Personal Bankruptcy Laws For Dummies

by Caher, James P.; Caher, John M.

• ISBN13: 9780471773801
• ISBN10: 0471773808
• Edition: 2nd
• Format: Paperback
• Copyright: 2006-01-04
• Publisher: For Dummies

Summary

With tips on understanding -- and surviving -- the new bankruptcy laws If you're considering bankruptcy, you need straightforward answers and reliable advice. This handy guide covers it all -- so you can get your finances in line and your life back on track. This updated new edition covers everything you need to know about the new bankruptcy law and includes even better resources. Don't get desperate -- get out of debt instead! Discover how to * Weigh the consequences of bankruptcy * Manage your spending * Find professional help you can trust * Decide on the right type of bankruptcy * Pass the means test * Keep more of your stuff

Author Biography

James P. Caher, a practicing attorney with 30 years of experience, is a nationally recognized expert on consumer bankruptcies and authority on the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.
Jim coauthored, with his brother John, Debt Free! Your Guide to Personal Bankruptcy Without Shame (Henry Holt, 1996) and two highly regarded books for lawyers: Discharging Marital Obligations in Bankruptcy (LRP, 1997) and Discharging Credit Card Debts in Bankruptcy (LRP, 1998).
In addition, Jim has published scores of articles for bankruptcy professionals and is frequently called upon to analyze and interpret the complicated provisions of the 2005 bankruptcy law. He was labeled the “online guru” by a national legal weekly because of his regular appearances on the Internet as an expert analyst on bankruptcy law. Jim also serves on the editorial board of the American Bankruptcy Institute.
Jim graduated from Niagara University and then earned his law degree from Memphis State University Law School, where he was a member of the Law Review and recipient of the American Jurisprudence Award for Excellence in the field of debtor-creditor relations. He filed his first consumer bankruptcy case shortly after graduating in 1975. Jim lives and practices in Eugene, Oregon.

John M. Caher is a legal journalist who has written about law and the courts for most of his 25-year career.
Currently the Albany bureau chief for the New York Law Journal, John previously was state editor and legal affairs reporter for the Times Union of Albany, New York. His legal reportage has won more than two dozen awards, including prestigious honors from the American Bar Association, the New York State Bar Association, the Erie County Bar Association, and the Associated Press.
John coauthored, with his brother Jim, Debt Free! Your Guide to Personal Bankruptcy Without Shame (Henry Holt, 1996). He is the author of King of the Mountain: The Rise, Fall and Redemption of Chief Judge Sol Wachtler (Prometheus Books, 1998). In addition, John was the principal writer assisting former U.S. Treasury Secretary William E. Simon in preparation of his memoirs. Mr. Simon’s autobiography, A Time for Reflection, was published in 2003 by Regnery.
John is a 1980 graduate of Utica College of Syracuse University, where he received his bachelor’s degree in journalism, and a 1993 graduate of Rensselaer Polytechnic Institute, where he earned a master’s degree in technical communications/graphics. John lives in Clifton Park, New York.

Table of Contents

Introduction	1	(1)
About This Book	1	(1)
Conventions Used in This Book	2	(1)
What You're Not to Read	2	(1)
Foolish Assumptions	2	(1)
How This Book Is Organized	3	(1)
Part I: Bankruptcy: The Big Picture	3	(1)
Part II: Avoiding Bankruptcy	3	(1)
Part III: Keeping Your Stuff	3	(1)
Part IV: Getting Rid of (Most of) Your Debt	4	(1)
Part V: Strategies for a Successful Bankruptcy	4	(1)
Part VI: Enjoying Your Fresh Start	4	(1)
Part VII: The Part of Tens	4	(1)
Icons Used in This Book	4	(1)
Where to Go from Here	5	(2)
Part I: Bankruptcy: The Big Picture	7	(108)
Considering Bankruptcy	9	(18)
Viewing Bankruptcy in a Historical Context	10	(2)
Debunking Bankruptcy Myths	12	(4)
People who go bankrupt are sleazy deadbeats	12	(2)
Bankruptcy is the easy way out for folks who can pay their bills	14	(1)
Bankruptcy threatens the ethical foundations of our society	15	(1)
Honest folks pay a ``tax'' to support those who are bankrupt	16	(1)
Understanding What You Can Gain Through Bankruptcy	16	(4)
Stopping creditors in their tracks	18	(1)
Wiping out most of your debts	18	(1)
Catching up on back mortgage and car payments	18	(1)
Filing bankruptcy to pay some debts over time	19	(1)
Using bankruptcy to pay all your debts	19	(1)
Knowing What You Can Lose in Bankruptcy	20	(1)
Considering Alternatives to Bankruptcy	21	(1)
Introducing the Different Types of Personal Bankruptcy	22	(2)
Liquidations (Chapter 7)	23	(1)
Consumer reorganizations (Chapter 13)	23	(1)
Weighing the Consequences of Not Filing Bankruptcy	24	(2)
Claims secured by your car	24	(1)
Claims secured by your home	25	(1)
Student loans	25	(1)
Support obligations	25	(1)
Fines and restitution	25	(1)
Taxes	25	(1)
Lawsuits	26	(1)
Using the Statute of Limitations	26	(1)
Stopping the Bleeding	27	(20)
Realizing You're Not Alone	27	(1)
Preventing Further Damage Now	28	(2)
Comparing Your Income with Your Spending	30	(7)
Focusing on how much income you have	31	(1)
Coming to grips with where your money goes	32	(5)
Assessing Your Spending Habits	37	(3)
The devil's in the details: Scrutinizing your expenses	38	(1)
Are you a spendaholic?	39	(1)
Getting a Handle on What You Own	40	(3)
Figuring Out How Much You Owe	43	(4)
Meeting the Players	47	(10)
Finding Professional Help	47	(4)
Answering why a lawyer is a must	48	(1)
Finding a good lawyer	48	(1)
Understanding what to expect from your lawyer	49	(1)
Paying the piper	49	(2)
Getting to Know the Players	51	(6)
Bankruptcy judge	51	(1)
Case trustee	52	(2)
U.S. Trustee	54	(2)
Creditors	56	(1)
Deciding Which Type of Bankruptcy Is Best for You	57	(12)
Deciding Whether to Fly Solo or As a Married Couple	57	(1)
Looking at Your Probable Bankruptcy Choices	58	(4)
Straight bankruptcy	59	(1)
Debt repayment plans	60	(2)
Deciding Between Chapter 7 and Chapter 13	62	(5)
Recognizing when Chapter 7 is best	63	(1)
Considering Chapter 13 as your number-one option	63	(4)
Considering Other Types of Bankruptcy	67	(1)
Large reorganizations	67	(1)
Reorganizations for family farmers and fishermen	67	(1)
Adding Chapters 7 and 13	68	(1)
Changing Your Mind	68	(1)
Confronting the Means Test	69	(22)
Putting the Means Test in Perspective	69	(1)
Taking the Median Test	70	(6)
Computing your income	71	(4)
Comparing your income to the median	75	(1)
Deducting Your Expenses and Taking the Means Test	76	(11)
IRS National and Local Standards	77	(1)
Other necessary expenses	78	(4)
Specific BARF deductions	82	(2)
Deductions for certain debt payments	84	(3)
Figuring Out How Much of Your Debts You Can Pay	87	(1)
Passing the Means Test by Showing ``Special Circumstances''	88	(1)
Considering Ways around the Means Test	89	(1)
Getting Kicked Out of Chapter 7 for Abuse	90	(1)
Getting from Here to There: The Bankruptcy Process	91	(24)
Navigating the BARF Maze	91	(2)
Getting Organized Before Talking to a Lawyer	93	(5)
Doing your financial homework	93	(3)
Tracking down your creditors	96	(2)
Meeting Your Lawyer for the First Time	98	(1)
Arranging for Credit Counseling	98	(1)
Completing the Paperwork	99	(1)
Filing Your Bankruptcy Case	99	(1)
Using the Automatic Stay	99	(4)
Exceptions to the automatic stay	101	(1)
Situations where the automatic stay does not apply due to a prior bankruptcy	101	(2)
Receiving Notice of the Creditors' Meeting	103	(1)
Supplying Copies of Tax Returns	103	(1)
Attending the 341 Meeting	104	(1)
Signing Up for Your Financial Management Course	104	(1)
Working Your Way through Chapter 7	105	(5)
The 341 meeting in a Chapter 7 case	105	(2)
Dealing with secured creditors	107	(1)
Amending paperwork	107	(1)
Adding creditors	107	(1)
Sweating out key deadlines	108	(1)
Attending a discharge hearing	108	(1)
Closing no-asset cases	108	(1)
Administering asset cases	109	(1)
Anticipating complications	110	(1)
Working Your Way through Chapter 13	110	(2)
Filing your plan and beginning your payments	110	(1)
The 341 meeting in a Chapter 13 case	110	(1)
Confirming your repayment plan	111	(1)
Going through valuation hearings	111	(1)
Filing annual reports	111	(1)
Looking at the claims process	112	(1)
Comparing the Chapter 7 and Chapter 13 Process	112	(3)
Part II: Avoiding Bankruptcy	115	(38)
Considering Alternatives to Bankruptcy	117	(18)
Appreciating the Negative Consequences of Bankruptcy	118	(2)
The drawbacks of bankruptcy	118	(1)
Reasons not to file bankruptcy	118	(1)
Reasons to delay filing bankruptcy	119	(1)
Looking at Remedies Other Than Bankruptcy	120	(7)
Budgeting	120	(1)
Allowing your family to bail you out	121	(1)
Selling your assets	121	(1)
Transferring credit-card balances	122	(1)
Restructuring home mortgages	123	(3)
Tapping your retirement plan	126	(1)
Choosing Which Bills to Pay First (If at All)	127	(3)
Deciding whether to pay your mortgage	129	(1)
Considering whether to make car payments	129	(1)
Dealing with alimony and child support payments	129	(1)
Deciding whether you should pay your taxes	129	(1)
Negotiating with Your Creditors	130	(1)
Workout agreements	130	(1)
Threatening bankruptcy	130	(1)
Considering Credit Counseling Services	131	(2)
Simply Ignoring Creditors	133	(2)
Handling Bill Collectors	135	(10)
Taming the Toothless Tiger: The Bill Collector	136	(1)
Invoking Federal Law	137	(4)
When debt collectors can contact you	138	(1)
Where debt collectors can't contact you	139	(1)
When debt collectors may contact others about your debt	139	(1)
Dirty tricks are outlawed	140	(1)
Your remedies under the FDCPA	141	(1)
Tapping State Laws	141	(1)
State statutes	141	(1)
Common law remedies	142	(1)
Keeping Your Dukes Up	142	(3)
Negotiating with the IRS	145	(8)
Looking at the Tax Collection Process	145	(2)
Service centers	146	(1)
Automated Collection System (ACS)	146	(1)
Local revenue officers	147	(1)
Making Nice with the Touchy-Feely IRS	147	(4)
Your due process	148	(1)
Negotiating an installment agreement	148	(1)
Knowing when to get professional help	149	(1)
Gaining ``uncollectible'' status	150	(1)
Planning bankruptcy while pursuing an installment agreement	150	(1)
Submitting an Offer in Compromise	151	(1)
Getting Help from a Taxpayer Advocate	152	(1)
Part III: Keeping Your Stuff	153	(46)
Understanding Which Assets Are Off Limits to Creditors	155	(18)
Grasping the Legal Concepts	155	(5)
Digging through the property of the estate	156	(2)
Understanding how exemptions work	158	(2)
Determining the Value of Your Stuff	160	(1)
Understanding How the Courts View Certain Assets	161	(10)
Homesteads	161	(1)
Automobiles	162	(1)
Household goods	162	(1)
Inheritances and life insurance benefits	163	(1)
Divorce settlements	163	(1)
Spendthrift trusts	164	(1)
Rent receipts	165	(1)
Security deposits	165	(1)
Wages	166	(1)
Bank accounts	166	(1)
Severance and vacation pay	166	(1)
Sales commissions	167	(1)
Real estate commissions	167	(1)
Insurance commissions	168	(1)
Suits to recover money	168	(1)
Income tax refunds	169	(1)
Earned income credits	170	(1)
Retirement accounts	170	(1)
Education savings plans	170	(1)
Creating Exemptions	171	(2)
Dealing with Secured Debts	173	(10)
Getting the Lowdown on Liens	174	(1)
Perfecting liens	174	(1)
Seeing liens as double-edged swords	174	(1)
Identifying Different Kinds of Liens	175	(2)
Consensual liens	175	(2)
Nonconsensual liens	177	(1)
Dealing with Liens in Bankruptcy	177	(3)
Freeing your household goods and tools from liens	177	(2)
Redeeming (getting back) your property	179	(1)
Reaffirming your debts	179	(1)
Using the Special Powers Afforded Chapter 13 Filers	180	(1)
Dealing with Rent-to-Own Contracts	180	(1)
Banging the Gavel on Judgment Liens	181	(2)
Saving Your Home	183	(16)
Your Home, Your Castle --- and Sometimes Your Hassle	183	(4)
Figuring out how much your home is worth	184	(1)
Deducting mortgages and other liens that affect your share of the pie	184	(1)
Understanding the homestead exemption	185	(2)
Dealing with Jointly Owned Property	187	(2)
Example 1: When the homestead exemption is larger than your equity	188	(1)
Example 2: When your equity is larger than your homestead exemption	188	(1)
Understanding How Foreclosures Work	189	(1)
Heading off the Homewreckers	190	(6)
Keeping your home in Chapter 7	190	(1)
Keeping your home in Chapter 13	190	(4)
Comparing Chapter 7 and Chapter 13	194	(2)
Using Truth-in-Lending Laws	196	(1)
Coping When Your Dream Home Becomes a Nightmare	197	(2)
Part IV: Getting Rid of (Most of) Your Debt	199	(72)
Lingering Obligations	201	(14)
Recognizing (Possibly) Indelible Debts	201	(5)
Confronting obligations enforceable by court orders	202	(1)
Debts arising after bankruptcy	203	(2)
Unlisted debts	205	(1)
Debts preserved under sections of the Bankruptcy Code	205	(1)
Nondischargeable Debts in Chapter 7 versus Chapter 13	206	(3)
Sweating Out the 60-Day Bar Date	209	(1)
Avoiding the Urge to Borrow to Pay Nondischargeable Debts	209	(1)
Understanding Reaffirmation Agreements	210	(1)
Reasons to reaffirm	210	(1)
Changing your mind	211	(1)
Having Your Discharge Denied or Revoked	211	(4)
Grounds for denial of a Chapter 7 discharge	212	(1)
Grounds for denial of a Chapter 13 discharge	213	(1)
Protecting your discharge	213	(1)
Revoking your discharge	214	(1)
A House of Cards: Wiping Out Credit-Card Debts	215	(8)
Playing the Credit-Card Game	215	(2)
Seeing What Judges See	217	(1)
Examining Your Mind Set When You Incurred the Debt	218	(1)
Forcing the Credit-Card Company to Prove Its Case	219	(1)
Explaining Presumptively Fraudulent Charges	219	(1)
Defending Against False Financial Statement Allegations	220	(1)
Using Credit-Card Advances for Gambling	220	(1)
Bullying the Credit-Card Bullies	221	(1)
Transferring Credit-Card Balances	222	(1)
Give unto Caesar: Using Bankruptcy to Deal with Tax Debts	223	(14)
Getting a Handle on What Happens to Taxes in Bankruptcy	223	(1)
Wiping Out Dischargeable Income Taxes	224	(1)
Paying Nondischargeable Priority Income Taxes	225	(1)
Coping with Nondischargeable Nonpriority Income Taxes	225	(1)
Confronting Unfiled Tax Returns	226	(4)
Coping with Interest and Penalties	230	(1)
Managing Federal Tax Liens	231	(1)
Making the Trustee Pay Your Taxes	231	(1)
Keeping on Top of Postpetition Taxes in Chapter 13	232	(1)
Paying Taxes Before Bankruptcy	232	(1)
Using the Statute of Limitations to Escape Taxes	232	(1)
Facing the Consequences if You're a ``Tax Protestor''	233	(1)
Dealing with the State Tax Man	233	(1)
Addressing Taxes Other Than Income Taxes	233	(1)
Paying trust fund employment taxes	233	(1)
Deciding whether to pay real and personal property taxes	234	(1)
Obtaining Loans to Pay Your Taxes	234	(3)
The Devil Made Me Do It: Fines, Fraud, and Other Foibles	237	(10)
Dealing with Debts Resulting from Fraud	238	(3)
Charges on the eve of bankruptcy	238	(1)
False financial statements	239	(1)
Bad checks	239	(1)
Receiving undeserved welfare and unemployment benefits	240	(1)
Willful and Malicious Behavior	241	(1)
Covering Fines, Penalties, and Restitution Orders	242	(2)
Criminal fines	243	(1)
Restitution	243	(1)
Noncriminal fines and penalties	243	(1)
Motor-vehicle fines	244	(1)
Accepting Responsibility for Drunken-Driving Injuries	244	(3)
Till Debt Due Us Part: Bankruptcy and Divorce	247	(10)
Introducing Key Points	247	(1)
Planning Your Strategy	248	(4)
Exploring your financial obligations	249	(1)
Doing what's best for both spouses	250	(1)
Completing property transfers	250	(1)
Timing it right	251	(1)
Understanding How Support Obligations Are Treated in Bankruptcy	252	(4)
Support obligations in Chapter 7	252	(1)
Support obligations in Chapter 13	252	(2)
Figuring out which obligations are in ``the nature of'' support	254	(1)
Focusing on financial conditions at the time of your divorce	254	(1)
Looking at factors that some courts consider	255	(1)
Understanding How Property Divisions Are Treated in Bankruptcy	256	(1)
Other Grounds for Bankruptcy-Proof Marital Debts	256	(1)
Student Loans and Other Mind Games	257	(14)
Understanding the Student-Loan Industry	257	(1)
Tracing Your Loans	258	(1)
Knowing What They Can Do If You Don't Pay	259	(1)
Managing Student Loans with Bankruptcy	260	(6)
Proving your insufferable need for a break	260	(2)
Wiping out part of your student loans	262	(1)
Paying student loans under a Chapter 13 plan	263	(1)
Using a ``Chapter 20'' strategy	264	(1)
Addressing medical school loans	265	(1)
Getting stuck even when you're only a cosigner	266	(1)
Clicking your clock into The Hardship Zone	266	(1)
Managing Student Loans without Bankruptcy	266	(5)
Consolidating your loans	267	(1)
Requesting a reasonable and affordable payment plan	268	(1)
Getting a deferment	269	(1)
Accepting a forbearance	269	(1)
Going for an administrative discharge	270	(1)
Part V: Strategies for a Successful Bankruptcy	271	(34)
Avoiding Troubles with Your Trustee	273	(10)
Playing by the Rules and Telling the Truth	273	(2)
Accurately Listing Your Assets	275	(1)
Appreciating the Trustee's Ability to Recover Assets	275	(7)
Fraudulent transfers	276	(2)
Preferential transfers	278	(3)
Unperfected liens	281	(1)
Special problems with manufactured homes	281	(1)
Protecting Your Discharge	282	(1)
Living on the Edge in Chapter 13 Bankruptcy	283	(22)
Creating a Realistic Plan	284	(2)
Why Chapter 13 plans fail	284	(1)
Paying the bare minimum	285	(1)
Keeping Your Lawyer in the Loop	286	(1)
Blowing It . . . Again? Not!	286	(8)
Suspending your payments	288	(1)
Modifying your plan	288	(1)
Requesting a ``hardship discharge''	289	(1)
Converting to a Chapter 7	290	(1)
Dismissing your Chapter 13 and filing a new Chapter 7	291	(2)
Dismissing your Chapter 13 and filing a new Chapter 13	293	(1)
Tackling Car and Mortgage Payments Outside the Plan	294	(2)
Doing nothing	294	(1)
Proposing a new plan that includes missed payments	295	(1)
Working out drop-dead agreements	296	(1)
Asking for time to sell your property	296	(1)
Addressing Debts Incurred After You File	296	(3)
Nonemergencies	297	(1)
Emergencies	297	(1)
Automobiles	297	(1)
Support obligations	298	(1)
Income taxes	298	(1)
Sinking Your Ship before It Arrives	299	(2)
Tying Things Together	301	(4)
Part VI: Enjoying Your Fresh Start	305	(22)
Repairing Your Credit	307	(12)
Realizing that You've Already Taken the First Step by Filing Bankruptcy	308	(1)
Using the Fair Credit Reporting Act to Your Advantage	309	(1)
Getting Your Credit Reports after Bankruptcy	309	(5)
Getting credit reports for free	310	(1)
Correcting mistakes on your credit reports	311	(2)
Making sure that your credit reports properly reflect your bankruptcy	313	(1)
Obtaining New Credit	314	(2)
Applying for an unsecured credit card	314	(1)
Settling for secured credit	314	(1)
Informing credit bureaus of your good work when the creditor doesn't	315	(1)
Taking it easy when building new credit	316	(1)
Watching Our for Credit-Repair Scams	316	(1)
Establishing Good Credit When You're Married	317	(2)
Staying Out of Financial Trouble	319	(8)
Addressing Compulsive Spending	319	(1)
Admitting that you have a problem	320	(1)
Enrolling in Debtors Anonymous	320	(1)
Building a Consensus with Loved Ones	320	(1)
Establishing common ground with your mate on money matters	321	(1)
Creating realistic expectations from your offspring	321	(1)
Using a Budget	321	(1)
Developing a system for tracking what you spend	322	(1)
Sticking to the plan	322	(1)
Avoiding Temptation	322	(2)
Reducing credit-card solicitations	322	(1)
Removing your name from direct-marketing lists	323	(1)
Reigning in telemarketers	323	(1)
Making a Few Lifestyle Changes	324	(1)
Figuring out your priorities	324	(1)
Thinking about ways to save moneys	324	(1)
Discovering how to live without credit	324	(1)
Discovering cheap ways to have fun	325	(1)
Recognizing Danger Signs	325	(2)
Watching for telltale signals	325	(1)
Living without savings	326	(1)
Using debt-to-income and equity ratios	326	(1)
Part VII: The Part of Tens	327	(16)
Ten Common Bankruptcy Mistakes	329	(4)
Borrowing Money from Relatives	329	(1)
Repaying Money Owed to Relatives	330	(1)
Chipping Away at Debts with a Home-Equity Loan	330	(1)
Draining Retirement Accounts to Pay Debts	330	(1)
Neglecting to Accurately List All Creditors	331	(1)
Concealing Your Assets	331	(1)
Transferring Assets to Keep Them Away from Creditors	331	(1)
Making Payments that You Can't Afford to Make	331	(1)
Thinking that Bankruptcy Is Your Last Resort	332	(1)
Filing Bankruptcy Too Soon	332	(1)
Ten Things You Can Do Right Now to Ease Your Financial Woes	333	(4)
Stop Feeling Guilty	333	(1)
Cut Up Your Credit Cards	334	(1)
Order Your Credit Reports	334	(1)
Keep Track of Everything You Buy	335	(1)
Get Your Name off Any Joint Accounts	335	(1)
Stop Making Partial Payments on Credit-Card Bills	335	(1)
Call a Lawyer Now If You're Being Sued or Foreclosure Is Underway	335	(1)
Find Out How Much Your Home and Car Are Worth	336	(1)
Empty Accounts in Banks Where You Owe Money	336	(1)
Sharpen Your Pencil and Start Filling Out the Worksheets in Chapter 2	336	(1)
Ten Common Questions about Bankruptcy	337	(6)
Will Bankruptcy Damage My Credit Rating?	337	(1)
Will Bankruptcy Affect My Job?	338	(1)
Will I Lose My Home?	338	(1)
Will I Lose My Personal Belongings?	339	(1)
Will I Ever Be Able to Buy a House?	339	(1)
Does My Spouse Have to File Bankruptcy, Too?	339	(1)
Can I Keep Some Debts Off My Bankruptcy and Deal with Them Separately?	340	(1)
Can I Cancel My Bankruptcy If I Change My Mind?	340	(1)
Is Filing Bankruptcy a Long, Protracted Process?	340	(1)
Does It Cost a Bundle to File?	341	(1)
Will BARF Make it More Painful to File Bankruptcy?	341	(2)
Appendix: Homestead Exemption Laws	343	(4)
Choosing between Federal and State Exemptions	343	(1)
Identifying the Federal Homestead Exemption	344	(1)
Surveying State Homestead Exemptions	344	(3)
Index	347