay a meaningful portion of your debts you are trying to avoid doing so. This type of motion is very rare if your papers are prepared correctly. This is yet another reason why you should have an attorney assist you in preparing your court documents. If you would like information regarding the free initial consultation, click here.

Concealing Property or Failing to Cooperate. A motion to deny your discharge may also be filed if the trustee discovers that you have hidden property from your creditors or you have destroyed evidence or failed to follow an order of the bankruptcy court.

Adversary Proceedings. Any of your creditors can file what is called an "adversary proceeding" if the creditor believes he can prove that you have done something wrong, such as providing false information on a credit application or running up an account without the intent to pay it. The creditor has to actually file a separate lawsuit, pay a filing fee, and bear the burden of proving that you did what the creditor alleges. If the creditor is successful, you will have to pay that creditor but you may still receive a discharge from all your other debts. You can lessen the risk of having an adversary proceeding filed by taking certain steps before filing your bankruptcy. Anastasia L. Karson or Elizabeth C. Wallace, will advise you about the risks of an adversary proceeding in your case upon the information you provide at your free initial consultation. If you would like information regarding the free initial consultation, click here.

Chapter 13 Cases. Chapter 13 cases do not end 60 days after the meeting of creditors because you have to make monthly payments to the trustee. Because you are paying back a portion of your debts in a chapter 13 case, you are much less likely to have an adversary proceeding or a motion to dismiss filed.

Free Initial Consultation Information

Ask the Attorney a Question

Return to the Table of Contents