All of these blog posts provide some general bankruptcy information and concern the filing for protection under the Bankruptcy Code. They include discussions of such things as the means test, filing for Chapter 7, Chapter 13, and other such bankruptcy issues. Bankruptcy Blog PostsIf you have any questions or want to know more about the bankruptcy process then take a look at the different blogs on here and if you don’t find and answer then give us a call.

We handle bankruptcy cases all across the State of Alabama and we hope these posts can provide some useful bankruptcy information. There is a blog post on bankruptcy exemptions that explains a little about what property you can protect from being liquidated in a Chapter 7 bankruptcy. There is a blog post on the different people involved in the bankruptcy process including the role of the Trustee in handling your case. One of the jobs of the Trustee includes an evaluation of your bankruptcy estate (which is all of the property that you own) to determine if there are any assets they can possible sell and distribute money to your creditors. 

Those are some of the many blog posts about the bankruptcy process. If you have any questions or want to say something about any of our posts then feel free to leave a comment or give us a call at (205) 201-1789.

What Are Reaffirmation Agreements?

You have filed a Chapter 7 bankruptcy and want to keep property which secures a loan. What happens now? When you buy real property (usually your home or land) or personal property (vehicles, furniture, etc.), you sign papers which state that you promise to pay for the property and that the lender can foreclose or repossess if you don’t make the payments.  This is called a secured loan. Bankruptcy law requires that if you want to keep property securing such a loan, then you have to continue to pay it.  If you don’t want to pay the loan, then you have to give the property back. 

When you file your initial paperwork with the Bankruptcy Court, you file a document called a Statement of Intention.  This statement tells creditors whether or not you want to keep property or give it back.  If you are keeping property, the creditor will send to you an agreement called a Reaffirmation Agreement.  What Are Reaffirmation Agreements?The Agreement contains all of the terms and conditions of your original loan, including the amount due, interest rate, and budget information.  By signing the Reaffirmation Agreement, you agree to continue making the payments on the loan so that you can keep your property.  When the creditor files the Reaffirmation Agreement with the Bankruptcy Court, you are obligated to pay the loan in full.  If you default or stop paying on the loan, the creditor may take all legal actions to collect its debt.  Once the Reaffirmation Agreement is signed and filed with the court, the debt is no longer affected by the bankruptcy.

The deadline to file a Reaffirmation Agreement with the Bankruptcy Court is 60 days after the first date of the meeting of creditors.  If you do not sign the Reaffirmation Agreement by this date, then the creditor may move forward with repossession or foreclosure since you have not agreed to pay the debt.  The deadline can be extended with permission of the court, but it is best to have the Reaffirmation Agreement filed by the deadline.

 When you decide to sign a Reaffirmation Agreement, you are telling the creditor and the Bankruptcy Court that you can afford to make the payment because you have enough income to do so.  However, if your expenses are higher than your income, it is difficult to justify to a creditor that you can make the payment.  Your bankruptcy lawyer should explain to you that the law has provided a way to still be able to keep your property even though your income does not appear to be enough to afford the payment. 

A “presumption of hardship” is created when it looks like you cannot afford to make the payment.  The Reaffirmation Agreement is still filed with the court; however, you must appear before the judge and explain how you plan to pay the debt even if you do not have enough money to pay it each month.  If the judge agrees with your plan, an order will be issued approving the Reaffirmation Agreement and allowing you to keep the property by paying the debt.  If the judge does not agree with your plan, an order will be issued denying approval of the Reaffirmation Agreement and you will have to turn over the property to the creditor. Reaffirmation Agreements are a great tool to assure a creditor that you can pay the secured loan and that you will know the terms of the loan and be able to keep your property.

Sometimes creditors will let you ‘retain and pay’ where you do not sign a reaffirmation agreement but continue to make the payment and keep the vehicle. It is entirely up to the creditor but some would rather have you monthly payment than the vehicle or other property. Give our local bankruptcy attorney a call today if you have any questions about reaffirmation agreements and how your property will be treated in the bankruptcy.

 

 

What Happens at the Meeting of the Creditors

  Bankruptcy law requires that a meeting of creditors be set within thirty to forty-five days after a person files bankruptcy.  The meeting of creditors is an appearance in court to allow the trustee and creditors to question a debtor under oath about assets and liabilities.  You do not appear before a judge. What happens at the meeting of the creditorsHowever, you do appear before the trustee in your case. The idea of testifying in court makes many people very nervous, but there is nothing to fear. The actual proceeding varies from court to court but there are certain things that are common to all proceedings.  Your local bankruptcy lawyer will be there with you, but you do have to answer the questions yourself.

            The first thing that occurs is a roll call to see who has appeared and who has not appeared.  It is very important that you contact your attorney if you cannot attend the meeting of creditors or if you are running late.  Not appearing at your meeting of creditors could result in your case being dismissed and you will no longer be in a bankruptcy case.  If your case is dismissed, your creditors will re-start collection actions, including lawsuits, garnishments, and repossessions.

            The second thing that occurs is that you will be required to take an oath to tell the truth.  It is essential that you be able to discuss your assets (things you own) and liabilities (debts you owe) with confidence and honesty.  Hiding assets or not being honest in your answers is considered bankruptcy fraud and could result in being prosecuted by the U.S. Attorneys office. 

            The trustee will have the opportunity to question you.  The trustee has reviewed all of the documents that you signed and filed with the bankruptcy court, so most of the questions asked by the trustee will concentrate on the information contained in the paperwork. Other questions asked by the Trustee outside of your paperwork may concern any lawsuits that you have filed, parties that you may have a reason to sue, whether or not you pay child support or alimony, and whether or not you are current in the filing of your tax returns.  Bankruptcy HearingThe trustee will also tell you to correct any errors in your paperwork that need to be amended.

            Creditors may appear at the meeting of creditors, but this does not happen very often.  If a creditor does appear, generally the questions relate to insurance on vehicles and your intent on repaying debts. 

            In Chapter 7 cases the Bankruptcy Administrator may appear to ask questions. The Bankruptcy Administrator is a member of the Department of Justice and monitors all cases for fraud and ensures that the bankruptcy rules and code are followed.  The Bankruptcy Administrator may ask you about your income and expenses so that the information provided for the means test is verified.  If you have filed your case pro se (without a bankruptcy attorney), the Bankruptcy Administrator may ask if you had any help completing your paperwork or how you prepared your paperwork. 

            In Chapter 13 cases the trustee will review your reorganization plan with you. You will be asked about the repayment terms and the secured debts you are paying for through the plan. The trustee asks these questions to be sure that your plan payment will pay your case out within five years and that your creditors will get paid the amount proposed in your plan.  You should have made at least one of your plan payments before the meeting of creditors because this shows the trustee that you can afford to pay them.

            Your testimony will not take very long, generally from two to ten minutes. The longest part of the meeting of creditors is waiting for your turn to testify.  The meeting of creditors is not an interrogation but more like a conversation with the trustee.  It should be your only court appearance, so there is no need to be nervous.