Consumer Bankruptcy
[1] Introduction
[2] General Information
[3] Limitations on Filing
[4] The Automatic Stay
[5] Debt Treatment under Chapter 7
[6] Debt Treatment under Chapter 13
[7] Asset Treatment under Chapter 7 and 13
[8] Choosing Between the Alternatives
[9] Case Summary and Outline
[10] Getting Started
[11] Typical Pre-Filing Problem Areas
[12] Filing
[13] Typical Post Filing Issues
[14] The First Meeting of Creditors
[15] Chapter 7 Interim Administration
[16] Chapter 13 Interim Administration
[17] Chapter 7 Discharge
[18] Chapter 13 Discharge
[19] Typical Post Discharge Issues
[20] Fees and Costs
[21] Bankruptcy Reform

Booklet One
Booklet Two

Client Page

Bankruptcy Packet

Fees and Costs

Power Point
[1] Introduction & Priority Debt
[2] Secured Debt
[3] Executory Contracts & Unsecured Debt
[4] The Bankruptcy Estate
[5] Chapter 7
[6] Chapter 13
[7] Final Matters

Other Areas:
Business Formation
Agreement Writing
Small Claims
Radio Show
Paralegal Training

Practice Areas:
Wills & Trusts

Office Hours


Chapter 13

Typical Post Filing Issues

1.0 In General

There are a number of issues that typically arise after the filing of Bankruptcy. A number of these are discussed in the material below.

2.0 The Taking of Property

2.1 In General

The Automatic Stay of 11 U.S.C. § 362 provides that once a bankruptcy has been filed, creditors are no longer allowed to pursue their claims against you (subject to the exceptions discussed in Part 1). Nevertheless, some creditors will not learn about your bankruptcy filing until after they have already started the process of taking some of your property.

If you have provided your attorney with copies of all legal papers that were served upon you prior to the filing of bankruptcy, he will have sent a notice to those creditors and to the court which should minimize these types of actions. That is because the notice your attorney sends to the creditor will arrive before the notice from the Bankruptcy Court. However, if you find yourself in the position after filing where you may have forgotten to provide your attorney with the appropriate information, or a creditor has acted without knowledge of your bankruptcy, you will need to know what to do. The instructions below should help.

2.2 Garnishments

If your wages are garnished post-petition, you should immediately obtain a copy of the Writ of Garnishment from your employer. That document along with the name of a responsible person in your employer’s payroll department and their fax number should be immediately given to the attorney. The attorney will then fax notice to your payroll department that the garnishments is not to be honored. The attorney will also send a notice to the court that issued the Writ of Garnishment indicating that a bankruptcy has been filed and that no further Writ’s should be issued. Finally, the attorney will send a letter to the creditor’s attorney requesting a refund of any amounts attributable to post-petition earnings. You should understand, that it may take several weeks for you to receive money that had been garnished improperly.

If the creditor refuses to turn over money that it should not have taken, it may be necessary for an attorney to file an order to show cause proceeding in the Bankruptcy Court requesting return of the funds. You should be aware that this an additional legal process that is not included in the normal services provided to bankruptcy clients.

2.3 Foreclosures

A notice of sale on real property, is handled much like a garnishment. You must immediately provide the attorney a copy of the notice of sale and any other documents you may have received. This allows the attorney to call the foreclosing agent and inform them of the bankruptcy filing. He will also send a follow up letter to the agent and/or attorney involved. You may also call the foreclosing agent yourself and give them your case number and the date of filing.

2.4 Writs of Execution

Occasionally a Sheriff will appear at your door with a Writ of Execution. This is a document that normally allows a creditor to seize your non-exempt personal property to help satisfy the creditor’s claim against you. You should be polite to the individual who is attempting to serve those documents upon you. They are simply doing their job. However, you should give them your case number, the date of your bankruptcy filing, the name of your attorney, his address, and phone number. You can even show them the notice you received from the court listing the date of your hearing. That will allow the Sheriff or Constable to verify the information that you have provided to him. They will appreciate your assistant in being able to quickly resolve the matter.

Sometimes a creditor will serve a Writ of Execution against your bank account post-petition. While you are suppose to receive a copy of the Writ, you will often not know of its existence until the bank informs you that your accounts are frozen. Once you become aware of a Writ of Execution on a bank account, you should immediately obtain a copy of the Writ and provide it to your attorney. You may also provide your financial institution with your case number and the date of filing, as well as your attorney’s name and phone number. You should write down the name of the individual you talked to at the bank. Next you will need to go to the Court that issued the Writ of Execution. You should request from the clerk the packet containing documents allowing you to object to the Writ of Execution. You should complete those documents indicating that the Writ of Execution was not appropriate because you had filed bankruptcy. There is a specific place on the forms for noting a bankruptcy filing. The clerk will then schedule a hearing before the judge on the matter. You must attend that hearing and provide to the judge proof that you filed bankruptcy prior to the date the Writ of Execution was served upon your bank. If you come to the office, we will provide you the legal documents which the court will accept as proof. The court should then order a release of the Writ or a return of the money taken by the creditor. Unfortunately, this entire process can take up to two (2) months or more. If you wish the attorney to appear with you at the hearing (which is not necessary) there will be an additional charge for doing so. If you wish the attorney to appear with you, you must speak to him personally to make the appropriate arrangements.

2.5 Writs of Replevin

It is extremely rare to be served a Writ of Replevin in Utah. This is a legal document that allows an individual to repossess secured property. Most creditors will attempt voluntary repossession, which you are not required to comply with. If you are served a Writ of Replevin after the filing of a bankruptcy, you have two options. The first is to simply provide the Agent with proof of your bankruptcy filing. If however, the creditor has obtained “Relief from the Automatic Stay” as well as a “Writ of Replevin” you must immediately surrender the collateral.

If the item is something that you intended to surrender as part of the bankruptcy, you should immediately surrender the property even though the Writ may be technically invalid. Remember, that in order to retain property after the filing of Bankruptcy you must be current on your payments. If you are not current, you should surrender the property.

2.6 Surrender

Shortly after your bankruptcy is filed, the attorney will send a notice to each secured creditor indicating your intent with regard to their collateral. If you wish to surrender the property, that information is provided to the creditor. The creditor will usually contact your attorney requesting permission to contact you to arrange taking possession of the property. The attorney normally grants such permission since it is more efficient for you to arrange a time that is convenient to you to have the creditor come out and pick up the property. If you have indicated an intent to surrender property on your bankruptcy pleadings, you are required to complete the surrender within 30 days of your first meeting of creditors.

Some client’s wish to retain the collateral for as long as possible before surrendering it. However, the creditor is entitled to possession of the property as soon as possible since you are not paying for the use of that property. You must keep the collateral insured up until the time the creditor takes possession of it. As long as the property is in your possession you are responsible for any damage that may occur to it. Therefore, it may be wise for you to actually deliver the property to the creditor so that you can cancel your insurance coverage.

If the property is a motor vehicle, it can be delivered to the bank that did the financing or to the lot were you purchased it. Other property may be simply dropped off at the creditors place of business. It is wise to take an unrelated third party with you as a witness that you actually dropped off the property. If it is a motor vehicle, you should enter the place of business and give the keys to someone in authority. You may simply indicate that your attorney instructed you to drop off the collateral. If the collateral is a motor vehicle that is no longer operating, that information as well as the location of the vehicle should be provided to the creditor as soon as possible. Once the creditor has been informed, it was their responsibility under the old law to take possession of the collateral. The new law seems to indicate that you may have a responsibility to return the collateral. If you are not capable of returning something you should inform the creditor of that fact and keep the property insured for a reasonable amount of time after you have asked them to pick it up.

If the property you wish to surrender is a home, you should provide the mortgage company or their agent with the key and notice of the date upon which you are abandoning the property. When you leave the property, you should secure it and turn off all of the utilities. If it is winter time you should attempt to secure the property by shutting off any exterior utilities and draining the water lines so that they do not freeze. Alternately, you should leave the utilities on for at least two weeks after you have abandoned the property before shutting them off. Remember, that you will be responsible for any utility bills incurred after the date of bankruptcy filing.

If the property is a cell phone, you must not use the phone after the date of filing. In addition, unless you fully paid for the phones you should return them to the place were you purchased them. In addition, you should call and notify the company were you obtained service that you have filed bankruptcy giving them your case number, attorney information, and date of filing.

3.0 Legal Pleadings

3.1 In General

Do not ignore any legal papers that you may receive after the filing of your Bankruptcy. If you receive a document that you do not understand, immediately contact the attorney so that you can receive instructions on what you may need to do. Often the attorney will need to see the document, so it is usually a good procedure to either fax or drop off the document to the attorney before you call him. Some common documents that you may receive will be described below.

3.2 Motion for Relief from the Automatic Stay

The Bankruptcy Code provides that if a creditor is not “adequately protected”, the debtor has no equity in the property, the property is not necessary to the debtor, or the debtor has indicated an intent to surrender the property; the creditor may move the court to lift the automatic stay. In layman’s terms this means that a creditor is seeking the permission of the Bankruptcy Court to pursue its rights against their collateral. For example, the creditor may wish to take possession of a home or motor vehicle that you are delinquent on.

If you have indicated an intent to surrender the property or you are behind in your payments, or you are in a chapter 7; the court will automatically grant the creditors request to lift the automatic stay. As a result, you should not ask your attorney to object to the lifting of the automatic stay under those circumstances.

If, however, you are current on your payments and have indicated in your bankruptcy papers an intent to retain the collateral, you should immediately make an appointment with the attorney and bring him proof that you have made your payments. This proof must be in the form of canceled checks or verification of payments actually received by the creditor. The attorney will then file an objection to the motion. Please be aware that you may be required to attend the hearing and present evidence to the judge regarding the fact that you are current. You should also be aware that if the attorney must respond to motion or appear at a hearing there will be an additional charge. Any response must be filed with the Court within 10 days of the filing of the Creditor’s Motion. If you do not provide information to the attorney quickly enough he will not be able to help you. Please understand that in a chapter 7 the court will probably grant the creditor’s motion anyway. However, by sending an objection to the bank’s attorney there is a good chance that someone may actually look at the account and correct any error that may have been made. In chapter 13 motions for relief from stay are most often filed for failing to remain current on post petition filings. If you can prove that you are current the court will generally deny the creditors motion.

3.3 Motion to Accept or Reject Executory Contract

If you have a leased car or leased business equipment, the creditor can request that you either accept or reject the contract with them. Under the code, you have sixty days after the filing of a bankruptcy to accept an executory contract. If you are not current on such a contract, the creditor can ask for earlier cancellation. You should also be aware that the creditor is entitled to the fair rental value of the property for the length of time you keep it post filing if the contract is rejected. As a result, if it is your intent to cancel an executory contract you should immediately return the property to the creditor. If fact, this is a type of property that you should actually return to the creditor before you file.

Once your case is filed the attorney will send a notice to each creditor with an executory contract indicating whether you wish to accept or reject their contract. If you wish to accept the contract you should continue to keep your payments current.

If you receive a request to accept or reject an executory contract, and it is your intent to surrender the property back to the creditor, you need to do nothing except deliver the property to the creditor. If you are not capable of returning the property you should immediately provide the creditor with the location of the equipment and a list of convenient times to pick it up. If, however, you are current on your payments and you wish to retain the item, you should immediately contact the attorney and provide him documentation within 10 days of the creditors motion proving that you are current on your contractual obligations. This could include maintaining insurance on the property. The attorney will then file an objection and you may be required to appear in court with the attorney to answer any questions to which the court may have. Please be aware that this is an additional service beyond those typically rendered in a Chapter 7 and there will be an additional charge for the attorney’s time and effort. Also be aware that under the new law, the creditor may have the right to cancel the contract even if you are current.

3.4 Adversary Proceedings

Occasionally you will receive a Summons issued by the Bankruptcy Court and an accompanying Complaint prepared by one of your creditors. This is called an adversary proceeding. It is a separate legal action filed in the Bankruptcy Court which is handled just like regular litigation in the state district court.

The broad jurisdictional powers granted to the U.S. Bankruptcy Court, allows debtors and creditors one place to iron out virtually all non criminal problems in one court. The creditor can litigate his claims against the debtor and his related claims against non-debtors at the same time.

The most common adversary proceedings in chapter 7's are those filed to determine the dischargeability of a particular debt. Adversary actions filed under 523 deal with the dischargeability of: fraudulently occurred debts, recent consumer purchases or advances over $500, or other priority obligations. A complaint filed under 727 asks the court to deny the debtor a discharge because of some fraudulent action toward the court by the debtor, such as failing to list assets or answering untruthfully the questions on the statements and schedules. The most common 727 actions are those filed by Trustees asking that a debtors discharge be revoked for failure to turn over property.

If you receive an adversary proceeding, it is important that you not ignore these documents. The creditor can obtain a judgment against you that will survive bankruptcy or you may lose your discharge if they are successful. You should immediately make an appointment to speak to the attorney so he can advise you of your legal rights. You should understand that our office does not handle adversary proceedings. As a result, if you intent to fight the complaint, you will need to hire another attorney to represent you in that legal action. A list of attorney’s who handle adversary proceedings (at least as of the date of the preparation of this booklet) are found below.

Anna Drake                                           Daniel Boone

215 S. State St. #900                             10 W. 300 S. #707

Salt Lake City, UT 84111                     Salt Lake City, UT 84101

(801) 328-9792                                       (801) 355-5225


R. Mont McDowell                              Jeffrey W. Shields

50 W. Broadway #1200                       170 S. Main Sr. #1500

Salt Lake City, UT 84101                     Salt Lake City, UT 84101

(801) 359-3500                                       (801) 521-3200


Jory Trease                                           Jory also handles violations of the

#9 Exchange Place #200                      Automatic Stay and

Salt Lake City, UT 84111                     Student Loan Litigation

(801) 596-9400


3.5 A Regular Summons and Complaint

Occasionally you will be served a summons and complaint from the state court after the filing of a bankruptcy. You should immediately provide a copy of these documents to the attorney. He will then prepare a notice of bankruptcy filing to send to the court as well as the attorney for the creditor. This should normally take care of the matter. If it is a matter not stayed by a bankruptcy, such as a divorce, you will need to obtain the assistance of an attorney to help you. If you receive any further documents in a case stayed by the bankruptcy please contact the attorney immediately.

3.6 A Motion and Order in Supplemental Proceedings

Occasionally clients will receive a Motion and Order in Supplemental Proceedings. This can only occur in a case were a judgment has been entered against you. If you have provided the attorney a copy of any legal pleadings served against you prior to filing of your bankruptcy, this is not likely to occur since he will have already of sent a notice to the court and to the attorney. However, if you receive a Motion and Order in Supplemental Proceedings after the filing of a Bankruptcy, you should immediately provide copies of those documents to your attorney. He will then provide notice to the court and the attorney for your creditor that you have filed bankruptcy. This should prevent any further proceedings in the case and you generally do not need to appear.

However, if you have the time it is advisable that you or your spouse attend the hearing anyway with proof of your bankruptcy filing. Sometimes the court will miss filed documents. In addition, opposing counsel may occasionally misrepresent to the court the status of your case. As a result, it may be wise for someone to appear to ensure that the court dismisses the case rather than issuing a bench warrant for your arrest.

3.7 An Order to Show Cause or Supplemental Proceeding

Occasionally a court will schedule an Order to Show Cause or a Supplemental Proceeding of some sort to verify the filing of your bankruptcy filing. You should appear at any such hearing and provide the court with proof of your bankruptcy filing. That proof can be shown by giving the court a copy of the initial notice of your first meeting of creditors or by coming in to the office and obtaining a photocopy of the petition page from your bankruptcy filing.

3.8 Criminal Actions

The bankruptcy filing does not stay a criminal action or the exercise of police powers such as a local ordinance requiring you to maintain your real or personal property in a safe condition. If you receive legal documents in such an action you should immediately obtain the services of an attorney to assist you.

4.0 Creditor Contact

4.1 Phone Calls

If a creditor contacts you after the filing of a bankruptcy, you should politely indicate to them that you have filed bankruptcy, that you are represented by an attorney, and that they should not call you in the future. Please feel free to give them your bankruptcy case number, the date of filing, your attorney's name and his phone number. If the creditor is rude, insistent, or continues to call; be sure to ask for their name, their phone number, and if possible the name of their supervisor. That information should then be given to your attorney as soon as possible.

4.2 Billing Statements

If you receive a bill from a creditor that you believe was listed on your Bankruptcy, you should first carefully review your copy of the Bankruptcy schedules and statements. If they are already listed on your Bankruptcy, it will not be necessary to prepare an amendment. If it is a new collection agency collecting for a creditor who is already on your Bankruptcy, it may be wise to prepare an amendment adding them on. If the bill is from a creditor that is listed, and it is received more than thirty days after you have received your Notice of the Meeting of Creditors, you should bring the bill in to the attorney, so he can send a follow-up letter to the creditor. Otherwise, you can ignore the bill. If in doubt, contact the paralegal who handles Chapter 7 matters. She should be able to assist you.

In some cases you will continue to receive statements even though you have filed bankruptcy. For example, if you are surrendering a home on which property taxes are still due you will continue to receive billing statements until the property is actually sold and the taxes paid. If you have surrendered a car, you may receive statements until the vehicle is actually sold and perhaps even a deficiency letter thereafter. You can ignore these statements. The only exception is a bill for post filing association fees if you are still in possession of the property.

5.0 Safeguarding Property or Services

5.1 Utilities

If you are not current on payments to a utility company and you have listed that company on your bankruptcy statements and schedules, you should immediately call the utility company to give them your case number, date of filing, and to ask them if a deposit will be required to continue service. By law, they can require you to post a new deposit to continue service. Each company has their own particular policy, but most deposits are equivalent to two months regular service. You have 20 days from the date of the filing of your bankruptcy to pay this deposit or your service could be disconnected. Remember, that this deposit is in addition to any deposit already paid to the utility company. Previous deposits will be applied to any bills owing as of the date of filing. Be sure to write down the date and time you call as well as to the name of the person to whom you spoke. In addition to the required deposit, you must make payments for any utilities used after the date of filing. Most utility company’s will send you a new bill with services beginning on the date of filing. If you do not make payments on these services post petition even though you have posted a new deposit, your services will be disconnected or terminated. If your service is disconnected you will have to pay a reconnect fee in addition to a further deposit.

5.2 Insurance

It is a legal requirement that you keep your motor vehicle insured. If you owe money on the motor vehicle, insurance coverage will be a condition of that contract. You will not be able to reaffirm on the motor vehicle unless you have current insurance. In addition, it is a violation of Utah law to drive a motor vehicle that does not have insurance. If your motor vehicle is not insured the creditor can use that as grounds for filing a Motion to Lift the Automatic Stay. In a chapter 13 you are now required to provide secured creditors with proof of insurance on their collateral within 60 days of filing and copies of any renewals thereafter.

5.3 Post Petition Bills

5.31 Chapter 7

There are a number of payments that you should continue to make after the filing of bankruptcy. First, you should continue to pay your regular living expenses. These include your utilities, food, clothing, shelter, insurance, etc. If you have any executory contracts that you wish to accept you should continue to make the payments on those obligations as well. These include things such as your rent, cell phones, gym memberships, and leased motor vehicles. In addition, if you have secured debt that you wish to retain such as a home, motor vehicle, or recreational property you must continue to make the regular payments. If you fail to make the payments, the creditor will not reaffirm with you and will ask the court for permission to take back the collateral. Finally, you may continue to pay any obligations that you wish to repay even though they have been discharged in your bankruptcy. For example the obligation to your doctor or pediatrician.

5.32 Chapter 13

The debts you may continue to pay in a chapter 13 are more limited. You should continue to pay for ongoing living expenses such as food, clothing, and housing. You will also continue to pay 401k loan payments and any ongoing lease payments that you have accepted in your plan. Payments outside the plan are not allowed on pre-petition debt. If you have questions on how this might apply in your case, please ask the attorney.

5.4 Reaffirmation

In a chapter 7 most creditors (other than Mortgage Companies) will send a reaffirmation agreement to your attorney. He will then forward that agreement on to you. If you wish to reaffirm you should complete any requested information on the form, sign it, and return the document a soon as possible to the attorney. He must then countersign the document and file it with the court before the discharge date in your case. You can determine the discharge date by looking at your Notice of First Meeting of Creditors that was provided to you by the court. If you look down at the middle of the document you will see a heading called “Deadlines” under deadlines is a date for the last day to file complaints objecting to discharge. That is your discharge date.

If you change your mind and no longer wish to be bound by a reaffirmation agreement, you must notify the attorney in writing at least 14 days prior to your discharge date so that the proper documents can be prepared and filed with the court to revoke your reaffirmation. Once the bar date passes you cannot cancel your reaffirmation agreement.

5.5 Redemption

In the event that collateral you wish to retain in a chapter 7 is worth far less than the amount that you owe, it may be possible to enter into a redemption agreement with that creditor. If you wish to do this and that information was part of your initial bankruptcy statements and schedules, a letter will have been sent to that creditor requesting redemption. If the creditor responds that it is willing to redeem, that document will be forwarded to you for your signature. The document should be signed and returned with a cashiers check for the correct amount.

If for some reason you believe the amount in the redemption agreement is incorrect or the value is too high, you have the right to contact the creditor directly and negotiate a reduction in amount or you may contact our office in writing and ask us to make a counter proposal. If you do so, you should indicate the counter offer that you would like us to make. We will then contact the creditor and get back to you on whether or not they agree to a reduction. Remember that most creditors will not execute redemption agreements after your discharge date.

5.6 Post Petition Credit

5.61 Chapter 7

During the term of your Chapter 7 bankruptcy, you should not borrow or incur additional debt. Doing so could jeopardize your case. If you wish to purchase property, it is best that you wait until after attending your first meeting of creditors. You should be aware that any debt that you incur after the date of filing cannot be discharged in bankruptcy. That debt must be repaid.

If you wish to purchase a motor vehicle or other property after filing, most creditors will not extend you credit until after your case has been discharged. Some creditors will deal with you once you have actually attended the first meeting. Other creditors will ask you to provide them with some kind of documentation from the Trustee saying that you can occur new debt. The Trustees will not provide such a letter or form. If the creditor asks for proof that you have attended the First Meeting of Creditor’s, please contact our office and we will provide you a letter. Remember, you will pay higher interest for debt incurred immediately after the filing of bankruptcy.

5.62 Chapter 13

After the filing of a Chapter 13 Bankruptcy, and during the term of that Bankruptcy, you may not obtain credit of any type without the express permission of the Court. This means that your attorney must file a Motion, explain the credit you wish to obtain, why it is necessary, prove that you have the ability to make the payments, and that you will be able to continue to pay your regular monthly plan payments. If the Judge agrees, you will be able to go forward with the credit transaction.

Most often, this issue arises when you need to purchase a new motor vehicle, you have the opportunity to refinance your home at a lower rate, or you would like to obtain a student loan. The Court will almost always allow you to obtain a student loan. However, you should be aware that the process may take up to two(2) months before actual permission can be obtained.

6.0 Amendments

Many debtors realize at some point after filing, that they have left creditors off their bankruptcy. The creditor is entitled to notice of your bankruptcy filing at least 30 days prior to the bar date (the deadline on your court notice for filing complaints objecting to discharge in a 7 or the deadline for filing claims in a chapter 13). If you wish creditors to be added or any changes made to your bankruptcy pleadings you must provide that information in writing to the attorney along with $50 and a signed amendment cover sheet at least 15 days before the appropriate deadline. If you do not supply complete information to the attorney, he cannot prepare the amendment for you. Because of past problems with changes being requested over the phone by individuals pretending to be our client’s, all changes must be requested in writing.

7.0 Sale or Disposition of Property

7.1 In General

Once you file Bankruptcy, all of your assets are part of something called “The Bankruptcy Estate”. As a result, they cannot be disposed of without the courts permission.

7.2 Chapter 7

7.21 Motor Vehicles

There are several situations in which the sale of a motor vehicle arises post petition. First, a creditor may wish to take back the collateral and sell it themselves. To do this, they must file a Motion for Relief from the Automatic Stay requesting court permission to dispose of the motor vehicle. Alternately, they may simply wait until the discharge notice is received and then act to dispose of the collateral. Under the new law they may be to take possession 30 days after the first meeting of creditors.

On occasion, you will have a buyer for a motor vehicle. Most often, this buyer will not be willing to pay the full amount that is due and owing on the motor vehicle. In this case, you should put that particular individual into direct contact with the financial institution. Then the two of them can make whatever arrangements are appropriate. It is generally not recommended that you act as an agent in attempting to arrange a sale. It is generally a waste of your time and effort.

Sometimes the trustee in your Bankruptcy will want to dispose of the property. In that case, other than delivering the vehicle to him or his agent, you will not need to do anything further.

7.22 House

The sale or disposition of a home follows essentially the same pattern as that of a motor vehicle. If the creditor wants the house back, they may file a Motion for Relief from the Automatic Stay. If the motion is granted, the creditor may begin the normal foreclosure process. Alternately the creditor may wait until the stay is automatically lifted. Foreclosure is necessary so they can clear title to the property. The entire process from Motion to Sale averages between 3 to 6 months.

On occasion, a creditor will ask you to execute a Deed in Lieu of foreclosure. This is where you execute a Quick Claim Deed that gives them immediate tittle to the property, so they do not have to go through the process and expense of foreclosure. If you are requested to sign a Deed in Lieu of Foreclosure, you should bring in the document and have the attorney review it carefully. Unfortunately, some attorneys will place additional requirements or restrictions within the Deed that will waive the Bankruptcy protections you may have against a deficiency.

Sometimes, you will be approached by a Real Estate Agent to do a Short Sale. Usually, it is not in your best interest to enter into these agreements. The only party to benefit from a Short Sale is usually the Real Estate Agent who gets a commission on the deal. If the documents for a Short Sale are not properly drafted, you may end up waiving the protections afforded by your Bankruptcy filing and be liable for the full amount of any deficiency on the sale, which deficiency is increased by the realtor commissions. If you wish the attorney to review the Short Sale documents at closing, there will be an additional charge for doing so. As a general rule, it does not improve your credit in any way to do a short sale.

You may also be contacted by an individual indicating that he wishes to buy your home or assist you in obtaining refinancing of the home by Quit Claiming the property to him. As a general rule, this is not a wise thing to do. On a few occasions, when clients in our office have signed such agreements, the holder of the Quit Claim Deed has attempted to illegally obtain “owner” financing. A Real Estate Agent who attempts to do this could loose their licence. On other occasions, the holder of the Quit Claim Deed has simply rented out the property to third parties and pocketed the money. In these cases, the property often ends up being trashed and the mortgage company is very upset when they finally obtain possession of the property.

7.23 Tax Refunds

Any tax refund that you are entitled to but have not received, prior to the filing of the Bankruptcy or which may still be in your bank account, belongs to the court. You should not spend these funds without the expressed written permission of the Trustee. If you receive a tax refund or become entitled to a tax refund after the filing of your case, you should immediately notify your attorney, so he can provide that information to the Trustee. If the Trustee requests the tax refund, you should immediately provide the refund check to your attorney in the form of a certified check for the amount of the taxes made out to your Chapter 7 Trustee or the actual unendorsed tax check. You should also be aware that if you file you bankruptcy in August or later in the year, the trustee may request a pro rata share of the next years refund.

7.24 Other Assets

The Bankruptcy Court has the right to take and dispose of any non-exempt assets in which you have an ownership interest on the date of filing. You are expressly prohibited from selling or otherwise disposing of any of your property during your Bankruptcy without Court permission. If the Trustee requests’ that you turn over property, you should immediately do so. Failure to cooperate with the Trustee can result in your case being Dismissed.

7.3 Chapter 13

As part of a chapter 13 a debtor may propose the sale of assets. However, once a buyer is found the court must still approve the transaction including any sales commissions. As a general rule all of the proceeds must be provided to the trustee for distribution to creditors. There are some exceptions that you may wish to speak to the attorney about. Post confirmation sales require not only permission to sell property, but modification of any existing plan.

8.0 New Address

If your address and/or phone number change after the date of filing, it is necessary for your attorney to file a Notice of Address Change with the Court. Therefore, you should immediately provide this information to your attorney (in writing). If you do not notify your attorney of any change in address, you may not receive notice of your court hearing, and your case could be dismissed. Please keep the attorney informed of your address and phone number at all times during the pendency of your case.