A Fresh Start
With Bankruptcy

A Fresh Start
With Bankruptcy

General Information About Bankruptcy Proceedings

The following information is intended to set forth general rules of law and procedure that affect the typical Chapter 7 and Chapter 13 bankruptcy pro­ceedings. The specific application of these general principles depends upon the particular circumstances of your financial condi­tion and situation. Talking with attorney Stephen Zayler about your case and needs can help you understand how the process will affect you. You can trust your bankruptcy questions and concerns to Law Office of Stephen J. Zayler in Lufkin, Texas.

The Purpose Of Bankruptcy

The purpose of a bankruptcy proceeding is to allow a person to obtain what is known as a “fresh start.” No one wants to file a bankruptcy or ever expects to have to file; however, the law and society recognize that sometimes people will find themselves in financial situations where it becomes impossible to pay their debts as they come due.

Often this is caused by factors totally beyond control such as unexpected or long unemployment, illness, loss of income, lawsuits, tax problems and similar problems. Usually, a person faces a combi­nation of these problems. Bankruptcy offers a person a legal and proper way to become discharged or released from having to pay some or all of their debts when there is no possible way to pay them.

The reason the law allows a person to become re­leased from certain debts is the recognition that it is in the best interest of the person to remain a productive member of society by having a second chance.

Changes To The Bankruptcy Laws

It is very important to understand that for cases filed after October 17, 2005, the bankruptcy law has been changed. In some important ways, these new laws have made major changes in the way bankruptcy works. There are still a number of areas where it is very uncertain what some of these changes mean and how they are supposed to work.

Acting As A Debt Relief Agency

Attorney Stephen Zayler is authorized to act as a “debt relief agency” under the new laws to help an “assisted person,” a person with mostly consumer debts (meaning debts created for personal or family use, not business) whose net equity value (discussed below) is less than $150,000. Most people without specific business-related debts will be considered an “assisted person.” Certain additional information required by law will be provided to you.

Debt Counseling Is Mandatory Before And After You File

The law requires that all persons wanting to file a bankruptcy seek credit counseling with an approved debt counseling service before they file. This is called a credit counseling course and may be done in person, over the telephone or through the internet. Attorney Stephen Zayler will provide you a list of approved counseling agencies. There are very limited emergency exceptions.

After you file, requirements for a mandatory financial education course must be taken to complete your bankruptcy. If this certificate is not filed with the Bankruptcy Court within the established deadline, your case will be closed without a discharge being issued. There will be a fee charged by the court of $260 to reopen the case and file the certificate so that you can receive your discharge order.

If you complete this course online and the agency indicates to you that the certificate will be emailed or faxed to my office, you are strongly urged to contact Law Office of Stephen J. Zayler to make sure that the certificate is in fact received. Attorney Zayler has no way of knowing to expect the certificate unless you inform him once you have completed the course.

Full Disclosure Of Information – Everything

Bankruptcy starts with full and complete disclosure of your finances. You must tell the court under penalty of perjury everything you own and everybody you owe money, including the debts you want to keep and pay. This is done by filling out the following forms:

The Schedules

Schedule A is a list of all real estate (land and houses), including oil and gas and mineral interests in which you have any ownership interest, individually, jointly, or otherwise, whether located in Texas or anywhere else, purchased, received as a gift or inherited, paid for or not.

Schedule B is a list of all personal property owned (everything other than land) by you, which includes any kind of property or asset, property right, or claim, or right to property, which you own, paid for or not.

Schedule C is the list of property that you claim as ex­empt or protected. There are two ways to protect property, which we will discuss in more detail later.

Three main types of creditors:

Schedule D is a list of all creditors whose debts are se­cured or guaranteed by some type of property as collateral, whether real estate or personal property. The treatment of secured creditors in bankruptcy is very important. Secured creditors are given special rights to protect their mortgage rights in the collateral, and so each secured claim must be dealt with very specifically. Generally speaking, if you wish to keep property that acts as security or col­lateral for the debt, you must pay that secured debt in full. Most secured debts are known as purchase money secured debts, which means that the debt is for the purpose of financing the purchase of the specific property. Sometimes a loan is made for one purpose and property that is not encumbered by a debt is placed up as collateral. These are known as nonpurchase money secured debts and typically are made with finance companies. It is sometimes possible to void or cancel the lien or mortgage against this property.

Schedule E lists what are known as priority debts. The principal priority debts are taxes and unpaid child support. However, taxes may also be considered secured if a proper tax lien has been filed. Generally speaking, these debts may not be discharged in a bankruptcy.

Schedule F lists all other debts not secured by any piece of property (ordinary unsecured debts). This list should include all debts, claims and even possible claims, however unlikely, which do or may exist against you. Examples are credit cards, signature loans and medical bills.

Other required information:

Schedule G lists all existing contracts and unexpired leases. Executory contracts and leases are contracts that you have with another person, which have not yet been completely performed.

Schedule H lists all co-debtors who are or might be jointly liable with you on a debt.

Schedule I lists the average monthly income from all sources.

Schedule J lists average monthly expenses as calculated on the basis of your financial situation after you file for bankruptcy. Law change – Expenses are now required to be set according to the Financial Collection Standards of the Internal Revenue Service.

Statement Of Financial Affairs Or Background Questions

The Statement of Financial Affairs is a financial disclo­sure form. All answers to the questions in this statement are made under penalty of perjury. The questions ask for infor­mation concerning your financial condition and recent history. For example, questions deal with such matters as income over the last several years, involvement in lawsuits, repossessions and foreclosures, transfers of property, and similar matters. If you have been engaged in business, other than as an employee, addi­tional questions must be answered concerning that business.

While the forms you are given may look long and complicated, they really are just long. Law Office of Stephen J. Zayler cannot fill out these forms for you. It is important that you fill them out as completely and accurately as possible.

Get Started Today

For more information or to schedule a free initial consultation with Attorney Stephen Zayler, call his office at 936-755-5002 or send him an email.

Law Office of Stephen J. Zayler is a debt relief agency. He helps people file for bankruptcy relief under the bankruptcy code.