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The Bankruptcy Process in 2020

Are you facing judgement, repossessions, or a foreclosure on your home? Do you know that you need to file for bankruptcy protection, but you are apprehensive about the process and going to court? You don't have to let your payment history or credit utilization hold you back anymore. We are facing a unique time in history with the Covid-19 pandemic that’s occurring. Just as it has changed many things in your life, it’s also changed the court processes for the safety of the staff and those seeking debt relief. Following tips from the CDC, the court is protecting you while still servicing your needs. While the pandemic hasn’t stopped the court from processing bankruptcy requests, it has altered things dramatically. The first step is to see if you qualify for a Chapter 7 bankruptcy or if you will be required to file a Chapter 13. The deciding factor is whether you have any disposable income and a method to repay some of the debts you owe.

Credit Counseling and Debtor Education

When bankruptcy reform occurred in 2005, the rules change significantly. Credit counseling is something that was added to the requirement list. Before you can file for bankruptcy protection, the court wants to see that you have a certificate where you have completed credit counseling. Before you can get a discharge from your debts, you must complete debtor education. Due to Covid-19, you can take these classes over the phone or on the internet, and many companies are waiving fees to people who cannot afford these services.

The Means Test

During your consultation with our Long Island bankruptcy team, we will use the information you give to decide which chapter will be right for you. However, if we believe that you will file a Chapter 7, we will issue you this expenses and income evaluation. The Means Test is an examination given when a person wants to file for complete liquidation. To file for Chapter 7, you must show the court that you have no way to pay back your debts. This test will evaluate your income versus your outgoing and see if there is any disposable income. Due to the number of people out of work and the drastic hit to credit scores, many people are looking to the court for help. You can only file for a complete liquidation once every eight years, but it’s the perfect time to take care of this now that everything has been simplified.

Chapter 13 Repayment Plan

If you have told us that you have disposable income, or if the Means Test has shown that you can repay some debts, you must file for a Chapter 13. Additionally, if you have filed for bankruptcy in the previous eight years, the court will require you to file this method. During a Chapter 13, your disposable income will be used to pay back some of your debts. The amount of disposable income will dictate how much you will pay. Many just pay pennies on the dollars, but it’s all dependent on your situation. The benefit of using this chapter over others is that you can keep assets like cars and homes through reaffirmation of the debts. Though it’s also possible in Chapter 7, it’s easier when you have money and can prove to the court you can repay the debt. Additionally, the fees paid for our services can be worked into the plan so that you less out of pocket.

The Petition

The petition is quite lengthy, and it has several schedules that must be completed. This paperwork is essential to your case because if anything is left out, then you won’t get protection from the bankruptcy court for this debt. It’s vital that you take your time, gather your bills, pull your credit reports, and have a complete list of all your debtors. Any charge-off debts that are on your Experian, Equifax, or FTC reports must be reported. The trustee assigned to your case will go through your petition and check for any inaccuracies. If you leave anything off this petition or attempt to hide debts, it can be considered fraud. So, before your first meeting with us, make sure you have an accurate list of all your debts as well as income. Transparency before the court is of the utmost importance. If you cannot pay for the filing fee, we can ask the court to split the payment into four smaller installments. They usually approve these if they see that a person is struggling financially and unable to pay it. They are also more understanding of financial suffering during this Covid-19 crisis. So, a lack of money should never be the reason you don’t file for the court’s protection.

The 341 Meeting of Creditors

About 20-40 days after we file your petition, the court will schedule your Meeting of Creditors. Traditionally, you would go to the courthouse, and any lender that wanted to appear against you would come and file an objection to their debt being discharged. You would sit at a table and be sworn in by the trustee of the court. This process makes people very anxious even though we are standing beside you the whole time. Due to the Covid-19 pandemic, these meetings are now being conducted over the phone. You will be in a recorded session and answer the trustee’s questions. Your creditors can still file an objection, but nothing will be done in person. The good news for you is that you can take care of these matters in the comfort of your own home. You don’t have to go to court, deal with the nauseating nerve issues, and worry about finding parking. If you tend to be a bit shy and don’t like confrontation or appearing in front of others, then this is the time to take advantage of the court’s assistance during these unprecedented times. You don’t even need to worry about getting dressed in court attire.

Receiving a Discharge

If no one files an objection to the liquidation of their debt, then you will be granted a discharge from the court. They will typically issue a discharge 4-6 months after you file for a Chapter 7. If you successfully complete your Chapter 13 payment plan, then they will give a discharge within 60 days after your last payment. Keep in mind the repayment plan can last anywhere from 3-5 years, so it will take some time to get discharged using this method.

The Benefits of Bankruptcy

One thing that many people don't consider is that they can repair their credit through this process. We can give you many tips and develop a strategy to help you fix your score. Your payment history and credit utilization won't be erased, but the bankruptcy will go on your report drawing a defining line of debt forgiveness. You can start rebuilding your credit right away. Those inquiries and negative marks on Experian, Equifax, and FTC will not have such an impact moving forward. Yes, your charge-off debts and foreclosures also will not have the effect on your score as this strategy will help you fix and repair your credit. Though a bankruptcy will stay on your record for 7-10 years, it’s not going to stop you from rebuilding. While Covid-19 has brought unprecedented issues, it has helped those who want to file for bankruptcy.

The Law Offices of Adam C. Gomerman can help navigate you through this process. While you’re dealing with all these issues, the last thing you want to handle is the financial debts on top of everything else. Thankfully, this horrific time in history has led some assistance in seeking debt relief. Call today at 631-549-1111 to schedule your appointment for a consultation to get rid of your debts. 
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