|
Bankruptcy is a way for people or businesses who owe more money than
they can pay right now (a "debtor"), to either work out
a plan to repay the money over time, under Chapter 11, 12 or 13,
or for most of the bills to be wiped out ("discharged"),
as in a chapter 7 case. While the debtor is either working out a
plan or the trustee is gathering the available assets to sell, the
Bankruptcy Code provides that creditors must stop all collection
efforts against the debtor.
Any person, partnership, corporation or business trust may file
a bankruptcy. If the person or entity who owes the money, referred
to as the debtor, starts the bankruptcy, it is called a voluntary
bankruptcy. The people or entities that are owed money, referred
to as the creditors, can also file a petition against a person or
an entity who owes them money, and that is called an involuntary
bankruptcy. In an involuntary case, the debtor gets a chance to
contest the petition and contend it should not be in bankruptcy.
A joint petition is the filing of a single bankruptcy petition by an individual
and the individual's spouse. Only people who are married on the
date they file may file a joint petition. Unmarried persons, corporations
and partnerships must each file a separate case. If you are an individual
and have a business, you may not file a single petition for yourself
and your business; each must be a separate bankruptcy case.
Chapter 7 is the liquidation chapter of the Bankruptcy Code. Chapter
7 cases are commonly referred to as "straight bankruptcy"
or "liquidation" cases, and may be filed by an individual,
corporation, or partnership. Under chapter 7, a trustee is appointed
to collect and sell all property that is not exempt and to use any
proceeds to pay creditors. In the case of an individual, the debtor
is allowed to claim certain property exempt. In exchange for this,
the debtor gets a discharge, which means that the debtor does not
have to pay certain types of debts. Corporations and partnerships
do not receive discharges. Consequently, any individuals legally
liable for the partnership's or corporation's debts will remain
liable. Therefore, individual bankruptcies may be required as well
as the corporation or partnership bankruptcy.
Chapter 9 is only for municipalities and governmental units, such
as schools, water districts, and so on.
Chapter 12 offers bankruptcy relief to those who qualify as family
farmers or family fishermen. There are debt limitations for chapter 12, and a certain
portion of the debtor's income must come from the operation of a
farming or fishing business. Family farmers or fishermen must propose a plan to repay their
creditors over a period of time from future income and it must be
approved by the court. Plan payments are made through a chapter
12 trustee who also monitors the debtor's farming or fishing operations while
the case is pending.
Chapter 11 is the reorganization chapter available to businesses
and individuals who have substantial assets and/or income to restructure
and repay their debts. Creditors vote on whether to accept or reject
a plan of reorganization, which must also be approved by the court. In
addition to the filing fee paid to the Clerk, a quarterly fee is paid to
the U.S. Trustee in all chapter 11 cases.
There is no debt limit under Chapter 11. However, only a chapter
11 debtor that qualifies as a small business may request expedited
treatment under chapter 11. To qualify as a "small business,"
the debtor must be engaged in commercial or business activities,
other than the ownership of real property, and the total of its
secured plus unsecured debts must be less than $2,343,300. Due to
the expense and complexity of chapter 11, the decision to file a
chapter 11 petition should be made in consultation with an attorney.
Chapter 13 is the debt repayment chapter for individuals with regular
income whose debts do not exceed $1,441,875 ($360,475 in unsecured
debts and $1,081,400 in secured debts), including individuals who
operate businesses as sole proprietorships. It is not available
to corporations or partnerships. Chapter 13 generally permits individuals
to keep their property by repaying creditors out of their future
income. Each chapter 13 debtor proposes a repayment plan which must
be approved by the court. The amounts set forth in the plan must
be paid to the chapter 13 trustee who distributes the funds for
a small fee. Many debts that cannot be discharged can still be paid
over time in a chapter 13 plan. After completion of payments under
the plan, chapter 13 debtors receive a discharge of most debts.
You have a choice in deciding which chapter of the Bankruptcy Code
will best suit your needs. The decision whether to file a bankruptcy
and under which chapter to file depends on the particular circumstances
of the debtor. There is no way that a simple statement can spell
out all the different things to be considered. Also, considering
your personal facts, comparing them to each chapter's requirements,
and deciding which chapter to select, would be giving you legal
advice. The Clerk's Office staff and bankruptcy petition preparers,
including typing services and paralegals, are prohibited from giving
you legal advice. Only a lawyer can give you legal advice.
The decision whether to file a bankruptcy and under what chapter
is an extremely important decision and should be made only with
competent legal advice from an experienced bankruptcy attorney after
a review of all of the relevant facts of the debtor's case.
Bankruptcy petition preparers are permitted to provide services
limited to the typing of forms. They may not advise you in any way.
Their services are subject to various statutory requirements and
limitations.
Please note that although bankruptcy preparers are required to
sign all documents prepared for filing, they are not authorized
to sign any document on your behalf. Therefore, you and your spouse, and if filing
a joint petition, must also sign all documents. Copies
of all prepared documents should be furnished to you by the bankruptcy
petition preparer at the time they are presented to you for signature.
Likewise, bankruptcy petition preparers are prohibited by law from
collecting or receiving any court fees connected with the filing
of your case. Consequently, all court fees connected with the filing
of your case, including the filing fee and miscellaneous administrative
fee, should be paid directly by you to the court. The failure of
any bankruptcy petition preparer to comply with the law should immediately
be brought to the attention of any trustee appointed in your case and the
local Office of the United States Trustee.
The Clerk's Office provides a variety of services to the bankruptcy
judges, attorneys and the public. Clerk's Office staff provides
clerical and administrative support to the court by filing and maintaining
case-related papers, signing ministerial orders, collecting authorized
fees, sending notices, entering judgments and orders, and setting
hearings. The services provided by the Clerk's Office to attorneys
and the public include responding to requests for information and
making copies of papers in bankruptcy court files.
Although Clerk's Office staff cannot give you legal advice, the
U.S. Bankruptcy court is a source for many forms and local rules
which you will need to file your bankruptcy petition and related
documents.
- Form 1--Voluntary Petition (3 pages)
- Exhibit D
- Form B22A, B or C, depending on chapter - Statement of Current Monthly Income and Means Test Calculation
- Form 6--Summary of Schedules
- Schedules A through J, and Declaration
- Statistical Summary
- Form 7--Statement of Financial Affairs
- Form 8--Statement of Intention
- Creditor Matrix (list of people you owe money to)
- Verification of Creditor Matrix
- Application to Pay Filing Fee in Installments (if applicable).
These are the forms required for either a Chapter 7 or Chapter 13 filing, however, if you are filing a Chapter 13, the Chapter 13 Plan is a required document as well. You must also submit certification that you have received credit counseling from an approved credit counseling provider.
The filing fee for a Chapter 7 case is $306.00 and the filing fee
for a Chapter 13 case is $281.00, payable in either cash, money
order or certified bank check. Current fees can be found on the
Fees Page of this Web Site. Please be advised that this office does
not accept personal checks.
If you need to start your case quickly, you can file only Form
1--Voluntary Petition and your Creditor Matrix with the accompanying
Verification. You have an additional 14 days to file the certificate of credit counseling, statement of current monthly income and means test calculation, and the rest of
your bankruptcy papers. Your failure
to timely file these additional required documents or seek an extension
of time to do so will result in the dismissal of your case, denial
of discharge, or the imposition of sanctions.
Official Bankruptcy Forms may be obtained at the public
counters of the Bankruptcy Court. One set of forms is provided and
these may be photocopied. You can also find them on the Forms
Page of this web site.
Make sure you put a response to every question. If your answer
is "none" or "not applicable", make sure you
indicate that in writing. Use continuation pages if you run out
of room. Make sure you sign each form where required as this is
very important. Also, if you are filing a joint case, make sure
that your spouse signs as well. When filling out the Means Test form for a chapter 7, be sure to check the appropriate box on the front of the form to indicate whether a presumption of abuse arises.
Prepare your creditor matrix (a mailing list of your creditors)
according to the matrix format instructions. You can find this under
the Creditor Matrix section of this web page. The Clerk's Office
uses an Optical Character Reader to scan matrices and if you do
not follow the instructions exactly, the scanner will not be able
to read the matrix properly.
A Secured Debt
A secured debt is a debt that is backed by property. A creditor
whose debt is"secured" has a right to take property to
satisfy a "secured debt." For example, most homes are
burdened by a "secured
debt." This means that the lender has the right to take the
home if the borrower fails to make payments on the loan. Most people
who buy new cars give the lender a "security interest"
in the car. This means that the debt is a "secured debt"
and that the lender can take the car if the borrower fails to make
payments on the car loan.
B. Unsecured Debt
A debt is unsecured if you have simply promised to pay someone a
sum of money at a particular time, and you have not pledged any
real or personal property as collateral for that debt.
C. Priority Debt
A priority debt is a debt entitled to priority in payment, ahead
of most other debts, in a bankruptcy case. A listing of priority
debts is given, in general terms, in 11 U.S.C. § 507 of the
Bankruptcy Code. Examples of priority debts are claims for domestic support obligations, some taxes, and wage
claims of employees.
If you have questions deciding which of your debts are entitled
to priority status, you should consult an attorney.
D. Administrative Debt
An administrative debt is also a priority debt and is one created
when someone provides goods or services to your bankruptcy estate.
The best example of an administrative debt is the fees generated
by attorneys and other authorized professionals in representing
the bankruptcy estate.
11 U.S.C. § 522(b) allows an individual debtor to exempt real,
personal, or intangible property from the property of the estate.
Exempt assets are protected by state law from distribution to your
creditors. Typically, exempt assets include vehicles up to a certain
dollar amount, the equity in your home up to a certain amount, and
tools of the trade.
Exemptions are claimed on Schedule C. As with all schedules, it
is important to fully complete and provide all the information requested.
If no one objects to the exemptions you have listed within the time
frame specified by the bankruptcy court, these assets will not be
a part of your bankruptcy estate and will not be used to pay creditors
through your bankruptcy case.
Deciding which assets are exempt and how and if you can protect
these assets from your creditors can be one of the more important
and difficult aspects of your bankruptcy case. It is extremely important
to consult an attorney if you have any questions regarding the issue
of exempt assets.
The bankruptcy court is a federal court. The District of Maine has
two court locations where you may file, depending on the county in which you live.
Effective January 1, 2004, all attorneys must file electronically.
For non-electronic filers, bankruptcy petitions, pleadings and other
papers may be submitted for filing by mail or in person at the Clerk's
Office public counters.
Absent extraordinary circumstances, all documents must be submitted
for filing by mail or at a Clerk's Office public counter during
business hours. When extraordinary, compelling circumstances require
delivery of a document to the Clerk's Office after hours, an emergency
filing can be arranged by contacting the appropriate Clerk's Office
during business hours. The Clerk's Office does not currently accept
documents for filing by facsimile.
After completing your bankruptcy papers, mail or deliver them to
the appropriate divisional Clerk's Office accompanied by the filing
fee payment or a completed application to pay fees in installments.
If you want a file stamped copy of your petition, you must bring
or mail a copy and the Clerk's Office will file stamp and return
it to you. If your petition is mailed, you must include a self-addressed,
stamped envelope of sufficient size to obtain your file stamped
copy.
How much are the court fees to file a bankruptcy?
The Fees Page of this site states the current fees charged.
An individual chapter 7 debtor may file an application for waiver of the filing fee along with the bankruptcy petition. The application must conform substantially to Official Form 3B. The Court may waive the chapter 7 filing fee for an individual debtor who: (a) has income less than 150 percent of the poverty guidelines last published by the United States Department of Health and Human Services based on family size; and (b) is unable to pay that fee in installments. You will have to justify your request to waive the filing fee, and the Court will make a determination. If the Court denies the fee waiver application, you will be ordered to pay the fee in installments, and a schedule will be included in the order.
Installment payments may be approved under certain circumstances,
and are governed by Fed R Bankr P 1006. They are limited to individual
debtors. An application to pay in installments must be submitted
to the Clerk's office for approval by the Court. Fees paid pursuant to an approved installment application must be paid in four equal installments.
Upon filing the original petition with the Clerk's Office, the "automatic
stay" immediately takes effect and prohibits all creditors
from taking any collection action against the debtor or the debtor's
property. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 includes several limitations on the imposition of the automatic stay, especially for repeat filers, so you may want to check with an attorney before assuming that all your debts are stayed. Although the stay is automatic, creditors need to be advised
of the stay. Using the creditor matrix provided by the debtor, the court issues a notice to all creditors advising
them of the filing of the bankruptcy, the case number, the automatic
stay, the name of the trustee assigned to the case (if filed under
chapter 7, 12, or 13), the date set for the meeting of creditors
(called the "341 meeting"), the deadline, if any, set
for filing objections to the discharge of the debtor and/or the
dischargeability of specific debts, and whether and where to file
claims. The exact information in the notice differs depending on
the chapter under which the case is filed.
In a chapter 7 case involving an individual debtor, the creditors
generally have sixty (60) days from the first date set for the meeting
of creditors to object to the discharge of the debtor and/or the
dischargeability of a specific debt. If the deadline passes without
any objections to the debtor's discharge being filed, the court
will issue the discharge order. If any objections to the dischargeability
of specific debts are filed, they will be heard by the court, but
will not delay the granting of a discharge with respect to other
debts. An objection to discharge or to the dischargeability of certain
debts is considered a separate lawsuit (an adversary proceeding)
within the bankruptcy and may result in a trial before the judge
assigned to the case. Corporate and partnership chapter 7 debtors
do not receive discharges. If there are no assets from which creditors
can be paid, the trustee will prepare a report of no distribution
and the case will be closed. If there are assets that are not exempt,
funds will be available for distribution to creditors. The court
will set claims deadlines and notify all creditors to file their
claims. The trustee will proceed to collect the assets, liquidate
them and distribute the proceeds to creditors. When the assets have
been completely administered, the court will close the case.
In a chapter 13 case, creditors are given an opportunity to object
to the plan. If no objection is filed by creditors or the trustee,
the plan may be confirmed as filed. Once the plan is confirmed,
the trustee will distribute the proceeds of the debtor's plan payments
to creditors until the debtor completes the plan or the court dismisses
or converts the case. Upon completion of the chapter 13 plan, the
court will issue a discharge order, the trustee will prepare a final
report, and the case will be closed.
In a chapter 12 case, the confirmation hearing must be concluded
within forty-five (45) days of filing the plan. The court may consider
dismissal of the case if a plan is not confirmed.
In a chapter 11 case, a debtor's conference is held with the United
States trustee's staff before the creditors' meeting. At the debtor's
conference, the united States Trustee will go over the responsibilities
and restrictions on the debtor-in-possession, explain the quarterly
fees and monthly operating reports, and generally discuss the financial
situation of the debtor and the scope of the anticipated plan of
reorganization. A disclosure statement must be filed with the plan
and approved by the court before votes for and against the plan
can be solicited. After the estate has been fully administered,
the court enters a final decree closing the case. A chapter 11 estate
may be considered fully administered and closed before the payments
required by the plan have been completed.
In all chapter 7, 12, 13 and in some chapter 11 cases, a case trustee
is assigned. In chapter 7 cases they are called "Panel Trustees."
In chapter 12 and 13 cases they are called "Standing Trustees."
The trustee's job is to administer the bankruptcy estate, to make
sure creditors get as much money as possible, and to run the first
meeting of creditors, (also called the "341 meeting",
because 11 U.S.C. § 341 of the Bankruptcy Code requires that
the meeting be held). The trustee either collects and sells non-exempt
estate property, as in the case of a chapter 7, or collects and
pays out money on a repayment plan, as in the case of a chapter 12 or chapter
13. The trustee can require that you provide, under penalty of perjury,
information and documents, either before, after, or at the meeting.
You must also bring positive identification and verification of
your social security number to the meeting. You should always cooperate
with the trustee, since failure to cooperate with the trustee could
be grounds to have your discharge denied. Trustees are not necessarily
lawyers, and they are not paid by the court. They are appointed
by the United States Trustee. The trustees report to the court,
but their fees come out of the bankruptcy filing fees or as a percentage
of the money distributed to creditors in the bankruptcy.
The United States Trustee's Office is part of the U.S. Department
of Justice, and is separate from the court. The United States Trustee's
Office is a watchdog agency, charged with monitoring all bankruptcies,
appointing and supervising all trustees, and identifying fraud in
bankruptcy cases. The United States Trustee's Office cannot give
you legal advice, but they can give you information about the status
of a case, and you can contact them if you are having a problem
with a trustee, or if you have evidence of any fraudulent activity.
In monitoring cases, the United States Trustee reviews all bankruptcy
petitions and pleadings filed in cases, and participates in many
proceedings affecting the case, but they do not administer the case
themselves. They can bring motions in the bankruptcy, such as ones
to dismiss the case, or to deny the debtor's discharge. The United States Trustee is the agency which certifies credit counseling and debt education providers.
A "meeting of creditors" is the single event that ALL debtors
must attend in any bankruptcy proceeding. It is held outside the
presence of the judge and usually occurs between twenty (20) and
forty (40) days from the date the original petition is filed with
the court. In chapter 7, chapter 12, and chapter 13 cases the trustee
assigned by the court on behalf of the United States Trustee conducts
the meeting. In chapter 11 cases where the debtor is in possession
and no trustee
is assigned a representative of the United States Trustee's office
conducts the hearing.
The meeting permits the trustee or representative of the United
States Trustee's Office to review the debtor's petition and schedules
with the debtor face-to-face. The debtor is required to answer questions
under penalty of perjury concerning the debtor's acts, conduct,
property, liabilities, financial condition and any matter that may
affect administration of the estate or the debtor's right to discharge.
This information enables the trustee or representative of the United
States trustee's Office to understand the debtor's circumstances
and facilitates efficient administration of the case. Additionally,
the trustee or representative of the united States Trustee's Office
will ask questions to ensure that the debtor understand the positive
and negative aspects of filing for bankruptcy.
The meeting is referred to as the "meeting of creditors"
because creditors are notified that they may attend and question
the debtor about the location and disposition of assets and any
other matter relevant to the administration of the case. However,
creditors are not required to attend these meetings and, in general, are not
considered to have waived any of their rights by failing to appear.
The meeting usually lasts only a few minutes and may be continued
if the trustee or representative of the United States Trustee's
Office is not satisfied with the information provided by the debtor.
If the debtor fails to appear and provide the information requested
at the meeting, the trustee or representative of the United states
Trustee's Office may request that the bankruptcy case be dismissed
or that the debtor be ordered by the court to cooperate or be held
in contempt of court for willful failure to cooperate.
The discharge order is issued by the court and permanently prohibits
creditors from taking action to collect dischargeable debts against
the debtor personally; this does not prevent secured creditors from
seizing collateral if payments are not kept up, or other creditors
from pursuing property of the estate.
Some debts are not dischargeable, and others may be found to be
non-dischargeable depending on particular circumstances.
In a chapter 7 case, the bankruptcy court will order that the debtor
be discharged of all dischargeable debts once the time for filing
complaints objecting to discharge has expired unless:
a. the debtor is not an individual;
b. a complaint objecting to the debtor's discharge has been filed;
or
c. the debtor failed to complete an instructional course concerning personal financial management;
d. the debtor has a previous discharge within the past 8 years;
e. the debtor has filed a waiver of discharge.
In chapter 11 cases, if the debtor is an individual, a discharge must be granted by the Court after all payments are complete, or, at least, the amounts paid are not less than the amount that would have been paid under a chapter 7 liquidation; otherwise, the confirmation of a plan of reorganization
discharges the debtor from dischargeable debts that arose before
the date of the order of relief unless:
a. the plan or order confirming plan provides otherwise; or
b. the plan is a liquidating plan and the debtor would be denied
a discharge in a chapter 7 case under 11 U.S.C. 727
In chapter 12 and chapter 13 cases, the court will order that the
debtor is discharged of dischargeable debts after the debtor has
completed all payments under the plan, or prior to plan completion,
after notice and hearing, if the requirements of 11 U.S.C. §§
1228(b) or 1328(b) have been met.
The granting of a discharge does not automatically result in the
closing of a case. All contested matters, adversary proceedings,
and appeals must be resolved and the appointed trustee or debtor-in-possession
must file a final report and account and request entry of a final
decree before the Clerk's Office will close the case.
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 includes several new bars to the granting of a discharge. For example, all individual debtors must complete an instructional course concerning personal financial managements, and submit a certification of completion. Chapter 13 debtors must certify that any domestic support obligations are current. In some circumstances, a case may be closed without the discharge being granted. If that happens, the debtor will have to pay a fee to reopen the case and file the missing documents to get the discharge.
11 U.S.C. § 523 lists exceptions to discharge. In general,
all other debts are dischargeable.
Some debts listed in 11 U.S.C. § 523, such as those based
on fraudulent conduct, embezzlement or willful and malicious injury
to another, are discharged unless a complaint to deny discharge
of that debt is timely filed with the bankruptcy court. Ordinarily,
these complaints must be filed within sixty (60) days of the first
date set for the meeting of creditors.
Additionally, debts that were not listed on your bankruptcy schedules
or that were incurred after you filed bankruptcy are generally not
discharged.
Denial of a discharge goes to the debtor's entire proceeding, while
determination of non-dischargeability goes to a particular debt
only. A request for denial of discharge is usually granted because
the debtor has defrauded a creditor, concealed property of the estate,
made a false oath, presented or used a false claim, refused to obey
any lawful order of the court and other reasons contained in the
Bankruptcy Code.
On the other hand, non-dischargeability of a debt excepts a particular
debt from the discharge. This means that if the debt is determined non-dischargeable the
debtor is still obligated to that creditor.
A dismissal order ends the case. Upon dismissal the "automatic
stay" ends and creditors may start to collect debts, unless
a discharge is entered before the dismissal and is not revoked.
An order of dismissal itself will not free the debtor from any debt.
Often, a case is dismissed when the debtor fails to do something
he/she must do (such as show up for the creditors' meeting, answer
the trustee's questions honestly, produce books and records the
trustee requests), or if it is in the best interests of the creditors.
Unless the debtor appeals the order or seeks reconsideration of
the order within fourteen (14) days after entry of the order, the Clerk
will automatically close the case.
A reaffirmation agreement is an agreement by which a bankruptcy
debtor becomes legally obligated to pay all or a portion of an otherwise
dischargeable debt. Such an agreement must generally be filed within
sixty (60) days after the first date set for the meeting of creditors.
An original and executed reaffirmation agreement filed with the
Clerk no later than sixty(60) days after the first date set for the meeting of creditors
is enforceable without hearing or court order, if the agreement is
accompanied by a declaration or an affidavit of the debtor's attorney.
The reaffirmation agreement must be filed on form B240A along with the reaffirmation agreement cover sheet form B27. If a reaffirmation agreement is filed without an attorney's declaration
or affidavit, or creates a presumption of undue hardship, a hearing is required. You must appear in person at
the hearing. The judge will ask you questions to determine whether
the reaffirmation agreement imposes an undue burden on you or your
dependents and whether it is in your best interests. Since reaffirmed
debts are not discharged, the bankruptcy court will normally only
reaffirm secured debts where the collateral is important to your
daily activities.
Reaffirmation agreements are strictly voluntary. They are not required
by the Bankruptcy Code or other state or federal law. You can voluntarily
repay any debt instead of signing a reaffirmation agreement, but
there may be valid reasons for wanting to reaffirm a particular
debt.
Since a reaffirmation agreement takes away some of the effectiveness
of your discharge, legal counsel is advisable before agreeing to
a reaffirmation. Even if you sign a reaffirmation agreement, you
have a minimum of sixty (60) days after the agreement is filed with
the court to change your mind. If your discharge date is more than
sixty (60) days after the agreement is filed with the court, you
have until your discharge date to change your mind. If you reaffirm
a debt and fail to make the payments as agreed, the creditor can
take action against you to recover any property that was given as
security for the loan and you may remain personally liable for any
remaining debt.
Redemption allows an individual debtor (not a partnership or a
corporation) to keep tangible, personal property intended primarily
for personal, family, or household use by paying the holder of a
lien on the property the amount of the allowed secured claim on
the property, which typically means the value of the property. Otherwise,
in order to retain the property, the debtor would have to pay the
entire amount of the secured creditor's debt, do a reaffirmation
agreement and become legally obligated on the debt again. The property
redeemed must be claimed as exempt or abandoned.
With redemption, a debtor can often get liens released on personal
household possessions for much less than the underlying debt on
those secured possessions. Unless the creditor consents to periodic
payments, redemption must generally be made in one lump sum payment
to the creditor.
A. Claims
In the broadest sense, a claim is any right to payment held by
a person or company against you and your bankruptcy estate. A claim
does not have to be a past due amount but can include an
anticipated sum of money which will come due in the future. In filling
out your Schedules, you should include any past, present or future
debts as potential claims.
B. Claims Objections
You may be entitled to object to any claim filed in your bankruptcy
case if you believe the debt is not owed or if you believe the claim
misrepresents the amount or kind of debt (e.g. secured or priority)
which you owe. In some circumstances, an objection to claim can
be initiated by filing a motion in the bankruptcy court; in other
circumstances, it must be initiated by filing an adversary proceeding
(like a lawsuit in your bankruptcy case). If you anticipate objecting
to claims, you should seek the advice of an attorney as soon as
possible since the objection process can be complicated and time
sensitive.
C. Filing of Claims
The written statement filed in a bankruptcy case setting forth
a creditor's claim is called a proof of claim. The proof of claim
should include a copy of the obligation giving rise to the claim
as well as evidence of the secured status of the debt if the debt
is secured. Under the Federal Rules of Bankruptcy Procedure, with
limited exceptions, claims filed by creditors, except governmental
units, in chapter 7, 12 and 13 cases must be filed within ninety
(90) days after the first date set for the meeting of creditors.
If a creditor files a claim after the specified deadline, you may
object to the claim as being untimely filed.
For purposes of obtaining your discharge, it may be important for
you to file a claim on behalf of a creditor if that creditor should
fail to do so. Under the Federal Rules of Bankruptcy Procedure,
you (or in chapter 7 and some 11 cases, the trustee) may file a
proof of claim on behalf of a creditor within thirty (30) days after
the last day for filing claims.
If a creditor continues to attempt to collect a debt after the
bankruptcy is filed in violation of the automatic stay, you should
immediately notify the creditor in writing that you have filed
bankruptcy, and provide them with either the case name, number and
filing date, or a copy of the petition that shows it was filed.
If the creditor still continues to try to collect, the debtor may
be entitled to take legal action against the creditor to obtain
a specific order from the court prohibiting the creditor from taking
further collection action and, if the creditor is willfully violating
the automatic stay, the court can hold the creditor in contempt
of court and punish the creditor. Any such
legal action brought against the creditor will be complex and will
normally require representation by a qualified bankruptcy attorney.
The information contained in your petition, schedules, and statement
of affairs is submitted under penalty of perjury. Therefore, you
must be certain that it is correct when you sign these documents.
If, however, you later discover that something is inaccurate, the
documents may be corrected by the filing of an amendment with the
Clerk's Office. New schedules or statements must be filed showing
the corrected information along with an amended Summary of Schedules.
A fee of $30.00 must be paid to amend schedules of creditors or
lists of creditors after notice to creditors. All amendments must
be served upon the United States Trustee and case trustee, and certain
amendments must be served upon the creditors affected by the amendment.
If the debtor cannot make a chapter 13 payment on time according
to the terms of the confirmed plan, the debtor should contact the
trustee by phone and by letter advising the trustee of the problem
and whether it is temporary or permanent. If it is a temporary problem
and the payments can be made up, the debtor should advise the trustee
of the time and manner in which the debtor will make up the payments.
Significant changes in the debtor's circumstances may require that
the plan be formally modified. If the problem is permanent and the
debtor is no longer able to make payments to the plan, the trustee
will request that the case be dismissed or converted to another
chapter. The determination of whether to modify, dismiss or convert
a case requires the same kind of analysis as is needed for the initial
decision whether to file bankruptcy and under what chapter. Therefore,
the debtor should seek counsel from a qualified bankruptcy attorney
before attempting to make such a decision. If the debtor delays
making a voluntary decision and cannot make the plan payments, the
court may dismiss the case.
If you are a co-obligor with your ex-spouse on a debt, you should
seek legal advice for a thorough explanation of your rights and
obligations in this area as soon as you find out that your ex-spouse
has filed a bankruptcy.
| 
