Since the Bankruptcy Abuse Prevention and Consumer Protection Act went into effect in October 2005, the process for filing bankruptcy in Washington DC changed. A qualified bankruptcy attorney can help guide you through the changes to qual.
Credit Counseling – Anyone considering filing for either Chapter 7 or Chapter 13 bankruptcy must now complete mandatory redit counseling within 6 months before filing for bankruptcy. Once filed, you must also complete a financial management class.
Gathering Documentation - Bankruptcy cases require extensive documentation. Many bankruptcy attorneys ask clients filing for bankruptcy to provide this documentation before filing bankruptcy.
Documentation required for bankruptcy cases include:
• Itemized statements of all income sources for the 6 months prior to filing
• Copies of tax returns for the previous 2 years
• Proof of monthly expenses
• Proof of all secured and unsecured debt – mortgage, car loan, credit cards, student loans
• Proof all property – all assets, real estate, and property
• Proof of major financial transactions for the previous 2 years
• Deeds to property and motor vehicle titles
• Loan documents
A bankruptcy attorney can tell you exactly what documentation you might need to present to the courts. Your lawyer can help you speak with creditors and sort through your expenses to put together all the information the court and trustee may need.
Determining Chapter 7 Bankruptcy – to qualify you will be scheduled for a Chapter 7 Means Test which determines if you qualify for debt discharge. To qualify for Chapter 7 bankruptcy in Washington DC, your income must be below the median income for the area as determined by the U.S. Census Bureau for 6 months prior to the filing.
As of March 17,2008, Washington DC Median Income is:
• $39,504 – single wage earner
• $67,790 – two person household
• $67,790 – three person household
• $73,609 – four person household
• $6,900 – for each additional person over four
However, if your income exceeds Washington D.C. Median Income, you might still qualify for Chapter 7 bankruptcy if, after deducting acceptable expenses from your income, you are unable to pay $6,000 ($100/month) to your unsecured creditors over 5 years (60 months).
If your budget allows for payments of $6,000 ($100/month) or more in a 5 year period, you will be denied Chapter 7 bankruptcy. Chapter 13 bankrtuptcy will be your next option.
A qualified attorney can assist you with all the calculations to see if you qualify for Chapter 7 debt relief.
Determining Chapter 13 Bankruptcy – is a debt reorganization plan that allows for repayment of your debts over a 3-5 year period, giving you time to pay off your debts. In Chapter 13, the petitioner must propose a payment plan for which provides for full payment of priority debts like taxes, child support, and student loans, but allows for partial payment of unsecured – or consumer – debt.
To file Chapter 13 bankruptcy your repayment plan must past three tests:
• Must be delivered in good faith
• Must pay creditors at least as much as they would get in a Chapter 7 settlement – generally the value of all non-exempt property
• All disposable income must be paid into the plan for at least 3 years and up to 5 years and must meet the Chapter 7 requirement. Disposable income means anything over the amount required for necessary monthly expenses.
If you decide you wish to pay your debts, or do not qualify for Chapter 7, a bankruptcy attorney can help you determine what monthly payment you can afford and help you file your payment plan with the courts.
Automatic Stay Protection – once bankruptcy – either Chapter 7 or 13 – has been filed with the courts, the petitioner is granted an immediate Automatic Stay. Automatic stays prohibits creditors from staking any claim to any of your property or from making any direct contact with you. It also stops foreclosure proceedings. You are also protected form most wage garnishment and lawsuits.
Trustee – you will be assigned a trustee by the court who takes control of all debts, property, and arranges for your payments under Chapter 13. Many times these payments can be taken out of your wages. The trustee manages creditor payments, evaluates assets, and can challenge any part of the bankruptcy case.
341 Hearings – occur about a month after filing Chapter 7 bankruptcy. This is a meeting called by the trustee between you and your creditors. You are required to attend this “first meeting of creditors”. Creditors have 60 days to challenge your right to debt discharge.
If there are no challenges, you will receive notices that your debts have been discharged in approximately 3 – 6 months in a Chapter 7 case.
Bankruptcy attorneys are by your side every step of the way during the hearing to guide you through the process. Especially in Chapter 13, where there will be more questions about your ability to make monthly payments.
Chapter 13 Confirmations – happens after a hearing before a bankruptcy judge. He or she will either approve or deny your repayment plan. Bankruptcy attorneys are with you every step of the way during the hearing to make sure your case goes through.
If approved, and you make all your payments on time, the remaining balance of your debts will be discharged at the end of your term – usually 3-5 years.
If you’re ready to talk with someone about your bankruptcy options, fill our evaluation form, and talk to a Washington D.C. bankruptcy attorney today.