Methuss

Bankruptcy: Keeping the costs down.

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Great info! I'm in the process of preparing to file, and it seems like a straight forward, but time consuming process, especially if you have many possessions. I'm new here and there are plenty of resources everywhere, but I would suggest for people to go get a NOLO book on How to file for Chapter 7 bankruptcy. They have different editions each year, with updates, but I got one from last year for about $4.00 or so total off eBay, and there seems to be no major changes for the newer (more expensive) edition anyway. Just my suggestion on a very good resource that breaks things down step by step and really reduces the complexity of all this.

Thanks for mentioning that NOLO has a book. I'm wondering if this might help me to do the Chapter 7 myself without paying the paralegal service $400.

But if one prints out the forms from the Fed site or wherever, aren't there about a 100 forms to print out? (Lot's of printer ink!)

I think I read in a thread where it said that one can obtain forms for about $50 from their local court? Is that correct?

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"......If you are pro-se, then you are essentially waiving your automatic stay rights related to being contacted by creditors.......

I read the above in a post on this thread. And I'd like to state that this information is NOT true, especially if the filed bankruptcy is Chapter 7. When filed, all collection efforts must be put on hold, or cease altogether. It doesn't matter if there is a lawyer representing the person, or the person is filing pro se.

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Thanks for mentioning that NOLO has a book. I'm wondering if this might help me to do the Chapter 7 myself without paying the paralegal service $400.

But if one prints out the forms from the Fed site or wherever, aren't there about a 100 forms to print out? (Lot's of printer ink!)

I think I read in a thread where it said that one can obtain forms for about $50 from their local court? Is that correct?

-------------------

The Nolo book is excellent. Plus all the forms required are in the book as tear- out sheets.

There are NOT "about 100 forms". Most people will use less than 50, in my opinion. I used about 40. Any forms not in the book can be easily typed in and printed off of the court websites.

To my knowledge, forms are not for sale at courts. However, that knowledge of mine may be lacking. Seems it'd be best to type online, then print them off. 50 bucks for ink? 50 bucks if they do sell them at the court? Unless a person has an old-fashion typewriter, any forms purchased at a court would have to be filled in by pen.

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Merry Christmas....Nice post....thanks for sharing...

Massachusetts Bankruptcy Attorney

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"......If you are pro-se, then you are essentially waiving your automatic stay rights related to being contacted by creditors.......

I read the above in a post on this thread. And I'd like to state that this information is NOT true, especially if the filed bankruptcy is Chapter 7. When filed, all collection efforts must be put on hold, or cease altogether. It doesn't matter if there is a lawyer representing the person, or the person is filing pro se.

Really? Then, if you are pro se, how do you negotiate any reaffirmation agreements, redemptions, or handle notices of exempt assets? How do you handle claims to the estate by creditors you deem inaccurate? The creditor has a right to state their claims and as a pro-se you are required to talk to them if you disagree.

You can't have it both ways.

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Hi,

I think the information u provided is great. I think the first step in a bankruptcy filing is gathering your financial information.

Thank You for sharing.

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Really? Then, if you are pro se, how do you negotiate any reaffirmation agreements, redemptions, or handle notices of exempt assets? How do you handle claims to the estate by creditors you deem inaccurate? The creditor has a right to state their claims and as a pro-se you are required to talk to them if you disagree.

You can't have it both ways.

Go back to the statement in question. A person, pro se, does NOT automatically waive any of his rights. As to how do you negotiate reaffirmation agreements, etc., you do it the same way as a representive would do for you. I fail to see the "rights' that are waived. Are you suggesting there is something in the above that can't be handled by a pro se defendant? What you describe will mostly have as its arena the 341 meeting. The reaffirmation process, plus the other areas are covered quite thoroughly the 16th EDITION of "How to File Chapter 7 Bankruptcy", sample forms and instructions of how to petition the court.

Chapter 3 is titled: Your Property and Bankruptcy

This covers reaffirmation, exempt property, nonexempt property, how to avoid liens on exempt property, how to surrender property, all kinds of sundry things that may pop up. Along with the explanations are sample forms, even sample proof of Service by Mail, etc, etc.

It is not, necessarily, that claims are on hold but that all overt collection efforts and attempts must cease upon notification to the creditors, whoever they may be. Negotiations are another animal, and will be handled in various ways. At the 341 meeting if any creditor shows up; petitioning the court for the reaffirmation approval.....etc.

The basic point, back to the basic point, there aren't any rights "waived" just because someone is pro se. Collections efforts cease, whether a Bk defendant is pro se or has a lawyer. Negotiations are not a "right", but what will naturally occur if there are creditors who have a claim or interest.

Probably this is all gobbledegook, but the NOLO book helps mightily to look out for "rights".

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One statutorily defined difference between pro se filers and represented filers:

Reaffirmation agreements for represented debtors are valid upon filing with the court. No analysis is performed by the court.

Reaffirmation agreements for pro se debtors are not valid until the judge APPROVES the agreement, which requires the judge to make an undue hardship assessment.

Not a big deal, but to my knowledge, this type of bifurcation of processes between pro se and represented debtors is unique in American law.

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That does not mean that judges do not make mistakes with that rule. When I did my BK in 2005 and reaffirmed a vehicle loan and bank overdraft line of credit, I had waited for the Undue Hardship Hearing to be scheduled so that I could take time off of work to deal with it. Well, they send the discharge and then closed my case without the hearing.

That does make me wonder though, even 6 years later, were the reaffirmation agreements even valid in that case since the process was not completed (it really was the courts fault, not mine). It is neither here nor there at this point financially because I have paid off both accounts but is still an interesting question.

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Your reaffs were not valid, but it doesn't really matter. If you stop paying, they take the collateral regardless of reaff validity.

A bit off topic, but one thing I'd like to see attorneys do a much better job on is participation in reaffirmation negotiation and/or the use of the redemption option. Filers with vehicle debt are almost ALWAYS significantly underwater. Let me give you a typical example:

Vehicle FMV $6,000, Vehicle loan balance: $12,000. Current payment of $488/month (8.0% interest rate) at time of filing.

A straight reaffirmation agreement of the original contract results in the continuation of this $488/month. 8.0% interest payment for another 27 months. This is very lender friendly and results in little additional work for the attorney. Total cost of the vehicle after bk filing = $488 x 27 = $13,175.

Better alternatives:

1) A redemption (11 USC 722) would result in the one time payment of $6000 to the lender.

(A) If the debtor can borrow it from a 401k or a family member, then go for it. You've just put $6,000 in your pocket. Just make sure the payments that WOULD HAVE gone to the lender now go to the provider of the $6,000 in funds, even if it is from yourself or your retirement fund. In fact, your 401k monthly loan payment amount will likely be much lower than $488/month, so now you have room to significantly bump up monthly retirement savings % saved (pretax too!) in addition to the loan payment plus interest being paid into your 401k. Total cost: $6000 plus a small amount of interest paid to one's own retirement plan.

(B) Unfortunately most debtors do not have access to large sums of cash at their fingertips to secure a redemption, so option A is off the table. There are companies out there that provide redemption loans for just this purpose. BEWARE: they are high interest. So let's assume a typical 24% redemption loan keeping the same $488/month payment: $6,000 at 24% = 14 months of payments = Total cost of the vehicle after bk filing = $488 x 14 = $6900.

2) With a potential huge savings out there with a redemption and what would amount to be an enormous LOSS for the prior lender, an attorney or pro se filer can use this as leverage to negotiate a much more debtor friendly reaffirmation agreement.

(A) So in the example above, the debtor could then send to & negotiate a "take it or leave it" reaffirmation agreement with the prior lender that allows for 14 more $488 payments, not 27 as originally called for in the original contract. All terms in reaffirmation agreements are entirely negotiable by both parties, yet little negotiation ever occurs, benefiting secured lenders. The lender may agree, disagree, or negotiate some type of payment plan with a value between the redemption amount and the original contract amount. Still, a huge savings for most filers.

Edited by jq26

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Very valuable information indeed. Thank you for sharing this kind of information.

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