Consumer Bankruptcy

CONSUMER BANKRUTPCY

TYPES OF BANKRUPTCY RELIEF AVAILABLE TO
CONSUMER DEBTORS

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CHAPTER 7: LIQUIDATION

In General......

Chapter 7 is designed for debtors in financial difficulty who do not have the ability
to pay their existing debts.

When you file for relief under Chapter 7 of the Bankruptcy Code, a trustee is
appointed to take over your property. In most cases, you will be able to claim
certain of your property as exempt under governing law, but the trustee will have
the right to take possession of and sell the remaining property that is not exempt
and use the sale proceeds to pay your creditors. If all of your property is exempt,
there will be no property for the trustee to sell. Your attorney can advise you as
to what property is considered exempt under governing law, and what property is
subject to sale by the trustee.

The purpose of filing a Chapter 7 case is to obtain a discharge of your existing
debts. A discharge is a court order which states that you do not have to pay most
of your debts. The discharge only applies to debts that arose before the date you
filed. You may only receive a discharge of your debts under Chapter 7 once every
eight years.

Limitations to Relief......

You should be aware that even if you receive a general discharge under Chapter
7, some particular debts are not discharged under the law. You may still be
responsible for most taxes and student loans; debts incurred to pay
nondischargeable taxes; domestic support and property settlement obligations;
most fines, penalties, forfeitures, and criminal restitution obligations; certain
debts which are not properly listed in your bankruptcy papers; and debts for
death or personal injury caused by operating a motor vehicle, vessel, or aircraft
while intoxicated from alcohol or drugs.

Also, if a creditor can prove that a debt arose from fraud, breach of fiduciary duty,
theft, or from a willful and malicious injury, the bankruptcy court may determine
that the debt is not discharged. Moreover, if, you are found to have committed
certain kinds of improper conduct described in the Bankruptcy Code, the court
may deny your discharge and, if it does, the purpose for which you filed the
bankruptcy petition will be defeated.

Qualifications for Filing Chapter 7......

Debtors whose debts are primarily consumer debts are subject to a "means test",
which is designed to determine whether the case should be permitted to proceed
under Chapter 7. If you file a Chapter 7 case and your income is greater than the
median income for your state of residence and family size, in some cases, creditors
have the right to file a motion requesting that the court dismiss your case. It is up
to the court to decide whether the case should be dismissed. Your attorney can
help you determine whether you qualify for Chapter 7 relief under the means
test.

COURT COSTS*: $245 filing fee, $39 administrative fee, $15 trustee surcharge:
Total fee $299
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CHAPTER 13: REPAYMENT OF ALL OR PART OF YOUR DEBTS

Chapter 13 is designed for individuals with regular income who would like to pay
all or part of their debts in installments over a period of time. You are only eligible
for Chapter 13 if your debts do not exceed certain dollar amounts set forth in the
Bankruptcy Code. In most cases, you can avoid liquidation of your assets by filing
under Chapter 13 and paying all of the required installments.

Under Chapter 13, you must file a plan with the court to repay your creditors all
or part of the money that you owe them, using your future earnings. The period
allowed by the court to repay your debts under the plan may be three years or
five years, depending upon your income and other factors. The court must
approve your plan before it can take effect. Your attorney can advise you as to
the requirements of a plan that will meet court approval.

After completing the payments under your plan, your debts are generally
discharged, except for domestic support obligations, most student loans, certain
taxes, most criminal fines and restitution obligations, certain debts which are not
properly listed in your bankruptcy papers, certain debts for acts that caused
death or personal injury, and certain long term secured obligations.

COURT COSTS*: $235 filing fee, $39 administrative fee: Total fee $274
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CHAPTER 11: REORGANIZATION

Chapter 11 is designed for the reorganization of a business but is also available to
consumer debtors. One of the most common reasons consumer debtors file for
relief under Chapter 11 is that their debts exceed the limit allowed under the
Bankruptcy Code for filing under Chapter 13. The provisions under Chapter 11
are quite complicated, and any decision by an individual to file a Chapter 11
petition should be reviewed with an attorney.

COURT COSTS*: $1000 filing fee, $39 administrative fee: Total fee $1039
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CHAPTER 12: FAMILY FARMER OR FISHERMAN

Chapter 12 is designed to permit family farmers and fishermen to repay their
debts over a period of time from future earnings and is similar to Chapter 13. The
eligibility requirements are restrictive, limiting its use to those whose income
arises primarily from a family-owned farm or commercial fishing operation.

COURT COSTS*: $200 filing fee, $39 administrative fee: Total fee $239

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* COURT COSTS DO NOT INCLUDE ATTORNEYS FEES.

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CREDIT COUNSELING REQUIREMENT

With limited exceptions, the Bankruptcy Code requires that all individual debtors
who file for bankruptcy relief on or after October 17, 2005, receive a briefing that
outlines the available opportunities for credit counseling and provides assistance
in performing a budget analysis. The briefing must be given within 180 days
before the bankruptcy filing. The briefing may be provided individually or in a
group (including briefings conducted by telephone or on the Internet) and must
be provided by a nonprofit budget and credit counseling agency approved by the
United States trustee or bankruptcy administrator.

In addition, after filing a bankruptcy case, an individual debtor generally must
complete a financial management instructional course before he or she can receive
a discharge.

The clerk of the Bankruptcy Court maintains a list of the approved budget and
credit counseling agencies in your district. Your attorney can also provide you
with this list.

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REAFFIRMATION AGREEMENTS

Even if a debt can be discharged, you may have special reasons why you want to
promise to pay it. For example, you may want to work out a plan with the bank to
keep your car. To promise to pay the debt, you must sign and file a reaffirmation
agreement with the Court.

Reaffirmation agreements are under special rules and are voluntary. They are not
required by bankruptcy law or by any other law. Reaffirmation agreements:

*must be voluntary;
*must not place too heavy a burden on you or your family; and
*must be in your best interest.

A reaffirmation agreement can be cancelled anytime before the Court issues your
discharge or within 60 days after the agreement is filed with the Court, whichever
gives you the most time.

If you are an individual and you are not represented by an attorney, the Court
must hold a hearing to decide whether to approve the reaffirmation agreement.
The agreement will not be legally binding until the Court approves it.

CAUTION: If you reaffirm a debt and then fail to pay it, you owe the debt the
same as IF there was no bankruptcy. The debt will not be discharged and the
creditor can take action to recover any property on which it has a lien or
mortgage. The creditor can also take legal action to recover a judgment against
you. You are strongly advised to seek the advice of an attorney before entering
into any reaffirmation agreement.

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ARE YOU HAVING DIFFICULTY DEALING WITH DEBT?

The LAW OFFICE OF ROSEMARIE BRUNO can help you determine what
your options are - inside and outside of the Bankruptcy Code - and what the best
course of action is for your particular situation. Bankruptcy law can be very
complicated. Should you decide to file for relief under the Bankruptcy Code, we
can help you understand your rights and responsibilities under the law.

Call us today and get started on the path to a new beginning!

To schedule your free in-person consultation, call (631) 979-3480 or email us at
bankruptcy@rosemariebruno.com. .

The Law Office of Rosemarie Bruno is located at:
4250 Veterans Memorial Hwy., Suite 165E
Holbrook, NY 11741