Prior to the effective date of BAPCPA, most consumer debtors who needed relief from creditors filed for relief under Chapter 7 which allowed them to discharge those debts under a fairly inexpensive and simple procedure.

New changes in the code became effect on October 17, 2005. These  provisions were called the Bankruptcy Abuse Prevention and Consumer Protection Act, known a “BAPCPA” and were enacted primarily with  Republican backing who held majorities in both the House and Senate,  after  intense lobbying by the credit industry to make it more difficult for consumer debtors to file and discharge their debts in bankruptcy. Under BAPCPA, a “means test” must be calculated using objective costs for certain expenses such as mortgages and living expenses.  If you make more than the median income, you may not be eligible to file under Chapter 7, and may have to file Chapter 13, which basically requires payments, in most cases, to be made over five years.  However, the means test also includes deductions, so even if you make more than the median income, you may still be eligible to discharge your debts under Chapter 7.  Don't presume you may not qualify simply because your gross income may exceed the median income.  We will review your financial information and calculate the means test at no cost as part of the initial consultation to determine if you are eligible for discharge in a Chapter 7 proceeding.

    In addition, pay “advices” or pay stubs for 60 days must be filed with the petition, and debtors must obtain credit counseling .  This counseling must be obtained during the preceding 180 days before the petition date.  Finally, debtors must complete a “debtor education” course and file the certificate of completion of this course before the discharge will be entered.

    Because new provisions provide for sanctions for attorneys who fail “to reasonably investigate the circumstances surrounding the debtor’s financial affairs” attorneys must spend additional time reviewing documents, checking for values of assets, and pay very close attention to the information in the schedules filed with the Court.

What you can expect-and what you will be required to provide?

    In order to adequately meet these new requirements, you should obtain six months pay stubs from your employer (or have some evidence of your source of income if you have not been employed).  In addition, your tax return should be provided for both the previous year and the current year if it is due.  You must provide other information about your assets such as your deed to your home, your home mortgage, auto payments, and titles to your vehicles.  Most of this information can be entered by you on a web site for your convenience.

    You also will have to obtain a credit counseling certificate prior to filing.  Counseling can be done by telephone, or over the internet, either from your home or at our office, and takes about one hour and costs $9.00.   After you file, you must also complete a debtor education course, either on-line or over the telephone.  The debtor education will cost  $9.00 (for both single or joint). These fees are paid directly by you to the credit counselor or course provider.  We assist you in obtaining both credit counseling and completing the debtor education course.

     Our services  provide for negotiation for reaffirmation agreements.  Reaffirming debts is a legal document that basically allows the debt not to be discharged.   You may be required to attend a Court hearing for the Court to approve the reaffirmation agreement to make it effective.

     After all the required documents have been processed, and your petition and schedules prepared, they are filed along with your certificate of completion of credit counseling and pay advices with the Court.  The clerk will set a "341 Meeting of Creditors" no less than 20 and no more than 60 days from the date  your case if filed.  For cases in the Eastern District of Oklahoma, the hearing will be held in the Federal Court House in Okmulgee, Oklahoma.  For cases filed in the Northern District, the hearing will be held in the Federal Bankruptcy Court House in Tulsa, Oklahoma. Directions and the date and time of the hearing will be provided.  You must attend the hearing.

How much will it cost?

    Fees for our services vary, but most cases run  $1250.00 for a consumer Chapter 7 bankruptcy, depending on the complexity.  Filing fees in the amount of $335.00 also must be paid to the bankruptcy court.  Attorney Fees and costs can be paid over time, but for Chapter 7, all fees must be paid prior to the petition being filed.  A specific fee will be quoted at the time of consultation and is based on the complexity of your case.

    There are additional costs for obtaining credit reports and other costs in the amount of $40.00 (single) to 60.00 (joint). There is no charge for the first consultation, and usually takes about an hour.

     It will take approximately one to two hours, depending on the complexity of your case, for your initial consultation.  If you decide to retain our services, the amount of fees and costs for your case will be explained. 

Can I avoid bankruptcy if I use a company that promises to work out my debt with my creditors?

    Unfortunately, with the economic downturn, you've probably seen on television or over the internet advertisements that promise with their help you can avoid repaying your debt without filing bankruptcy.  If you read the fine print, most of these companies require monthly payments to establish an escrow fund in order to save enough over time to offer a "lump sum" settlement to your creditors. What they don't explain to you is that they will charge you 15 to 20 percent of the amount you owe to your creditors, and take that from each payment you make until it is paid before they will do anything on your behalf. Of course, by then, most creditors have begun collection activities, including lawsuits. When you contact the company, you find out that they haven't done anything, and won't do anything for you until they've been paid in full, and you've basically paid them to do nothing. Don't be a victim of these scams.  If you want to try to work something out with your creditors, call them yourself.

    To add insult to injury, the credit card banks or other creditors are required to submit a Form 1099C to the IRS, as  debt canceled  is treated as income and fully taxable. So even if you are able to negotiate a settlement with the bank, you will get an unexpected tax bill from the IRS for the year the debt was written off.  If you file bankruptcy, there is no tax, even if the debt is canceled and a 1099C is submitted by the creditor (although, filing a Form 982 may be required with your tax return).  You may be able to avoid any taxes if you don't file bankruptcy by filing  Form 982 if you were insolvent when the debt was written off.  Avoiding taxes on canceled debt by reason of insolvency may be more difficult to prove than filing bankruptcy.  Note, however, that the Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence for calendar years 2007-2016 (including 2017 if written agreements were entered into in 2016).

What about judgments?

If you have a judgment against you, and own any real estate or your home, and the judgment was recorded at the county clerk's office, it will act as a lien on your home or other property.  While the lien on your home cannot be foreclosed, it will cloud title, and if you ever sell the home, the lien will have to be paid to obtain a release in most cases. The bankruptcy code provides that this type of lien can be voided, so it will clear title to your home, allowing you to sell or borrow money against it after your bankruptcy.  However, a motion must be filed, and proper notice must be given to the judgment creditor.  Our fees include filing such a motion, and obtaining an order voiding the judgment, for up to four judgment creditors.  There may be a small charge for voiding judgments in excess of four to cover our costs.  If you have any judgments against you, be sure to your attorney will void any judgments before your case is closed.  Otherwise, you may have to pay costs and fees to later re-open your case to void these judgments in order to sell or mortgage your home.  Judgments against non-homestead property may not be voided in bankruptcy.

How do I make an appointment?

 The filing of a bankruptcy case can involve complicated issues.  Be sure to select someone qualified and experienced to represent you to be sure that your case proceeds in accordance to the rights you have under federal and state law.

We intentionally limit the number clients we see, to insure that we can provide the best quality and representation possible. 

Contact us at 918 687-1347, or email at appt@gmillerpc.com if you would like to make an appointment.  There is no charge for the initial consultation.