Bankruptcy Discharge – Is That A Good Thing?

Written by Peter Mullison, Colorado Bankruptcy Attorney

Like most attorneys, I pride myself on my communication skills. Like most people, I’m blind to my shortcomings. The other day I was in a consultation explaining the bankruptcy process and got to the part where I start talking about the discharge order. “Discharge order?” my potential client asked. “Is that a good thing?” It was one of the moments that I realized that I was using Legalese, that particular language used only by lawyers. It made me think of two things that I wanted to share.

First, a discharge order is a good thing. When the court signs that order, you’re no longer legally responsible for any of your discharged debts. They are permanently eliminated. In a Chapter 7 bankruptcy, the order will come about 90 days after we file your petition. In a Chapter 13, it will come after you’ve completed your three to five year repayment plan.

That means that creditors can no longer pursue you for those debts. However, if you’ve included a secured debt in your bankruptcy, like a car loan or mortgage, the discharge order does not prevent them from repossessing your car or foreclosing on your home if you fail to make payments on the loan.

Keep in mind, not all debts are discharged in bankruptcy. Debts such as alimony, child support, court restitution, certain back taxes, for example can’t be eliminated by bankruptcy. There are others, and you should talk to an attorney to learn more.

Also remember that before your discharge order can enter, you have to complete the financial management class. If you forget to take the class and file the certificate of completion and the court will close your case without a discharge and shortly you’ll be where you were before you filed.

The second thing that my potential client’s question made me think was that if you are considering bankruptcy, you should remember that this is your bankruptcy. If something is happening that you don’t understand, ask the question. Make sure your attorney explains the process to you in a way that you understand. If he refuses, consider whether or not he’s the best bankruptcy lawyer for you.

If you’re confused by what you’re finding on the Internet about bankruptcy, we hope you’ll come in for a free, no obligation consultation with an experienced bankruptcy attorney. You can schedule your appointment online or call 303.331.3403 to meet at a time that’s convenient for you.

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What Is The Deadline For A Creditor To Object To My Bankruptcy Discharge?

Written by Peter Mullison, Colorado Bankruptcy Attorney

Most bankruptcies go off without a hitch. As long as you work with an experienced attorney, once your petition is filed and you attend the meeting of creditors, all that’s left is to wait for the passage of time and for the court to enter your discharge order. Getting a discharge order means that you are no longer legally liable to repay your dischargeable debts.

But occasionally, you can run into a hitch along the way. One of those “hitches” is a creditor objecting to your discharge. Under Federal Rule of Bankruptcy Procedure 4004(a), a creditor has 60 days from the meeting of creditors to file a complaint objecting to your discharge. Why would a creditor object? One reason might be that you lied on a credit application about your income. Another is that  the Bankruptcy Code charges to one creditor for luxury items over $600 within 90 days of filing and cash advances over $875 from one creditor within 70 days of filing are presumed nondischargeable. There are other grounds for objecting to your discharge, and an experienced attorney should be able to identify potential objections. It might be possible that filing Chapter 13 instead of Chapter 7 will avoid some objections.

Once a creditor has filed a complaint, your attorney has 28 days to respond. After your attorney reviews the creditor’s claim, you have a couple of options. The first is that you can negotiate with the creditor to settle the debt. You’ll likely be able to get fairly reasonable terms, including a reduction in principal, suspension of interest accrual, and monthly payments. But if you and your attorney don’t think their claim is valid, you can fight their objection. Of course, your attorney might expect additional fees. Defending an objection is typically not included in the flat fee that most bankruptcy attorneys charge.

If you have questions about the bankruptcy process or wonder if a creditor might object, then we hope you’ll come in for a free, no-obligation consultation with a bankruptcy attorney. You can schedule your appointment online or call 303.331.3403 to set up a time that is convenient for you.

What Is The Difference Between The Bankruptcy Trustee And The U.S. Trustee?

Written by Peter Mullison, Colorado Bankruptcy Attorney

One of the reasons that a person hires a bankruptcy attorney is to guide him through the bankruptcy process, but that doesn’t mean that he shouldn’t try to learn as much about the process as possible. One important thing to know is who the players are in the process. Two of the most important people are the trustee and the U.S. Trustee.

From the Colorado Bankruptcy Court’s website comes the best explanation:

In all Chapter 7, 12, and 13 cases, and in some Chapter 11 cases, a trustee is assigned. In Chapter 7 cases they are called a “panel trustee,” and a group of some two dozen trustees are assigned by rotation. In Chapter 12 and Chapter 13, the trustee is always the same, and is called the “standing trustee.” That means that your Chapter 12 trustee will likely always be the same person, and your Chapter 13 trustee will always be the same person. The trustee’s job is to administer the bankruptcy case, or the bankruptcy estate, to make sure creditors are treated as contemplated by the Bankruptcy Code, and to preside over the meeting of creditors. The trustee either collects and sells non-exempt property, as in the case of a Chapter 7, or collects and pays out money from 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, during, or after the meeting of creditors. Failure to cooperate with the trustee could be grounds to have your discharge denied. Trustees are generally, but not always, lawyers. They are appointed by the United States Trustee. Their fees come out of the bankruptcy filing fees or of the money collected in a bankruptcy case.

Trustees are not your attorney, they do not represent you, they work on behalf of the bankruptcy estate and all of its creditors.

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 bankruptcy cases, 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. If you are having problems with a trustee, or have evidence of fraud in a case, you can contact them. The United States Trustee’s Office reviews all bankruptcy petitions and pleadings filed in cases, and participates in many proceedings, but they do not administer specific cases. The trustees whom they appoint administer the cases. They can file motions in the bankruptcy case, such as a motion to dismiss the case or convert it to another Chapter.

If you have questions about the bankruptcy process or whether or not it’s your best option, we hope you’ll come in for a free, no-obligation consultation with a bankruptcy attorney. You can schedule an appointment online or call 303.331.3403 for a time that is convenient for you. We also offer phone consultations.

What You Should Know About The Colorado Bankruptcy Court

Written by Peter Mullison, Colorado Bankruptcy Attorney

If you’re filing bankruptcy in Colorado, you might want to learn about the Colorado bankruptcy court.

The U.S. Bankruptcy Court for the District of Colorado is located in the U.S. Customs House at 721 19th Street in Denver, CO 80202.

As of May, 2012, the Court is under going renovations and hearings and status conferences are being held in the Rogers Courthouse at 1929 Stout Street in downtown Denver.

Meetings of creditors are currently being held at 1999 Broadway, 8th Floor, Suite 830 in downtown Denver, as well. If you live outside of Denver, your meeting of creditors may be held in Ft. Collins, Colorado Springs, Pueblo, or Grand Junction.

There are five judges assigned to the Bankruptcy Court. They are:

Chief Judge Howard Tallman

Judge Sidney Brooks

Judge Elizabeth Brown

Judge Bruce Campbell

Judge Michael Romero

The Bankruptcy Clerk’s Office will remain in the Custom House at 721 19th St., Denver, CO 80202. If you are filing documents in paper, making installment payments or need information from the Bankruptcy Court Records section, you will need to use the Custom House address.

You can find a map of the Colorado Bankruptcy Court below.


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What Are The Alternatives To Bankruptcy?

Written by Peter Mullison, Colorado Bankruptcy Attorney

You might not expect a bankruptcy attorney to tell you that bankruptcy isn’t your best option, but that’s exactly what the point of this post is. When someone comes in for an initial consultation, I know they’re looking for guidance and honest answers. I believe that bankruptcy should only be used as a last resort. Bankruptcy will stay on your credit report for ten years and may affect your ability to get a new job. It’s one of the biggest decisions that a person can face. I believe my job as an attorney is to make sure my clients understand all the alternatives available to them. If you’re thinking about bankruptcy, you should know you might have some other choices. They are:

Debt consolidation – This alternative involves combining your debt into a single line of credit. You might be able to consolidate your credit cards into one card, for example. If you can find a card with a lower interest rate, you’ll save money and get some psychological relief by having to only pay one credit card bill  a month. This option requires diligence, though, because you want to avoid using the new credit card while you pay it down. If you’re using credit cards to pay monthly living expenses, like food and gas, and only paying down what you charged that month, you might not make the headway on reducing your debt you hoped you would. Another common option is to take out a home equity line of credit and pay off your credit cards. Remember that if you choose this option, you’ve just effectively used your home as collateral for the charges on your credit cards. If you default, your lender could foreclose on your home.

Debt settlement – Debt settlement involves either you or someone else negotiating with your creditors to reduce the amount you owe or restructure your repayment terms. There are two things you should know about this option. The first is that if you get a lender or credit card company to agree to reduce the amount you owe, there will likely be tax consequences. For example, if you currently owe $10,000 on a Visa card and Visa agrees to settle your account for $5,000 (usually in a lump sum payment), at the end of the year they’re going to send you a tax document that shows that you “earned” $5,000 in “forgiven debt.” That means you’ll have to claim that $5,000 on your tax return and potentially pay taxes on it.

The second thing to know about debt settlement, particularly when working with a debt settlement company, is how their system works. You’ll no longer be paying your creditors. Instead, you’ll be sending that money to the debt settlement company. But that doesn’t mean they’ll be sending it to your creditors. No, they’ll hold onto it (minus their fees) until they have enough to negotiate with your creditors. What that means is that your creditors will shortly start its collection process (if it hasn’t started already), which means that phone calls will start and you’ll likely have someone deliver a summons for a lawsuit. Debt settlement only prevents collection if you can immediately start and continue making regular payments. If not, your creditors are going to do whatever they need to do to collect what you owe.

Do nothing – This option always surprises people. Keep in mind that there are very limited circumstances in which you should consider this option. When a creditor gets a judgment against you, they can do a few things.  They can garnish your wages and bank account and place a lien against your home if you own it. If you are retired or disabled and your only source of income is Social Security or money from a retirement or pension account, they can’t take any of that money. That doesn’t mean that they won’t sue you and that they won’t stop calling you. It just means that they won’t be able to take any money when they get judgment. All they’ll have is a piece of paper that say they can. If you own a home, they can place a lien against it, and you won’t be able to sell or refinance it until that lien is cleared, however.

If you’re wondering whether bankruptcy is your best option, consider scheduling a free, no-obligation consultation with a bankruptcy attorney. You can make your appointment online or call 303.331.3403.

Preparing For The Bankruptcy Meeting Of Creditors

Written by Peter Mullison, Colorado Bankruptcy Attorney

For most people who file bankruptcy, the meeting of creditors is the one appearance that they have to make during the bankruptcy process. Keep in mind that it is not a court appearance. The meeting is not held in a courtroom. Right now, the meeting of creditors in Denver is being held in an office building down the street from the courthouse while it undergoes renovation. The meeting of creditors in Fort Collins is actually held in a conference room in the Hampton Inn hotel.  No judge is at the meeting. In fact, judges are prohibited by the Bankruptcy Code from attending the meeting.

While I counsel my clients not be overly anxious about the meeting, it’s important that they be prepared. If you’re getting ready to appear at your meeting of creditors, here are some things to know before you go.

First and foremost, you should be familiar with your bankruptcy petition. Even though you should have read it before it was filed, go over it again to make sure the information is fresh in your mind and no changes need to be made. It may have been a month or more since you last looked at it. Second, make sure you have everything you need for the appearance. That is your driver’s license, your Social Security card (make sure it’s not laminated), any paystubs you’ve received since your petition was filed, and bank statements that reflect your bank balance on the day your petition was filed.

You should also know that despite its name, creditors rarely show up to these meetings. Ex-spouses sometimes come to ask what happens to debts that were divided in the divorce agreement, or if someone has been hiding a boat or other collateral, a creditor might show up to ask where it’s located.

Otherwise, the meeting of creditors typically involves the filer being interviewed by the bankruptcy trustee. Since the meeting is public, your interview will take place in front of other filers and their attorneys. You’ll be called up to the trustee’s table with your attorney and sworn in. The trustee will then ask a series of questions and generally follows a script. She’ll ask you your name, address, where you work, whether you read the petition before it was filed, whether you have any changes, and a few other questions.

You should answer her questions truthfully, but that doesn’t mean you need to give her any information than what she asked for. Answer only the question she asked. If she wants to know more, she’ll ask another question.

If you have any questions about your meeting of creditors, you should talk to your lawyer before the day of the meeting to make sure she has time to answer your question. The last thing you want is for undisclosed issue to come for the first time in front of the trustee.

If you have questions about the bankruptcy process, including the meeting of creditors, we hope you’ll come in for a free, no-obligation consultation. You schedule an appointment with a bankruptcy attorney online or call 303.331.3403.

How Bankruptcy Can Affect Your Children

Written by Peter Mullison, Colorado Bankruptcy Attorney

It’s generally not my practice to tell someone whether or not I think they should file bankruptcy. That decision is one of the hardest and most personal they’ll ever make, and I’m not comfortable giving an opinion on that question. I’m sure divorce attorneys feel the same way when they’re asked by someone if they should get a divorce. What I will do, however, is tell them how bankruptcy will change their current financial situation.

I’ve written a lot about how bankruptcy will stop collectors from calling, foreclosure, garnishment, and other collection activity. But for my clients with children, there are other consequences.

My clients are people who are struggling to make ends meet. They’re finding it impossible to pay all of their debt and provide for their families. Bankruptcy can change that. Bankruptcy means being able to provide your family with the shelter, clothing, and food that you want to provide but have been unable to because of credit card debt and medical bills. Instead of making payments on high interest loans that you’ll never be able to pay down, you can put some of that money into an education fund. Instead of worrying about how you’re going to put food on the table, you’ll be able to start thinking about your children’s future. Instead of worrying about the never ending phone calls from bill collectors, you’ll be able to enjoy your time with your family.

Of course, there are some other consequences, especially for clients with older children who have moved out of their home. If you’ve co-signed a loan with a child, for a car, for example, bankruptcy has consequences that you should know about. As long as your child keeps paying the debt, she’ll be able to keep the car. If she defaults, the lender can repossess the car and sue her for any deficiency due after they re-sell it, but they won’t be able to pursue you to collect that debt. That loan will also be discharged in your bankruptcy. That doesn’t mean that you can’t help your child make payments so she can keep the car, it just means that you aren’t legally obligated to.

Bankruptcy isn’t for everyone, and it’s not always the best option. But for many, bankruptcy can be the best way to get a new financial start, for you and your family.

If you have questions about how bankruptcy can affect your family, we hope you’ll come in for a free, no-obligation consultation. You can schedule an appointment with a bankruptcy attorney online or call 303.331.3403.

Can I Keep My Motorcycle If I File Bankruptcy?

Written by Peter Mullison, Colorado Bankruptcy Attorney

I recently became a parent. Among the multitude of changes that I have had to face was giving up my favorite pastime: motorcycle riding. With a new baby, I just wasn’t able to ride any more and it didn’t make sense to make payments on a bike that was sitting in the garage, gathering dust. At the risk of sounding overly dramatic (as my wife would argue), the day the new owner rode that bike away was one of the saddest I’ve had in a long time. I nearly burst into tears.

Will you lose your motorcycle if you file bankruptcy? It depends. In Colorado the vehicle exemption is $5,000 and can be applied to motorcycles. What that means is that $5,000 in equity in vehicles is protected and cannot be distributed to your creditors. If you have a car and a motorcycle, it might be hard to come within that exemption amount. If you are over that amount by a significant amount, the bankruptcy trustee is going to want the non-exempt value to give to your creditors. If that’s the case, you have two options: sacrifice one of the vehicles and let the trustee sell it (you’ll get any money back you’re entitled to with the $5,000 exemption), or you can pay the trustee the non-exempt amount that you agree on. So, if your two vehicles have $6,000 in equity, you might have to pay the trustee $1,000 to give to your creditors.

Another option is to sell one of the vehicles before you file bankruptcy. Be careful, though. It needs to be a legitimate sale, preferably to a non-related third party for the fair market value. If you try giving it to your brother-in-law, he’s going to get a letter from the trustee forcing him to give it over. You can use the proceeds of the sale for things like rent, medical bills, car repairs and other allowable things. You should talk to a lawyer before you spend it. If you pay back a loan to a family member with the money, the trustee is going to send them a letter asking for that money as well.

Can you keep the motorcycle if there is little to no equity in the motorcycle and can still make payments? There’s a good chance the answer is no. If you’ve got enough money to make to make the motorcycle payment and already have another vehicle, one of your creditors might argue that you have enough money to make payments in a Chapter 13 plan.

The bottom line is that if you have a motorcycle, you might have to come to terms with losing it. The same goes for boats, ATVs, and RV and other recreational vehicles and property. Of course, every case is different. You should consult with an attorney in your area to get answers.

If you live in Colorado and you’re wondering if you can keep your property when you file bankruptcy, we hope you’ll schedule a free, no-obligation bankruptcy consultation with us. You can schedule an appointment online or call 303.331.3403 to meet with a bankruptcy attorney.

What You Should Know About Medical Bankruptcy

Written by Peter Mullison, Colorado Bankruptcy Attorney

At least once a week someone comes into my office for a consultation to tell me how they can no longer pay their bills because of an unexpected medical emergency. Hospital and doctor bills have left them struggling to make ends meet, yet they feel guilty for contemplating bankruptcy when they know it means that they won’t being paying that people who helped them. The fact is, they are not alone. Medical debt is one of the top three reasons, along with unemployment and divorce, for which my clients file bankruptcy.

Bankruptcy, either Chapter 7 or Chapter 13, will eliminate medical bills. Chapter 7 doesn’t require you to pay any of those bills back, but Chapter 13 might require you to pay back a portion of those bills, depending on your monthly income and allowable expenses.

The question for me isn’t whether someone can file to get rid of these medical bills. The question for me is when someone should file. If their medical condition hasn’t been resolved and they expect more bills, they should wait until they’ve gotten better or have health insurance to cover future expenses. Bankruptcy will only get rid of medical bills that were taken on before someone files. If they get treatment after they file, those bills will not be included. You must wait eight years before you can file Chapter 7 again.

You should know that when you file bankruptcy, you have to include all of your debts. That means that you won’t be discharging only your medical bills. If there are debts that you want to keep, like a car loan, you can reaffirm them but you can’t decide not to list them on your petition.

One more thing to consider is that if your spouse is not filing, the medical provider might try to go after him for those bills. They might argue that he is responsible for them under the “family necessities” doctrine, though it is unclear in Colorado whether medical bills fall under this doctrine. They’ll use a lawsuit, or threat of a lawsuit, to persuade your spouse to pay the bills that you’re filing bankruptcy to get rid of. Consider whether it might be a better idea for both of you to file.

If medical bills are making it hard for you to make ends meet, we hope you’ll come in for a consultation. They’re free and require no-obligation. You can schedule an appointment online or call 303.331.3403 to meet with a bankruptcy attorney at a time that is convenient for you.

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