1. Legal Aid of Nebraska Lea Wroblewski (402) 435-2161 lwroblewski@legalaidofnebraska.com www.legalaidofnebraska.com

4. Introduction to Bankruptcy Consumer Bankruptcy Who files and why? Assets and debts Automatic Stay Discharge

5. Consumer Bankruptcy Chapter 7 – straight bankruptcy or liquidation Chapter 13 – wage earner’s bankruptcy or repayment – also special structuring of debts Different requirements and outcomes

6. Process for Clients Collect a LOT of documents (paystubs, tax returns, bills, bank statements, etc.) Meet with attorney to answer questions (my questionnaire is 50 pages long) Wait while we draft everything Meet to review and sign For a Chapter 7 bankruptcy it takes three months once the case is filed and the client will probably never see a bankruptcy judge; a Chapter 13 lasts 3-5 years

7. Pre and Post Bankruptcy Counseling Part of the Great Bankruptcy Reform Clients are required to take credit counseling prior to filing bankruptcy Clients are required to take financial management prior to getting a discharge $20-$50 a class

8. Means Test Another solution to the great Bankruptcy Problem You can’t file a Chapter 7 bankruptcy if your average income over the six months prior to filing is over the median income for a family of your size Deductions are allowed

9. 341 Hearing/First Meeting of Creditors Debtor’s SideCreditor’s Side Represented by the Trustee Trustee and his office have read and analyzed all the bankruptcy documents prior to the hearing May ask to inspect property May object to objections May seize property to sell and distribute to creditors

10. Who files bankruptcy? 2013 – 5, 557 (3,557) consumers 2012 – 5,788 (4,066) consumers 2011 – 6, 556 (4,679) consumers 2010 – 7, 843 (5,771) consumers

11. At least three people you know personally!

12. Why do people file? 42% of personal bankruptcies are due to medical expenses (78% of those who filed had insurance!) 22% of personal bankruptcies are due to job loss or change (credit cards, payday loans, nagging creditors) 15% of personal bankruptcies are due to over spending – credit cards, mortgages, expensive cars, etc.

14. Declaring Bankruptcy Stops wage garnishment Stops collection calls Prevents foreclosure Prevents utility shut offs or evictions

15. Giant Pause Button Everything stops Start over Establish a financial plan

17. Wait. What about my stuff?

18. Real Estate Homestead up to $60,000 You have to reside in the house You have to be married, have a dependent or be 65 years of age Trailers included Proceeds of the sale of your homestead for up to six months

19. Life Insurance Proceeds

20. Immediate Personal Possessions Wedding rings

21. Burial Plots, tombs, crypts

22. Personal Injury Awards No limit Must not be comingled or lose it’s identity

23. Retirement Benefits Vary based on profession and source Reasonable and age based

24. Clothing Reasonable

25. Professionally Prescribed Health Aids No limit Wheelchairs, oxygen tanks, etc.

26. Furniture and Household Goods $1500 per debtor Fair market value

27. Public Benefits Worker’s compensation Aid to blind, aged, and disabled

28. Tool of the Trade $2400 per debtor Tools for work (hair dresser and mechanic) Vehicle used for transportation to and from work

29. Wildcard $2500 per debtor Can be any kind of property but real estate Bank accounts, a second vehicle or equity, Mickey Mantle baseball, etc.

30. Exemptions

31. What about the debt?! Secured Unsecured Nondischargeable

32. Secured Debt Purchase Money Security Agreements Non-purchase Money Security Agreements Reaffirmation Redemption Retain and Continue Payments Relinquishment

33. Co-Debtors Automatic Stay does not apply in a Chapter 7 but does in a Chapter 13 Can collect from the co-debtor in most cases Property settlements will not stop creditors in state court

34. Mortgages Can cure a defaulted mortgage in a Chapter 13 Can strip off an unsecured mortgage Modify terms of mortgage

35. Unsecured Debts Medical bills, credit card bills, student loans, personal loans, child support Being unsecured does not guarantee that the debt is discharged

36. Repo Man for the Department of Education

37. Nondischargeable Some tax debts Child support Alimony Fraudulently obtained debts – ex: unemployment overpayment or personal loans Property Settlements from a divorce

38. Why file? Advantages Protection Assistance Clear debts Peace of mind Rebuilding Quality of life Time Disadvantages Fees Restrictions Business closure Hard to get credit Still have debts Career Income Assets

39. Discharge Order Does not list specific debts discharged If there is not a specific order regarding fraud or value or the treatment of a secured claim, then the debt is generally discharged Sent to all creditors and codebtors Violation of the discharge order can result in sanctions

41. Resources National Consumer Law Center Surviving Debt: Counseling Families in Financial Trouble US Bankruptcy Court for the State of Nebraska website Local consumer bankruptcy attorneys