Bankruptcy
In these tough economic times, you might need some relief.  Bankruptcy can be a powerful tool for people in financial distress.  Attorney David M. Saiki was a bankruptcy attorney with a law firm in Bethesda, Maryland for six years before starting his own firm.  At his previous firm he represented lenders in bankruptcy, foreclosure, and debt collection cases. His firm's clients included SunTrust Bank, BB&T Bank and several federal credit unions.   Mr. Saiki uses his past training and experience to help you today. 
 
The Law Office of David M. Saiki proudly serves the communities of Prince William County, including Manassas, Haymarket, Occoquan, Dumfries, Quantico and Woodbridge, as well as the neighboring communities including Warrenton, Centreville, and Chantilly. 
 
Don't pay more for a standard Chapter 7.  A standard Chapter 7 costs $799.00 plus filing costs (see below for more information on costs).
Please read the questions and answers below to find out more about what bankruptcy can do for you.
 
What can bankruptcy do for me?
 
You probably know that bankruptcy can eliminate much of your debt.  But bankruptcy can do much more.  For example:
 
  • If you are behind on your mortgage and your lender refuses to allow you to come current on your payments, a Chapter 13 bankruptcy can force your lender to accept your late payments so you can come current on your mortgage and keep your house.
  • If your paycheck is being garnished, a Chapter 7 will stop the garnishment.  We may even be able to get your money back for you.
  • If you have liens on your property, a Chapter 7 or Chapter 13 bankruptcy can eliminate, or reduce these liens.  If you have a second mortgage, for example, you may be able to completely eliminate this second mortgage, while keeping your home. 
 
Will I have to give up all my assets if I file for bankruptcy?
 
No.  You will be able to keep many of your assets, such as household items, and your car, up to a certain dollar amount.  For example, a single person can keep up to $5,000 in household goods. You can also keep certain assets, such as retirement savings, up to an unlimited amount.  Depending on your particular situation, you may also be able to keep your home with no negative effects.
 
Will I ever be able to borrow money again after filing for bankruptcy?
 
Yes.  A bankruptcy discharge will remain on your credit report for up to ten years.  However, many people are able to borrow again in a reasonably short time after filing for bankruptcy. To rebuild your credit, you would establish a credit history by borrowing and repaying your debts in a timely manner. To do this you might obtain a secured credit card (a credit card secured by collateral).  You might also obtain a credit card by having someone co-sign for you.  You would then repay any amounts you borrow on these cards in a timely manner.  You could also take out a vehicle loan and repay the loan in a timely manner. Books on how to improve your credit score after bankruptcy are available at many bookstores.
 
What is the difference between a Chapter 7 bankruptcy and Chapter 13 bankruptcy?
 
In a Chapter 7 bankruptcy case the Trustee sells your assets and uses the money from the sale of those assets to pay off your creditors.  The trustee will not take certain exempt assets (see the above section "Will I have to give up my assets if I file for bankruptcy).  After about three months, the Bankruptcy Court will enter an order discharging your debts.  
 
In a Chapter 13 case, by contrast, you keep all your assets, and make payments to the Trustee over a three to five year period.  The Trustee pays this money to your creditors.  The amount you will pay to the Trustee is your disposable income which is: your income, plus your spouses income if you are married, minus allowed expenses.  If, at the end of the 3 or 5 years, you have made all the payments, the Court will enter an order discharging your debts.
 
People usually prefer to file under Chapter 7 because a Chapter 7 case ends more quickly than a Chapter 13 case, and is less burdensome.  However, under current law, you will be required to file under Chapter 13 if your monthly income is greater than the median income for persons in your locality, and, if, after subtraction of allowed expenses, your monthly income when multiplied by sixty is not less than the lesser of either $10,000.00 or 25% of your nonpriority unsecured debt (or $6,000.00 whichever of the $6,000.00 or the 25% is greater).
In certain situations, you may want to file under Chapter 13 even if you qualify to file under Chapter 7.  For example, as mentioned above, if you wanted to keep your home, and you wanted to force your lender to accept your late mortgage payments, you would file under Chapter 13 instead of Chapter 7.
 
What happens in a typical bankruptcy case?
 
In a Chapter 7 case:  The first step is to take a pre-filing educational course on managing expenses and debt.  You take this course over the Internet.  You can see the online course at www.hummingbird.org   This online course must be completed before you file.
 
After your case is filed, your creditors, by law, must stop all garnishments, evictions, phone calls, collection letters and any other efforts to harass you. 
About 45 days after your case is filed, you will attend a hearing, called a "341 Hearing" or the Meeting of Creditors.  The 341 Hearing takes place at an office building near the courthouse.  At the 341 Hearing, the bankruptcy Trustee, an officer who oversees the administration of the case, will check your identity and will ask you questions to confirm the information in your bankruptcy materials is correct and accurate. Your creditors might also appear and ask you questions at this hearing.  You will spend some time waiting for your hearing to start, but the hearing itself typically takes less than fifteen minutes.
 
After the 341 hearing has concluded, you will wait for about two months.    
 
At some point after you file your case, you must complete a post-filing educational course on managing your personal finances.  This is also done over the Internet, either at our office, or at your home over the Internet, if you prefer.  See the online course at www.hummingbird.org After you go to the site, choose "Bankruptcy Certifications" on the left.  On the next page, choose "After Bankruptcy Financial Education Certification" on the right.  You should not take this course before you file you case.
 
It is possible that issues will arise that will delay or interfere with your discharge.  For example, if you hide assets, the Trustee may request that the Court deny your discharge completely.  You should therefore disclose all your assets to the Trustee.  Also, some of your creditors may decide to fight the discharge of the amounts you owe them.  This may involve litigation over the dischargeability of a debt (see the discussion below on "What debts can I discharge in bankruptcy?").  A credit card lender, for example, may argue that you borrowed money on your card with the intention of filing for bankruptcy instead of repaying it.  Many of these issues can be avoided, or at least anticipated, by a careful review of your case before filing. 
If your case goes smoothly, you will receive a discharge of your debts at the end of the two month period. After you receive your discharge, your old creditors will never be able to collect any debt that has been discharged.  Note, however, that some of your debts may not be dischargeable. See the discussion below on "What debts can I discharge in bankruptcy?" for further information.  You will still be responsible for any debt that is not discharged.
In a Chapter 13 case: Just as in a Chapter 7 case, you must also take the Internet pre-filing course.  You must also take the post-filing course.  In a Chapter 13 case you must propose a plan that controls how you will repay your creditors.  Our firm will calculate and file a Chapter 13 plan for you.  After the plan is filed, you will attend a hearing at the U.S. Bankruptcy Court, at which the Court will either confirm or reject your plan.  If your plan is confirmed, you must make payments as established in your plan until the term of the plan has ended. This will take three to five years.  You will then receive a discharge of your debts.  As in a Chapter 7 case, some of your debts may not be dischargeable.  See the discussion below on "What debts can I discharge in bankruptcy?" for further information.
 
What debts can I discharge in bankruptcy?
 
Many debts can be discharged in bankruptcy.  These include credit card debts, hospital bills, mortgage deficiencies, and business debt, among others.  This list is so broad that it might be easier to explain what is not discharged in bankruptcy.  The following debts cannot be discharged in bankruptcy:
 
  • Debt that was incurred by fraud.
  • Debt that the debtor incurred because of personal injury caused by the debtor's drunk driving.
  • Debt that resulted from the debtor's willful and malicious injury to the property of another.
  • Debt for alimony or child support.
  • Debt to the government for a fine, or criminal penalty.
  • Tax debt for taxes for which a return was due three years before the filing of the bankruptcy case.
  • Tax debt for taxes for which a return was filed two years before the filing of the bankruptcy case.
  • Tax debt for taxes that were assessed within two hundred and forty days of the filing of the bankruptcy case.
  • Tax debt for taxes for which a return was fraudulently filed.
  • Tax debt for taxes that the taxpayer willfully evaded paying.
 
Student loans are normally not dischargeable.  However, they may be discharged if you can prove that you are suffering an undue hardship because of your student loan debt.
 
What do I need to do to prepare to file a bankruptcy case?
 
Before you file a bankruptcy case, the bankruptcy law requires that you do the following:
 
  • If you are filing Chapter 7 or Chapter 13, you must have filed your tax return for the most recent year in which your taxes are due, and you must provide a copy of the tax return to the Trustee not later than seven days before the 341 Hearing.
  • If you are filing Chapter 13, you must, in addition to the above, file returns for your taxes that were due for the four years before your bankruptcy case.
  • You must provide to the Trustee proof of your income from any source for the sixty day period before you filed your bankruptcy case.  This can include paystubs, or any other proof of payment.
  • You must obtain current account statements for any savings or checking account at any bank at which you have deposits.  You will need to submit this at the 341 Hearing.
  • You must complete your Credit Counseling session from Hummingbird.  You can complete the course at home for  no charge.  To take the course, go to www.hummingbird.org.  At the site, choose the "Bankruptcy Certifications" button on the left.  Then on the next page choose "Before Bankruptcy Credit Counseling Certifications." You can also schedule an appointment to complete the online session at our office.  This course takes about forty five to ninety minutes to complete. You must complete this course before you file.
  • If you choose to complete the Credit Counseling course at home, please follow the instructions on the Hummingbird site.  After you finish the course, you must call Hummingbird at the number shown on their site to complete your session.  Please remember to write down your control number when you complete your session.  Please be careful to copy your control number correctly.  You should forward the number to us after you have obtained it if you are planning to have us represent you.  Hummingbird charges a fee to take this course.
  • You must pay your bankruptcy case filing fee to the Bankruptcy Court.  The fee for a Chapter 7 case is $299.00.  The fee for a Chapter 13 case is $274.00.  Note that these are fees that the government charges you to file your bankruptcy case.  You must also pay the fee to complete the prefiling credit counseling course ($49.00), a fee to complete the postfiling course ($19.00), a credit report fee ($35.00) to obtain your most recent credit report, and a filing fee to file your homestead deed to claim your exemptions ($21.00). These fees are paid to third parties and are separate from the attorney fees that you will pay your attorney to prepare your case, and represent you in court.  See below for attorneys' fees. 
 
How much does bankruptcy cost?
 
Attorneys' fees start at $799.00 for a standard Chapter 7 case.  Court costs and other required costs such as court fees and credit counseling costs are an additional $430 (see above) for a total of about $1,229.00. 
 
A simple Chapter 13 costs about $2,500.00.  If more work is required such as avoiding liens, or stripping off junior liens, more fees will be required.  This firm makes every effort to keep fees to a reasonable level.
 
We are a debt relief agency.  We help people file for bankruptcy relief under the Bankruptcy Code.

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