1. Jon Bell Kevin Coombs Jeremy Petrus MBA 620 Fall 2002
Bankruptcy
Jon Bell
Kevin Coombs
Jeremy Petrus
MBA 620
Fall 2002

2. What is Bankruptcy?
Bankruptcy is a legal proceeding in federal court in which a person with debts (the debtor) can be freed or "discharged" of most of their debts.
In exchange, unless protected by law, the debtor's property may be sold by a trustee with the approval of the court.
The money from the sale of the property is then divided among the people or companies to whom the debtor owes money (the creditors).
December 10, 2002
MBA 620

3. Should I Consider Bankruptcy?
The purpose of bankruptcy is to give someone a fresh financial start.
Bankruptcy works best for people with an income adequate to support them and pay their bills after bankruptcy.
Questions to ask yourself when considering filing for bankruptcy:
Can your financial problems be solved through personal efforts?
Are your financial problems going to reappear in the near future?
What will your expenses be after you file for bankruptcy?
December 10, 2002
MBA 620

4. Facts Over 1.5 million bankruptcy filings a year 70% are Chapter 7
11.5% of filers have filed bankruptcy previously
Utah is #1 in bankruptcies per capita
Example: Girl on KSL
Women
Fastest growing group filing for bankruptcy
Over 500,000 women will file by themselves
Half of these women will be trying to get child support and alimony
December 10, 2002
MBA 620

5. Options Refinance home Negotiate with lenders File for Bankruptcy
December 10, 2002
MBA 620

6. The Types of Bankruptcy
Chapter 11
Rare
Big businesses
Chapter 12
Family farmers
Chapter 13
2nd most common
Partial repayment plan
You retain your property while paying off as much debt as the courts think possible
Upon repaying the agreed amount, you receive a Chapter 13 discharge
Chapter 7
Most Common
Liquidation of debts
You lose all or most of your non-exempt property
This loss of property releases you from liability of most of your debts and you receive a Chapter 7 discharge
Recent back taxes, back child support, student loans, or debts associated with DUIs or other criminal matters are usually not dischargeable in a Chapter 7
Four Types:
11 would apply if you have 1 million more in assets
13:
7: most common; 3 months;
December 10, 2002
MBA 620

7. Your Estate You must list every asset and every debt! Not Exempt
Equity!
Equity the Law
Lets You keep
Equity the
Creditors Can Get
Release
Debt
Keep Property, at Lower, Negotiated Amounts
Liquidates Debts
Keep Property and Debts at same Terms
Redeem
You must list every asset and every debt!
Reaffirm
December 10, 2002
MBA 620

8. Your Estate You must list every asset and every debt! Not Exempt
The Debt Portion
Equity!
Equity the Law
Lets You keep
Equity the
Creditors Can Get
Keep Property, at Lower, Negotiated Amounts
Release
Liquidates Debts
Debt
Student Loans
Redeem
Keep Property and Debts at same Terms
You must list every asset and every debt!
Reaffirm
December 10, 2002
MBA 620

9. Timeline December 10, 2002 MBA 620 10 to 15 page packet
Pay 195 dollars
Signing appointment to find out former spouses, money transferred, etc.
Automatic Stay is two weeks
341 is the meeting of creditors
2 months for judge to decide.
Usually takes 3-4 months
December 10, 2002
MBA 620

10. Who would you rather lend to?
Your Credit Score
Who would you rather lend to?
After
Before
$X0,000 $0 ?
7 Years
On Credit Report for 10 Years
Always list on requesting forms
FICO goes to mid 500’s when bankrupt
Before:
40,000 in debt 20 yrs
After:
O if you didn’t reaffirm
1.5-2 years to get loan
Bankruptcy guy
Ch.13 after
7 years until next filing
Finance charges and fees continue to hurt credit
Bankruptcy may automatically lower FICO score below 600
December 10, 2002
MBA 620

11. Rebuilding Credit after Bankruptcy
Never be late on a payment after bankruptcy
Get a secured credit card ASAP
Don’t get credit with disreputable lenders
Avoid credit inquiries
Use large down payments to get a loan
Limit spending and don’t get close to limit
December 10, 2002
MBA 620

12. Tips before Filing Make sure you have all your creditors
Don’t transfer property out of your name before you file
Don’t obtain large debts or cash advances right before you file
If you have a loan with where you bank, you will need to reaffirm the loan or change where you bank
December 10, 2002
MBA 620

13. Tips after Filing List all your creditors
Attend 341 meeting with creditors
Comply with trustee’s requirements
Continue paying on reaffirmed debts
Don’t transfer property during bankruptcy
Stop all post-dated and bounced checks
December 10, 2002
MBA 620

14. Questions?
December 10, 2002
MBA 620