Finding a lawyer in Pittsburgh experienced in chapter 13 bankruptcy
Information on Chapter 13 Bankruptcy and Finding an Experienced Lawyer
Are you considering filing a chapter 13 bankruptcy case without a lawyer? Before deciding to file a bankruptcy petition without an attorney, you should consider that less than 3% of debtors who file chapter 13 cases on their own are successful. Chapter 13 bankruptcy cases often involve complex calculations, procedural hurdles and occasionally counterintuitive laws that balance the interests of debtors and creditors. Missteps by debtors who have had no legal guidance often result in their cases being dismissed. Since most chapter 13 debtors seek bankruptcy protection in order to save their homes from foreclosure, the consequences of dismissal of chapter 13 cases can be catastrophic. Before you decide to file bankruptcy without a lawyer, why not allow yourself the benefit of a free initial consultation to help you understand the road ahead?
The No-Cost Chapter 13 Bankruptcy Consultation
While bankruptcy lawyers are not required to provide free consultations, many attorneys will agree to meet with people in financial distress for an initial discussion. For people facing mortgage foreclosure in Pittsburgh, there is simply no reason not to take advantage of a no-cost discussion with an experienced bankruptcy lawyer in Pittsburgh.
A free initial consultation will give you an opportunity to ask questions about the chapter 13 process. Additionally, a bankruptcy attorney with experience in chapter 13 cases may be able to provide valuable insight into how chapter 13 cases are handled in your jurisdiction. Procedural differences among bankruptcy courts can often be profound, and understanding those nuances prior to filing your case can be critical to achieving your bankruptcy goals.
The initial consultation will also be an opportunity for you to “interview” the attorney offering to represent you throughout your chapter 13 case. It is important that your lawyer can effectively communicate with you. You should be able to get complete answers to your bankruptcy questions. The initial consultation serves as an opportunity for you to build a relationship of trust with your bankruptcy attorney.
The bankruptcy schedules are the primary forms that debtors use to reveal their basic financial information. Disclosure of debtors’ financial condition is an essential condition of relief under the United States Bankruptcy Code. The bankruptcy schedules, along with the statement of financial affairs are designed to elicit almost every detail of debtors’ financial condition. From a modest consumer debtor in a case under chapter 7 of the Bankruptcy Code with a few thousand dollars in debt to an extraordinarily sophisticated financial services company with liabilities in excess of one billion dollars, all debtors must submit complete and accurate bankruptcy schedules.
“Both business and consumer debtors must submit complete and accurate bankruptcy schedules.”
The following is a concise and plain description of those bankruptcy schedules as they apply to individual debtors in consumer bankruptcy cases. On December 1, 2015, a new set of forms became effective to all newly filed bankruptcy cases. Those forms arose from the Judicial Conference Forms Modernization Project. The new forms track the same information as their predecessors but the design is retouched. Additionally, the new forms exist in separate sets, applicable to individual debtors and non-individual debtors (think corporations, partnerships and other business organizations). This review will focus on the new bankruptcy forms schedules A/B, C, D, E, F, H, I and J, as applicable to individual bankruptcy debtors.
Bankruptcy Schedule A/B – Property
Bankruptcy schedule A/B seeks information relevant to a debtor’s interest in property. Previously, schedule A pertained only to a debtor’s interests in real estate and schedule B sought a listing of all other interests in property that a debtor may have. Schedule A/B merges those two previously distinct schedules into an integrated, itemized list of various sorts of property. The first category in schedule A/B is real property (in the parlance of part 1 of bankruptcy schedule A/B, “Each Residence, Building, Land, or Other Real Estate”). Next, a debtor lists vehicles, followed by personal and household items. Within those two asset classes, there are further subitems (e.g., electronics, collectables and jewelry). Next on schedule A/B, a debtor must list all financial assets and business related property. If a debtor owns farm or commercial fishing-related property, that property must also be detailed on this bankruptcy schedule. Responses to the specific inquiries on schedule A/B will generally reveal all of a debtor’s property but the final category does not leave the matter to chance and requires a debtor to describe all property not disclosed in response to the prior questions.
Bankruptcy Schedule C – Bankruptcy Exemptions
Bankruptcy schedule C requires that a debtor list all of the property claimed as exempt and therefore unavailable to pay the claims of creditors. Because Congress left it up to the legislature of the individual states to determine the property that debtors in bankruptcy cases could exempt from creditors, exemption law may vary from state to state. In many states, a debtor may rely only upon the exemptions available under state law. In other jurisdictions, a debtor in a bankruptcy case may only apply the “federal” exemptions set out in section 522(d) of the Bankruptcy Code. The Commonwealth of Pennsylvania permits a debtor to elect the federal exemption scheme or Pennsylvania exemption law.
Depending on the circumstances of any particular case, the decision whether to use the federal or state exemptions may have very serious consequences and may impact a debtor’s right to keep certain assets. After the selection of the appropriate exemption menu, careful application of each exemption is also very critical. Misapplication of exemptions to assets could result in a debtor being required to turn over property to a chapter 7 trustee to be liquidated for the benefit of the debtor’s unsecured creditors. In a chapter 13 case, the same mistake could mean that a debtor would be forced to pay a considerably higher amount of money each month. When it comes to selection and application of bankruptcy exemptions on schedule C, a highly experienced bankruptcy lawyer will help ensure that a debtor maximizes the value of exemption rights in a bankruptcy case.
Bankruptcy Schedule D – Secured Claims
In schedule D, a debtor is called upon to list all secured creditors. A secured creditor is one that has recourse to a debtor’s property to protect its right to receive payments. The two most common kinds of secured creditors for most consumers are mortgagees and vehicle lenders. However, certain tax claims including real estate taxes may also be secured obligations. Additionally, a creditor with a judgment against a debtor may also hold a secured claim. That is so because a judgment acts as an automatic lien on all real property that the judgment debtor owns in the property in which the judgment is entered. A judgment may also form a lien on other property of the debtor if the judgment creditor has taken the necessary steps to perfect its lien before the filing of the bankruptcy case.
“Ignored secured claims can prevent a debtor from getting a meaningful fresh start even if that debtor receives a discharge.”
Ignored secured claims can prevent a debtor from getting a meaningful fresh start even if that debtor receives a discharge. Absent a debtor taking some affirmative measure to avoid or limit a secured claim, a lien will generally survive a bankruptcy case even if a debtor otherwise does everything right and receives a bankruptcy discharge. As with bankruptcy exemption and selection application, an effective bankruptcy lawyer may prove to be critically important to a debtor developing a strategy for the treatment of secured claims.
Bankruptcy Schedule E/F – Unsecured Claims
The new schedule E/F merges the priority claims together with other general unsecured claims against a debtor. The Bankruptcy Code gives priority to certain types unsecured claims. Each priority claim is listed in order such that first priority claims must be paid in full before any second priority claim may be paid. The priority scheme is designed to provide protection to certain kinds of creditors. Thus, domestic support obligations, wage claims and certain kinds of taxes are designed priority claims and must be identified that way. Although the new schedule collapses priority and general unsecured claims onto a single bankruptcy schedule, schedule E/F still requires debtors to list priority claims in a separate section on the schedule and to identify the nature of the claim. Your Pittsburgh bankruptcy lawyer will help you correctly identify and classify priority claims.
Bankruptcy Schedule G – Executory Contracts and Unexpired Leases
Debtors must also list all “executory” contracts and unexpired leases. Prior to a bankruptcy case, many people ask: what is an executory contract? An executory contract is one that has neither terminated nor expired and upon which substantial performance remains due from both parties. Just like an unexpired lease, an executory contract is a living, binding legal agreement. Debtors often face difficult decisions about whether to assume or reject an executory contract or unexpired lease. A clear explanation of the impact of rejection or assumption from a bankruptcy lawyer can make that difficult decision making process far easier.
Bankruptcy Schedule H – Codebtors
As the instructions on bankruptcy schedule H explain “[c]odebtors are people or entities who are also liable for any debts you may have.” It is important to list all codebtors with names and addresses and identify the debt upon which each codebtor shares liability. In many cases, the discharge of indebtedness of a debtor in a bankruptcy case may impact a codebtor’s financial life. It is important to discuss joint liability during a candid conference with a bankruptcy attorney.
Bankruptcy Schedule I – Income
Debtors must disclose their income from all sources. Income information is important and, as entered in the means test, may impact a persons qualification for relief under chapter 7. A debtor must have a regular source of income in order to qualify as a debtor for a case under chapter 13. Schedule I is detailed and seeks information about income from all sources and requires information about deductions from payroll. Additionally, if a debtor has a non-filing spouse, that income must be disclosed too unless they are separated and living apart. Your bankruptcy lawyer can help you to address the implied problem of having someone else’s income imputed to you (even if it is your spouse).
Bankruptcy Schedule J – Expenses
Bankruptcy Schedule J enumerates almost every typical consumer expense and debtors must honestly report their regular monthly expenses. Calculation of monthly expenses is an important exercise for the debtor and provides critical information to all parties in interest in the case. Very often the “monthly net income” calculation reached by subtracting expenses from income gives debtors a sense of how their cash flows on a monthly basis. Schedule J can also help debtors in chapter 13 cases determine whether they can present a chapter 13 plan that they can pay and is therefore, feasible.
It is important to note that bankruptcy schedules I and J seek the sort of information as does the means test. However, because the income on the means test is a backward-looking analysis of the six-month period preceding the filing of the bankruptcy case, the income information may diverge from that stated in bankruptcy schedule I. Similarly, the allowable expenses on the means test of primarily grounded in standard expenses having nothing to do with the actual expenses relevant to the debtor. Discuss these important distinctions with your bankruptcy lawyers.
Pittsburgh Bankruptcy Lawyers and Important Discussions about Bankruptcy Schedules
Disclosure is of income, expenses, assets and liabilities are a cornerstone of every bankruptcy case. The bankruptcy schedules are designed to facilitate that disclosure. Complete and accurate responses to all of the questions in the schedules is vital to the bankruptcy process. Before you file your bankruptcy case, carefully read and understand the information contained in those schedules. Candid disclosure is an important step in a bankruptcy process which allows honest but unfortunate debtors some relief from their debts with a fresh start.
If you are behind on your mortgage payments, filing a chapter 13 bankruptcy may help you avoid foreclosure. If you are behind on payments to the point where a foreclosure complaint has already been filed by your lender, filing a bankruptcy case will immediately halt it. The moment a bankruptcy case is filed, something called the automatic stay is put into effect. The automatic stay is a powerful provision of the Bankruptcy Code which prevents any creditor or party-in-interest from continuing litigation against you or depriving you of your property.
Chapter 13 bankruptcy also helps you repay your past due mortgage payments. Often, once you are several months behind on mortgage payments, you lender may refuse to accept any payment less than the total amount of the arrearages plus penalties and interest as payment, and consider the payment of a single mortgage payment a partial payment. This perpetuates the vicious cycle. A chapter 13 bankruptcy case allows you to pay off any arrearages over a three or five year time period – making catching up far more manageable. Often times, chapter 13 bankruptcy is the only practical option for those substantially behind on their mortgage payments.
There are other solutions for debtors with no other problematic and significant debt beyond mortgage arrearages. Mortgage modification, an arrangement to mitigate the lender’s loss and lower your monthly mortgage payments, can serve as a solution as well. Modification is a negotiation and loan restructuring process which back loads your mortgage arrearages and sometimes (though not always) lowers your monthly mortgage payment. This process often extends the term of your loan allowing your even greater advantages than might otherwise be available in a chapter 13 case limited to five years.
If you are behind on your mortgage payments and have mortgage arrearages in excess of what you can pay back, give us a call for a free consultation to discuss a solution based on your individual goals and problems with debt.