Guest Author - Bonnie Sayers

For many families the thought of Bankruptcy is a real concern. The debt can be from hospital bills or credors that resulted from the loss of a job or just unexpected issues that made borrowing a necessity. Those that have suffered from natural disasters like Hurricane Katrina might have no alternative but to file for Bankruptcy.

With the new law taking effect October 17, 2005 it will be difficult for some to file for bankruptcy. For those of us in the low-income bracket this law really does not pertain to our income level. However there is the issue of credit counseling before you can file for Bankruptcy.

For several months I had been dealing with a judgment from a creditor. This is going back fifteen years with the original judgment filed in 1992. I had no clue that judgments can be renewed every ten years and this would resurface and wreak havoc on my life.

It had been a few years since the renewal of the judgment, so I was quite surprised when suddenly I received a bank levy from said creditor. I searched the internet for the civil codes detailing the legal jargon I was oblivious to in these documents. I had ten days to file a claim of exemption along with a financial statement. I was shocked that my claim was denied due to not including proof of the Social Security my children receive due to their disability. There was no way rectify this in Court or through the creditor.

It was quite an experience bringing my two autistic children to court since the date was over the summer. My son went right up to the Judge and stomped his feet before going back down the stairs. While I was speaking to the Judge my other son proceeded to have a conversation with me. This was a disastrous experience that culminated with a flat tire as we returned to our vehicle.

Since I learned through the judgment that Legal Aid does not assist with consumer debt, but not before waiting several hours over the course of a few phone calls, I went straight to the library website for books on the subject of debt and bankruptcy. I found Nolo Press Quick & Legal, Bankruptcy: Is It The Right Solution To Your Debt Problems and immediately liked the question and answer format.

There are eleven chapters that cover Chapter 7 and 13 Bankruptcies. A bankruptcy is either liquidation (7) or reorganization (11,12,13). They can last from a few months (7) to several years (11). Chapter 12 pertains to a large debt due to a family farm.

The questions and answers are categorized for Chapter 7 and 13, like the trustee and going to court. The meeting of creditors takes place 20-40 days after you file. My meeting is taking place in one week. This is a meeting you must attend and have no input into the date and time it takes place. I have to keep my kids out of school and bring them to this meeting since the time is too close to the end of their school day.

Filing the papers costs $209 in California. Once they have been filed all creditors must cease to contact you, utilities will not be disconnected if they were going to be, an eviction will be stopped, foreclosures and judgments get an automatic stay. It is mentioned that in some states loss of driver's license happens because of a liability for damages stemming from an automobile accident. The automatic stay will stop this from occurring as well. If you are dependent on the vehicle for family support filing bankruptcy might be the reason to keep your license.


Filing bankruptcy does not stop the enforcement of child support or alimony. The book goes into this topic in various chapters. Federal, Local and State taxes are not discharged through Chapter 7. Student loans are not covered either, although if you can prove hardship a portion might get discharged.

Section 1 - covers the bankruptcies
Section 2 - eligibility requirements
Section 3 - exceptions, guarantors, cosigners
Section 4 - home ownership, mortgage, renters
Section 5 - exempt and non-exempt property
Section 6 - dischargeable debt and secured debt
Section 7 - employment, freedom, self-respect
Section 8 - How hard is it to file
Section 9 - rebuilding credit in the future
Section 10 - alternatives, chapter 11 and 12
Section 11- bankruptcy law changes, audits, counseling

There is a checklist in a box format that covers each chapter. The back cover has a listing of questions referencing which chapter is covering that topic. There are some cartoon sketches in black and white that take reduce the stress level of this process. The index breaks down all the topics.

Since I am a renter with no student loans I have less Schedules and Exemptions to fill out. Chapters 4 and 5 have charts with every State listed showing the exemption amounts for property. The Schedules are also listed with the categories.

B - personal property
C - property claimed as exempt
D - secured debt
E - unsecured priority claims
F - non-priority claims
G - contracts and licenses
H - co-debtors
I - income of debtor
J - expenditure of debtor


If you forget to add a creditor there is a grace period where you can amend the papers. Should the case be over by the time you notice a missed creditor or the address or name was in error, you can request to reopen the case. This is likely if the case is under a year old.

It is also recommended that your maiden and married names be cited in your papers. The judgment was in my first married name so I had three names included on my Chapter 7.

The personal property covers everything from interest in insurance policies, antiques, pension plans, savings bonds, business inventory, season tickets, health aids, livestock, copyrights and potential tax returns not yet filed.

You can reaffirm a credit card if there was a cosigner or you were current on the card and would like to keep it. I plan on doing this with one of my cards. Bankruptcy: Is it the right solution to your debt problems also discusses credit repair agencies and credit counseling companies as alternatives to filing for bankruptcy.

It is explained that you cannot run up a card prior to filing and then expect to eliminate those charges. There are exemptions like if you used the card for food and basic living expenses. If you paid one creditor over others in excess of $600 it is considered a preference, although this does not pertain to credit card debt but to a friend or family member. You will have to wait 91 days before filing. You cannot file for bankruptcy more than once within a seven year period.

The section with questions about how the Bankruptcy affects your personal life discuss employment and living. This should not impact your job and there is no reason why they would know about it, unless your wages were being garnished. This will be listed on your credit report and you will need to be diligent to make sure the creditors report this accurately. Filing for bankruptcy has nothing to do with jail, you did not break the law or lose your right to vote.

Bankruptcy: Is It The Right Solution To Your Debt Problems? will help you learn the schedules, how to pick your exemptions and decide if you are using a paralegal, lawyer or doing the forms yourself. This is a great guide to show you all the necessary documents needed to prepare with examples.

After reading through Bankruptcy: Is It The Right Solution To Your Debt Problems? I felt confident enough to find a lawyer and utilized the Yellow Pages to find one. I lucked out that they allowed me to make payments, with the actual filing not taking place until I paid in full. I was given forms to provide all my creditors names, addresses, phone numbers and account numbers. I spent one day calling them all for accurate data. This was then transferred to the Schedules by the paralegal. I took the Schedules home to read through and called to correct a few dates and amounts. The last steps are for the debtor and the Lawyer to sign and date before the forms are taken to court with the filing fee. Then the letter is received within a week notifying of the trustee and date for the meeting of the creditors.


This whole process was less stressful than the judgment that I endured alone with no support or advice. I was able to ask questions based on the contents of Bankruptcy: Is it the right solution to your debt problems with the Attorney. I felt I was more in control of my financial arrears due in part to perusing the book, which led to the decision of filing Chapter 7 Bankruptcy. Should something happen to me I know that my kids will not have that $24,419.00 price tag to deal with.

If you are considering doing your own filing - note that the papers are not readily available for free online. There are many programs you can purchase and download, but for $500 I went with a financial counseling company that has an attorney to represent clients.

The author is a consumer debt expert. At the end of each chapter is a box to remind you that it is time to fill out the questions in the checklist. Businesses cannot file for Chapter 13 Bankruptcy. There is also some information for newly married spouses to determine if both should be named in the bankruptcy.

I am armed with more knowledge and should have filed for Bankruptcy years ago! One word of caution you do not learn from a book - you will be inundated with car loan offers in the mail since the records are public. I filed last August with the completion in December of 2004 and still get offers in the mail weekly, as opposed to daily. I suggest using ebay motors for a used vehicle - I did that two years ago with my income tax refund.

I just borrowed the July 2005 issue of Kiplinger's Personal Finance Magazine from the Library yesterday and noticed there is an article on The New Rules of Bankruptcy.

Originally published on Epinions

Bankruptcy: Is It The Right Solution To Your Debt Problems? is available at Amazon.


Kiplinger Personal Finance Magazineis available at Amazon. Please note that currently this is only $12.00 for a one-year subscription!

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