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1. What is Bankruptcy? 1. Bankruptcy is a federal law that allows individuals, married couples, and businesses to eliminate or restructure their debts when they have financial difficulties. Because it is a federal law, it applies throughout the United States. Bankruptcy law provides for several different types of bankruptcy, called chapters, because the various provisions that govern them are contained in different chapters of the Bankruptcy Code. A bankruptcy will generally show up on your credit report for a period of 10 years. Although you can file for bankruptcy without a lawyer, it is not generally advised because of the complexity of the Bankruptcy laws. Mistakes can be very costly. 2. Chapter 7 or "straight" bankruptcy is the most widely known form of bankruptcy. It is designed to eliminate unmanageable, unsecured debt to give you a fresh start. However, some debts cannot be eliminated such as child support and alimony, debts arising from drunk driving or fraud, some student loans and some tax debts. Some of these debts can be handled by using a Chapter 13. As soon as a Chapter 7 is filed, the federal court issues a stay requiring all creditors to stop contacting you. A trustee is appointed to review your financial affairs and sell any unprotected assets, but you normally get to keep everything you own, such as your home, car, household goods, and pensions. If the trustee finds no assets to sell, which is true about 95% of the time, it is reported as a 'no asset' case and the case is closed. The court then issues you a discharge. The creditors whose debts have been discharged, or canceled, are forever prohibited from taking any action to collect the debt. 3. Chapter 13 is a type of bankruptcy proceeding available to individuals and sole proprietorship businesses to reorganize and eliminate debts. You file a plan with the Bankruptcy Court through which you pay all or a percentage of your debts, usually over a three to five year period, based on what you can afford, not what your creditors want. You are under the protection of the Bankruptcy Court, and payments are made to a court-appointed trustee who then pays your creditors according to the plan. Chapter 13 can often solve problems and offer relief not available under a straight Chapter 7 bankruptcy. You can keep your assets, stop home foreclosures and take up to five years to get caught up on back mortgage payments, protect co-signers, and modify contracts with secured creditors such as car or furniture loans. Chapter 13 can also release you from certain debts that cannot be eliminated in Chapter 7. 4. For family farmers (individuals, sole proprietorships, partnerships or corporations) with less than $3.2 million dollars in debt and for family fishermen with less than $1.5 million dollars in debt, Congress created a special bankruptcy section, Chapter 12, to help you stay in business. A Chapter 12 allows you to continue farming while reorganizing your debts. Both long-term mortgage debts and short-term equipment loans and operating lines of credit can be rewritten to more favorable terms. Foreclosures and repossessions are immediately stopped. A trustee is appointed by the court to help implement a reorganization plan which is based upon the value of your assets and realistic projections of your income and expenses over the next 3 to 5 years. Payments are made to the trustee who then pays your creditors. 5. Every bankruptcy case has a Court filing fee: Chapter 7 is $299; Chapter 13 is $274, Chapter 12 is $239; and Chapter 11 is $1,039. These fees are paid to us and we forward the payment to the Court upon the filing of a case. The attorney fees vary on a case-by-case basis. Naturally, bankruptcy cases with secured creditor issues (e.g., mortgage arrears) or tax issues are more involved and may have higher attorney fees. Thus, it is difficult to accurately estimate the cost of a bankruptcy without a full consultation with one of our attorneys. However, you should know that the attorney costs associated with your bankruptcy are modest when compared to the amount of debt that will be eliminated through the bankruptcy process. When analyzing bankruptcy costs, remember you are purchasing a service and not a product. You cannot purchase bankruptcies at the local store. If this were the case, you could easily compare the identical product from store to store. Bankruptcy representation is a service and you should choose an attorney and firm with which you are comfortable and confident. This means the lowest priced bankruptcy may not be your best value and, conversely, the highest priced representation does not necessarily mean the best for you. 6. Everyone is entitled to file and defend any legal proceeding without a lawyer, and bankruptcy is no exception. However, bankruptcy is often misunderstood as being a simple process, when it is, in fact, a very complicated area of law. The more complicated your problem, the more important it is to get a qualified (i.e., "specialized") attorney. The area of bankruptcy and business reorganization is one of those areas where proper qualification is especially important, given the costs, the complexity, and the consequences of incorrect action. Be sure to get as much information and ask as many questions as possible. Ask each attorney about their experience in practicing bankruptcy law; ask how many years they have done bankruptcy work; what percentage of their practice is bankruptcy; how many business reorganizations have they handled for debtors, and how successful those cases have been. The American Board of Certification has a rigorous set of prerequisites and demanding tests attorneys must take to be certified as a Specialist in Business or Consumer Bankruptcy Law. Currently, Kent Snyder of Snyder & Associates is the only attorney in Portland to hold both certifications. 7. Although Congress has made extensive changes to the Bankruptcy Laws in 2005, they did NOT eliminate your right to file bankruptcy should you need it. All individuals must obtain budget and credit counseling before they file bankruptcy. In other words, you need a ticket to get into the case. The certificate issued by the agency will be valid for 180 days. After you have filed your bankruptcy (Chapter 7 or Chapter 13), you must take and complete an approved financial management course in order to receive your discharge. Both of these sessions can be obtained in person, via telephone, or by the internet and usually cost around $50 each. The list of approved agencies for the counseling and financial management tickets can be viewed here: www.usdoj.gov/ust/eo/bapcpa/ccde/index.htm To determine if you qualify for Chapter 7, you may need to pass a "means test" if your income exceeds the median income for the same size family in your state. If you don't qualify for Chapter 7, a Chapter 13 plan may still be a good option. Although there are many new rules and requirements, bankruptcy is still designed to help you obtain a fresh start. 8. Once you call us for your free appointment, we will mail you a short, easy-to-complete questionnaire. Bring this completed questionnaire with you! You should also bring:
9. If you give, sell, or transfer an asset within two years before filing for bankruptcy, the trustee in bankruptcy can reverse that transfer and deem it fraudulent if it was made for less than the fair market value of the asset. For example, if you give away a piece of property to a family member within two years before filing bankruptcy, the Chapter 7 trustee may be able to reverse that transaction and bring the property back into your bankruptcy estate. If you have already engaged in such transactions as gifting, selling, filing a quit claim deed to real estate, or otherwise transferring a vehicle or other major asset, it is imperative that you talk to one of our lawyers before you attempt to reverse any such transaction. Generally, you should not transfer anything or pay any debts (other than normal monthly bills) before consulting a bankruptcy lawyer. 10. Most retirement plans are protected in bankruptcy. The Supreme Court has ruled that retirement plans which qualify under a federal law called ERISA are not property of the estate for bankruptcy purposes. This means that the bankruptcy trustee has to leave these assets alone. Most retirement plans qualify under ERISA, and even if they don't, they may be protected by other provisions in the bankruptcy laws. IRA accounts, for example, are protected under Oregon law. Since there are always exceptions, you should consult with an attorney who has expertise in bankruptcy law to ensure that your retirement plan is protected. 11. Just because you file bankruptcy does not mean that you lose your assets or possessions. The purpose of the bankruptcy laws is to give you a fresh start. In order to do that, there are exemption laws which let you protect and keep certain assets. For example, in Oregon, the homestead exemption lets you keep at least $30,000 of equity in your home or $39,060 if you own the home jointly with your spouse. You will usually be able to keep most furniture and personal possessions including your car and occupational tools. I.R.A.s, pensions and retirement savings plans are also protected. There may be some planning which needs to be done before you file bankruptcy in order to protect more of your assets. If there are assets that would be taken and liquidated in a Chapter 7 bankruptcy, you can still keep them by filing a Chapter 13 bankruptcy and setting up a plan to repay what you can afford for three years. For specific information about exemptions, and for advice about how to best protect your assets if bankruptcy is necessary, consult with our bankruptcy attorneys. 12. Even if you are married, you are not required to file a joint case with your spouse. Married people can file a joint case, two separate cases or one spouse can file for bankruptcy alone. However, if both a husband and wife are responsible for a debt and only one spouse files bankruptcy, the creditor has the right to come after the other spouse for the debt. This problem can often be avoided through Chapter 13. If you have recently married and most of the debts were incurred by your new spouse prior to your marriage, you are not legally responsible those pre-existing debts. When you marry someone, you do not marry their bills. 13. Your employer generally has no way of knowing that you filed a Chapter 7 bankruptcy proceeding. The Bankruptcy Court will not contact your employer, nor will your attorney. Usually the only way your employer will know you filed bankruptcy is if your employer is also a creditor, or if you are being garnished and your attorney needs to notify your employer about the bankruptcy in order to get the garnishment stopped. The Bankruptcy Court generally requires that Chapter 13 payments be paid by a wage deduction. Employers are prohibited from discriminating against employees who file bankruptcy. In some cases, it is possible to make Chapter 13 payments directly to the trustee. 14. The bankruptcy laws require that you list all debts. You can continue to pay home and car loans, and you are free to voluntarily pay any debt which has been discharged in bankruptcy. If you forget to list a creditor, it is usually possible to amend your bankruptcy to add the omitted debt. This should be done as soon as possible, as time limitations may apply. A debt will not be discharged in bankruptcy (meaning you will not be released from the debt) unless the creditor receives notice of your bankruptcy filing. Notice is provided by the Bankruptcy Court, and will be sent to the address you provide. This is why it is so important to list all possible creditors, and provide complete, accurate addresses. As for determining who you owe, think of everyone who could possibly claim that you owe them money and list them, even if you don't think you owe them. It is not necessary to know the amounts that you owe. You can also request a copy of your credit report, but credit bureaus only list those creditors who have sent information to them. Their list will not cover all of your creditors. You can get a free credit report each year at www.annualcreditreport.com 15. A Chapter 7 bankruptcy releases you from your debts, but does not release your cosigners. The creditors will demand payment from them if you don't pay. Lenders want cosigners so they can have someone else to pursue if you fail to make the payments or discharge the debt in bankruptcy. One way to protect your cosigners is to continue to pay the debt after you file bankruptcy. If you are too far in default or the payments are too high, you can use a Chapter 13 proceeding to protect the cosigner. Chapter 13 lets you rewrite the debt and take up to five years to pay it while protecting your cosigners from the creditor. As long as you are paying a cosigned consumer debt in full through a Chapter 13 plan, your cosigners are protected, even though the loan is not being paid off as fast as originally required. This is only one of the ways Chapter 13 can help you. 16. Everyone who files for bankruptcy has to attend a brief, informal meeting held in a hearing room, not a courtroom. The meetings are run by the bankruptcy trustee and there is no judge present. They usually take about 5 minutes. In a Chapter 7 bankruptcy, the trustee must determine if you have any assets which are to be surrendered and sold to pay your creditors. The trustee's questions relate to your assets, and not personal issues such as why you filed bankruptcy. In most cases the questions supplement the information you already provided in the written documents filed with the Bankruptcy Court. In a Chapter 13, you file a plan through which you pay your debts based upon your ability to pay and the value of your assets. Since your payment is based on your future income, the trustee may ask you questions about your expenses and the value of your assets. He does not take possession or control of your assets. There is a second hearing in front of a Bankruptcy Judge, but this is handled by your attorney and you don't have to attend. 17. A Chapter 7 bankruptcy usually takes 4 months to complete. In a Chapter 13, you may be making payments for three to five years. However, both Chapter 7 and Chapter 13 cases take effect the instant you file them. All bankruptcies start with a court order called an automatic stay, which stops all collection activity against you. As soon as the case is filed, your creditors cannot sue or garnish you, repossess your car, foreclose on your home, or take any other collection action. Bankruptcies are generally finalized with a discharge, which is a court order that says you will never have to pay the bills. This order comes about three months after you file a Chapter 7, or 3 to 5 years after filing a Chapter 13. During the 3 to 5 year payment period of a Chapter 13, you are protected from creditors by the automatic stay. 18. If divorcing couples believe that bankruptcy is a possibility, they should consider filing a joint bankruptcy case before the divorce is final. This not only saves legal expenses by avoiding the necessity of two separate bankruptcies, but may save some of the expenses you might incur in your divorce proceeding while arguing about who pays which bills. If one of you files a bankruptcy after being divorced, the bankruptcy filing does nothing to protect the other spouse from joint debts, regardless of what the divorce decree says. A divorce decree is an agreement between the two spouses and is not binding on their creditors. The creditors will pursue the spouse who didn't file bankruptcy. However, a requirement in a divorce decree that one spouse protect the other spouse from joint creditors may survive the bankruptcy under certain circumstances. This is a complex area. It is extremely important you talk to one of our attorneys about your options. 19. You may have some options outside of the bankruptcy laws. For example, you could pay each creditor what you can afford each month. Do not ask creditors how much they want; tell them what you will do, and then do it. Once you make a promise to pay, be sure you keep that promise. You can also get some relief by simply getting better control over how you spend your money; you may wish to take a course in money management. Also, there are non-profit consumer credit counseling services which may be able to help you restructure your debt. If these ideas don't help, consider filing a Chapter 13 proceeding to set up your own payment plan enforced by the federal Bankruptcy Court. These plans run from three to five years. You pay your creditors what you can afford each month while you remain under the protection of the court. When the plan is complete, your obligation to pay anything more to your creditors is eliminated, even if they have not been paid in full. 20. There is no special "medical" bankruptcy, but medical bills are discharged in bankruptcy. You may file either a Chapter 7, often called straight bankruptcy, or a Chapter 13, where you work out a plan to pay your debts under the protection of the Bankruptcy Court, based upon what you can afford to pay. Which bankruptcy is best for you depends upon a variety of factors including the value of your assets, the amount of your income and the size of your debts. 21. In October 1998, Congress changed the laws relating to student loans. As a result, student loans are generally not dischargeable in bankruptcy no matter how old they are. Student loans can only be discharged if the court finds that paying the loan will impose an undue hardship. However, the courts very rarely grant the hardship exception. Financial inability to pay is normally not enough to be considered a hardship. Chapter 13 can still be used to structure a new payment plan or to cure defaults in student loans. 22. For most people, all of their debts can be eliminated in bankruptcy. There are exceptions, and the rules are complex. Although there are some differences in the types of debts that can be eliminated in Chapter 7 and Chapter 13, certain debts are not discharged in either proceeding such as child support & alimony, criminal restitution, student loans, and debts arising from drunk driving. Other types of debts are discharged unless the creditor files an objection with 60 days of your hearing. These include debts based on inaccurate credit applications or fraud, embezzlement, willful or malicious injuries, debts which arose from a fiduciary responsibility, or debts which arose from substantial abuses of credit right before bankruptcy. Tax debts are not eliminated if the taxes are less than three years old, you have not filed tax returns or you tried to evade or defeat the tax. In a Chapter 13, some of these debts can be eliminated without full payment by offering a three to five year payment plan based upon your income and the value of your assets. The rules regarding the elimination of debts through bankruptcy are quite complex and you should have one of our experienced bankruptcy attorneys on your side. 23. The idea behind any kind of bankruptcy is to reduce your debts to manageable payments. This is typically done through a Chapter 13 plan rather than through a complete Chapter 7 bankruptcy. Chapter 13 allows you to rewrite loans on terms that you can afford. You can usually lower your payments, cut the interest rate, spread out the payments over time or catch up on back payments, all under the protection of the Bankruptcy Court. Chapter 13 often allows you to reduce the balance on your loan. For example, if your car is worth less than you owe, you may only need to pay the creditor the market value of the car, not the loan balance. This is a procedure called "cram down", and it can be used to modify other types of secured loans, such as those on furniture, appliances, and business equipment. If you are behind in mortgage payments or other long-term debts, a Chapter 13 plan may help you catch up and get back on track. The procedures for rewriting loans are complicated. If you think this may help you, contact us. 24. The stigma associated with bankruptcy has dramatically decreased over the last decade. At least one out of every 10 households in Oregon has filed bankruptcy in the last 10 years. A bankruptcy filing will show on your credit record for ten years. Keep in mind, however, that delinquent payments, defaults on loans, etc., already appear on your credit record for seven years. In other words, the filing of a Chapter 13 or Chapter 7 may not damage your record anymore than it has already been damaged. While maintaining a "clean" credit record is a good idea, it should not be done at the expense of your health, or the health of your family. Compare the relief that you will feel if you file bankruptcy against the amount of distress that you and your family currently feel while you are trying to maintain that clean record by living beyond your means. Once you have obtained the relief Congress has made available to you, many things can be done to reestablish your credit. 25. Yes. You can rebuild your credit after bankruptcy. One approach is the use of a secured credit card. A secured credit card is simply a standard MasterCard or Visa backed by an interest-bearing savings account. Because the credit is secured by your cash deposit, the lender is assured you will stay within your credit limit and the debt will be paid. Only charge amounts that are within your means and make your payments on time. A regular payment pattern will help qualify you for unsecured increases in your credit limit. Other methods include using your savings account as collateral for a small loan or having a friend or relative co-sign a loan upon which you make the payments. Paying the loan on time will establish a new credit record with that bank. Using one of these methods over a one to two year period will help you establish new credit for purchasing such things as a home or an automobile. Other tips are available at www.bankrate.com . Also, there is a good book called "Bounce Back From Bankruptcy" by Paula L. Ryan. 26. Bankruptcy laws specifically provide that a governmental entity cannot discriminate against you based solely on the fact you have filed bankruptcy. This means that you cannot be denied governmental benefits merely for having filed bankruptcy, including obtaining a license or a student loan. You also cannot be discriminated against in employment because you filed bankruptcy. 27. Your business can use the bankruptcy laws to get protection from all creditors while you work out a repayment plan you can afford. Your business stays open and you remain in control. All lawsuits, garnishments, and collection actions, including any actions by the IRS, are immediately stopped when a proceeding is filed in Bankruptcy Court. For sole proprietorships, a Chapter 13 bankruptcy can be used to restructure the business debts, often resulting in a significant reduction of the debt to be repaid. For corporations and partnerships, a Chapter 11 proceeding can be used to accomplish these same results. 28. What Chapter 11 immediately provides is a safe haven for your business while you develop solutions to solve your financial problems. Chapter 11 then provides a process to implement those solutions through a reorganization plan. One of the things you must look for is whether your business has sufficient cash flow to meet its monthly obligations without regard to repaying delinquent trade debt, delinquent taxes, etc. In other words, is the business making enough money every month to meet its payroll expenses, rent, utilities, operating expenses, etc? Do you have enough cash flow to keep the doors open and buy merchandise, supplies, raw materials, etc. on a COD basis or do you have new financing available? Chapter 11 may be utilized to structure a repayment plan for the old debt. Such a plan could spread the payments out over a number of years or set up a small, one-time payment to the creditors and discharge all the unpaid balance. Chapter 11 can be used to obtain additional time to sell assets or to collect receivables which can be used to repay all or a portion of the debt. Chapter 11 can also be used to stop expensive litigation which is bleeding the company.The filing of a Chapter 11 automatically stops all foreclosures, collection actions, litigation, and creditor action of any kind. The only proceedings not stopped are criminal proceedings and regulatory actions. It is important to know that a Chapter 11 is just a legal process. It does not provide business management, financing, or consultation. What it does provide is a safe haven while you implement your solutions, such as setting up new financing, selling extraneous assets, restructuring debt, implementing new marketing plans, etc. When Chapter 11 is used in this way, it is a very valuable tool. 29. According to the IRS "rules of engagement", if you are operating a business, owe more than $10,000 in payroll taxes and are delinquent for 3 or more quarters, you will be targeted for immediate and aggressive collection. This means that they will pursue more garnishments, more asset seizures and more business shut-downs and generally try to make your life miserable until the taxes are paid. That is the bad news. The good news is that you can use the bankruptcy laws to stop all collections by the IRS, and any other tax agency, and force them to accept a repayment plan that allows you to remain in business. This is accomplished by using a Chapter 13 for sole proprietorships or a Chapter 11 for corporations. 30. If you are not paying your bills on time, creditors are allowed to call you at reasonable times in order to collect the debt. However, federal and state laws prohibit creditors from engaging in abusive or harassing behavior such as calling at unreasonable hours, calling you at work, telling third parties about your late payments, etc. You should demand that they stop, keep records of the harassment, and file a lawsuit if appropriate. However, if your circumstances are leading you towards a bankruptcy filing, contact us. The filing of any type of bankruptcy immediately stops all collection efforts against you and your property. Once you file for bankruptcy, creditors must leave you alone, stopping all phone calls, lawsuits, collection notices, and garnishments. Foreclosures must stop, and repossession action must cease. 31. When you get behind on your house payments, your mortgage holder will start foreclosure and refuse to accept any further payments unless you pay the full amount of the delinquency. If you are unable to do so, the mortgage company may demand that you payoff the debt in full. However, you can use the bankruptcy laws to stop the foreclosure right up to the time of the foreclosure sale. A Chapter 13 plan gives you three to five years to catch-up the back payments while you maintain the regular payment. This law can also be used to stop tax foreclosure filed by the county for delinquent property taxes. Even if you cannot afford the regular payments, you still can stop the foreclosure. If you have substantial equity in the property, your Chapter 13 plan can give you time to sell the property and recover your equity. If you are behind on your house payments, chances are that you are also behind on other creditors too. All of these problems may be resolved by using the bankruptcy laws. The main thing to know is you can stop the foreclosure and either keep your house or gain time to sell it yourself. 32. When any type of bankruptcy is filed, the automatic stay stops all repossessions, garnishments, foreclosures, lawsuits and other collection actions. When you are behind on payments on a loan secured by you car, furnishings, appliances or other property, a creditor can repossess those items. Even if you voluntarily surrender the property, this may still regarded as a repossession for all legal purposes. Upon repossession, the items will be sold and the money from the sale credited to your account. If the sale proceeds aren't enough to pay off the account and costs of repossession, you will be liable for the difference. At that point, the creditor can take additional collection actions, including filing a lawsuit against you. The bankruptcy filing stops the repossession and stops the creditor from selling items already in their possession. Filing a Chapter 7 bankruptcy cancels the debt. Filing Chapter 13 also stops the repossession, but it allows you to keep the item and restructure the debt. Through a Chapter 13, it may even be possible to have a repossessed item returned, if it has not already been sold. It is important to act quickly if you are trying to stop a repossession or recover assets already taken. The automatic stay also stops all garnishments. If a creditor fails to stop a garnishment after a bankruptcy is filed, they can be held in contempt for violating the court's order and will be liable for damages they caused you, including paying your attorney's fees. Money taken from your wages or bank accounts after the bankruptcy proceeding is filed can generally be recovered. 33. Taxes can often be discharged through bankruptcy. If they cannot be eliminated, you can still use the bankruptcy laws to force the IRS or the State to accept a payment plan through Chapter 13 that you can afford, rather than what they demand. Income taxes are usually dischargeable if you filed the returns more than 2 years ago and the return was due more than 3 years ago. There are other rules which apply to tax dischargeability, and whether your taxes are completely eliminated will depend upon a variety of factors such as whether or not you have filed returns, the date you filed the returns, the date the taxes were assessed, the value of your assets, etc. If the taxes can't be eliminated, the bankruptcy laws will give you up to five years to pay them without any further penalties being charged. This can significantly reduce the amount you would have to pay the IRS if you attempted to pay the taxes on your own without using the bankruptcy laws. The rules concerning taxes and bankruptcy are very technical. To find out how they apply to your situation, you should talk to one of our attorneys. 34. Most taxes cannot be discharged unless the returns were filed more than 2 years before the bankruptcy is filed. Other technical rules apply even if your have not filed your taxes. There are ways to deal with your tax debts that can help you reduce or eliminate it all together. It is critical that you discuss your situation with our bankruptcy attorneys before you file any returns or contact the IRS. 35. Yes. The automatic stay forbids tax agencies from continuing the collection of taxes. This means they must release tax levies, distraint warrants, and stop the seizure of any of your assets. Some tax debts can be eliminated by filing a complete Chapter 7 bankruptcy. Even if the taxes cannot be discharged, you can still use a Chapter 13 plan to force the IRS and other creditors to take a payment plan based upon what you can afford to do rather than on what they demand. If the IRS has filed a lien and you have equity in assets, you can either payoff the lien through a Chapter 13 or take the time you need to sell the property at a fair price. 36. There are a number of non-bankruptcy options for solving tax problems. These include setting up a payment plan with the IRS or making them an "offer in compromise". The IRS generally has 10 years to collect taxes. In evaluating an offer-in-compromise, the IRS estimates how much they can recover by selling your assets and how much they can obtain from your income over the time they have remaining to collect the tax. Your age, the age of the taxes, your income, and your net worth all affect the likelihood the IRS will accept your offer. Your Bankruptcy options include Chapter 7 and Chapter 13. Tax debts frequently can be eliminated through bankruptcy. If they cannot be eliminated, you may be able to force the IRS to accept a repayment plan. In a Chapter 7 or chapter 13 Bankruptcy, income taxes are dischargeable if the tax return was due more than 3 years ago, it was filed more than 2 years ago and the tax was assessed more than 240 days ago. Even if you have sufficient assets or income to pay the debt in full within 3 years, a Chapter 13 may still help because you can keep the IRS off of your back while you pay them on your terms rather than theirs and stop interest and penalties. 37. All individuals filing for bankruptcy (any type of case) must complete a credit counseling course with an agency approved by the United States Trustee's office within six months before they file bankruptcy. In other words, you need to get a "ticket in". The purpose of this counseling is to give you an idea of whether you really need to file for bankruptcy or whether an informal repayment plan would get you back on your feet. Counseling is required even if it's obvious a repayment plan isn't feasible. You are only required to participate, not to go along with any repayment plan the agency proposes. However, if the agency does come up with a repayment plan, you will have to submit it to the court, along with a certificate showing that you completed the counseling, before you can file for bankruptcy. After you file bankruptcy, you have to attend another session to learn personal financial management and get your "ticket out." Only after you submit proof to the court that you fulfilled this requirement will you get your bankruptcy discharge. The approved agencies are listed at www.usdoj.gov/ust/eo/bapcpa/ccde/ .
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