Unnecessary Requests

You filed a Chapter 7 bankruptcy and received your discharge.  A year later, you apply for a loan.  The loan officer asks to see a copy of your discharge order and bankruptcy schedules to verify “what was included”.  The loan officer also runs your credit report and sees an outstanding debt that was supposed to have been discharged in the bankruptcy.  You call the creditor to ask them to report the debt correctly to the bureaus.  The creditor claims to be unaware of your bankruptcy and requests a copy of your discharge order and bankruptcy schedules to verify that “they were included”.
Do either the loan officer or the errant creditor really need the bankruptcy schedules?  No, they do not.

Stated another way, the Chapter 7 discharge is “good against the world,” including unscheduled creditors.  The discharge is said to be good against the world in the sense that it applies to all unscheduled debts except those that are expressly made nondischargeable by § 523.  In re Guseck, 310 B.R. 400, 402 (Bankr. E.D. Wis. 2004).

There are only two bits of information that the loan officer or the creditor need.  Proof of your discharge (the court order, which you should keep with your personal records for the rest of your life), and the date your bankruptcy case was filed (so that creditors can verify that their debt arose from before the petition date).  That’s it.
If the loan officer or the creditor are really interested in seeing your schedules, they are a matter of public record and can be obtained directly from the bankruptcy court: http://www.wieb.uscourts.gov/index.php/court-info/court-info/4-the-courthouse/the-clerks-office/95-obtain-copies-of-documents (or thy may register for their own PACER account: https://www.pacer.gov/).
However, if they choose to act against you based solely on an omission on bankruptcy schedules or not being provided with the schedules, they may still be guilty of violating the discharge injunction.

Planning Ahead – Documents Needed for Bankruptcy

Tip #1 – Don’t wait until the last minute to consult with an attorney regarding bankruptcy.  At the very least, reach out to one to explore your options as soon as you realize you’re in trouble (when you first begin to miss payments on bills).  You don’t necessarily have to file bankruptcy right away, nor do you even have to hire an attorney right away.  But at least talk to one, and do it early.  That way, you know your options, you know what will be expected of you, and you won’t be trying to cram work and fees that could ordinarily be spread out over several months into several hours.  Sometimes, just consulting with an attorney can help you to avoid your situation from becoming worse.
Tip #2 – Don’t force your attorney into filing a skeletal petition.  Some attorneys – myself included – won’t even do it for you as a matter of policy.  What is a skeletal petition?  It’s an emergency filing with minimal disclosure requirements designed to get you immediate bankruptcy protection, with the expectation that you will complete the remaining disclosures at a later date.  A skeletal petition necessarily means that your attorney has not yet had the opportunity to gather and review all of the relevant information for your case, which means he cannot properly advise you.  Even though most cases can be dismissed if you discover there is a problem later, this is not always the case.  And the bankruptcy filing alone will do damage to your credit, which will not be ameliorated by a discharge if your case is dismissed.  It is always best to give you and your attorney plenty of time to prepare and analyze a case properly, so that obvious issues can be identified ahead of time.  This means, again, not waiting until the last minute to consult with an attorney.  It means talking to an attorney at the first sign of trouble.
Tip #3 – Expect that you’re going to need to obtain several documents and other pieces of information for your attorney.  It is unlikely that you will have everything sitting at your fingertips.  Most debtors must submit several requests to various government agencies and creditors to gather all of the required documentation.  Some documents are relatively easy to obtain and only take a few minutes.
Other requests take several days, even several weeks to process.  Discuss the document requirements when you first consult with an attorney.  Identify any documents or pieces of information that you will need to obtain and start working on gathering those documents IMMEDIATELY.  You do not want to find yourself in the position where you need to file within the next day or so, but must wait several weeks to receive documents because you only submitted a request for them yesterday.
Based on my experience. the following is a list of common document requests usually take several weeks to process:
  • Federal or state tax transcripts.  You’ll need these if you do not keep copies of your tax returns and cannot obtain a copy from your tax preparer.  Both the Internal Revenue Service and the Wisconsin Department of Revenue process transcript requests in about 3 weeks, on average, but some requests take much longer, particularly if there is an issue with the request.
  • Vehicle titles / confirmation of ownership.  If you have neither your original vehicle title nor the original confirmation of ownership, you have a few options.  Do NOT request a replacement from the DMV.  The fastest way is to get a document referred to as “confirmation of security interest” from your creditor.  If they don’t have that, then you need to submit a special form to the DMV called a certified vehicle record.  Again, the turnaround time for these is usually 3 weeks.
  • Reinstatement quotes.  If you’re filing Chapter 13 to save your home from foreclosure, a reinstatement quote is a crucial number to have.  In many cases, it is the single largest debt that has to be paid back, and therefore has the potential to have a large impact on your plan payment.  Ideally, you do not want to file Chapter 13 without a reasonable degree of confidence in what your plan payment will be.  Because of late fees, penalties, and attorney fees, the reinstatement quote can be very difficult to estimate, and the margin of error on such an estimate may be high.  Furthermore, you are likely to be bounced back and forth between the mortgage company and their attorney.  Unfortunately, reinstatement quotes are only good for a limited time.  So it is highly advisable that you request a quote very early in the process to determine how long it takes your mortgage company to process such a request, then use that information to time your final request prior to filing your bankruptcy case.

Wise Bankruptcy Filing Strategies – Additional Medical Debt

Q: I have a serious medical condition and have incurred a ton of doctor and hospital bills.  I need bankruptcy protection now, but I also know that I will have more medical bills coming in the next several months or even years.  What can I do?
A: If you’re not eligible for a Chapter 7 discharge because of a prior bankruptcy, then you’d need to file Chapter 13 anyway.  BUT, if you are eligible for a Chapter 7 discharge, it might be wise in this circumstance to start out in Chapter 13.  11 U.S.C. § 348(d) treats claims that arise after your bankruptcy case is filed – but before your bankruptcy case is converted – as claims that arose before your case was filed.  What does that mean?  It means you can file Chapter 13 now to get bankruptcy protections, spend 3-5 years under that shield while you continue your medical treatment, then convert to Chapter 7 before your Chapter 13 discharge is issued in order to fold in your post-filing medical debt.  If you were otherwise eligible for Chapter 7, then it is unlikely that you’d need to pay anything to unsecured creditors while in Chapter 13 – your plan payments would be used to pay any priority or secured debts you have, such as a car loan or delinquent taxes (debts you would have been paying anyway, even if your filed Chapter 7).  Depending on the circumstances of your case and when your case is converted, maybe your unsecured creditors get paid a little money, but it’s almost certainly going to be peanuts compared to the benefit you get of having your post-filing medical debts included.

Wait – which one is my Trustee?

I suppose this was inevitable, but I’m surprised it took this long for questions like this to surface.  This post has a very limited audience.  It applies only to the Chapter 13 cases filed in the Eastern District of Wisconsin who are assigned to Trustee Rebecca R. Garcia.  There are two Rebeccas in the Chapter 13 Trustee’s office, and that has caused a tiny bit of confusion.
Rebecca R. Garcia is the Chapter 13 Trustee.  She took over last December when Thomas J. King retired.
Rebecca Quiroz is one of two staff attorneys (the other being Jennifer Marchniowski) who work for Trustee Garcia.  The confusion may arise because both staff attorneys regularly conduct the § 341 hearings and conduct the financial management courses.
Rebecca Garcia and Rebecca Quiroz are not the same person.  Plan payments should be made out to “Rebecca R. Garcia, Chapter 13 Trustee”.