Episode 3 Podcast – Text Version

Larry White: Welcome to the third episode of the Debt Killer podcast. I’m your host Larry White. So who is the Debt Killer? That would be bankruptcy attorney Jeffrey West. Jeff practices in Oklahoma, and brings his ten years’ experience as a bankruptcy attorney to our show. Jeff, what’s the topic today?

Jeff West: In this segment we’re going to talk about what the process is, and exactly for you the debtor, how we take you from the time that we first have your initial consultation until you receive your discharge and your case is finished and closed.

After you’ve come into the free consultation and provided us all the information that we requested, you and I have sat down and talked about your situation and we’re looking to determine which type of bankruptcy will best fit your situation — and there’s many, many determining factors. That’s the reason why it’s very important you speak to a bankruptcy attorney about this information.

Once we determine that, then you have to hire us. It’s called being retained; people use different terms. I just say you’ve retained me and we sign a contract for services. The contract for services sets out the type of bankruptcy, the services, the fees, how it’s going to be paid – in other words the terms of payment – what services will be provided and what is not going to be provided, the compensation for those services, and what your obligations are. There are six obligations that I like to set out and let the debtors know that you are going to be responsible for.

Such as, you are agreeing to pay out the fees as we discussed; you are agreeing to provide me all the information and be honest and accurate as best your ability; you are going to keep me advised at all times of your address and telephone numbers. I can’t tell you how important that is. I’ve had clients come in and retain me, and pay even the full amount of the detainment, and then not ever call me back for six months. Then we’ll have to call them and call them; their phones get changed, their addresses; we send letters and then all of a sudden one day they’ll pop up a year later and say, “Okay, I’m ready to go.” It’s very important to keep us informed of where you are at, whether or not we’re going to file the bankruptcy now or a year from now.

We also ask – you are required to show up to your 341 creditors meeting and any other hearings that are required by the court to show up to. And if there’s any other additional information we need for the Trustee’s Office or any other party or some other entity, then you will respond or provide that to me also. And then I ask and it’s very important that people respond immediately to my request.

I understand that people have lives and things going on, but generally when I have a request from someone else, two or three days have elapsed and we have time limits from ten to fourteen to twenty-one days that we need to respond by. And so it’s much more helpful to me and it’s much easier on you if you’ll respond to my request. So that’s what the contract for services does.

The second form that we have in our packet is the request for a credit report. If you are a single person, you fill that out, sign it and date it. We get a copy of your driver’s license and social security card. We attach that and we request a credit report. If you are married, both of you fill it out, both of you sign it, and both of you have to provide a picture ID and a verification of your social security. Generally we use driver’s license and social security card. I use a lot of military IDs also. I’ve used health cards before for social security numbers. If you don’t have a social security card, that’s fine, we can work around that. But I generally send people to the Social Security office to ensure that they get that, because you need to have that anyway.

The next page is current income. Most of the time we don’t have to do anything on this when we’ve been retained, because at the initial consultation you provided me all the information or you promised to bring it back to me. And we don’t have to go through the painstaking page of trying to figure out which taxes are taken out for this and how much for that. However as a footnote to that, whenever a client brings in that information to me, my office automatically creates what is called an income spreadsheet, and most bankruptcy attorneys are doing that nowadays, where we take your six months, split it up, we take out every deduction and then we take your gross, get you your net pay, find out how much taxes you paid. Every line of your paycheck is scrutinized and put on the spreadsheet. And every one of those categories is important for a different reason, which is why you are hiring a bankruptcy attorney, to get that done for you.

Because you could be, I’ve had situations where people making sixty to eighty to a hundred thousand dollars a year, that normally wouldn’t qualify to do a Chapter 7, once they give us all the calculations and do all the things that I need to do, and what we call the means test, I can qualify them, if you want to use that as a term, to file a Chapter 7 and at least give them that option. And like we explained before, Chapter 7 is much quicker, much easier on the debtor. There’s a lot less work and payments to the Trustee, and so it makes it a lot easier on you.

Now the next one that we have is what’s called the current expenses. It’s a little bit more detail into the current expenses of your living situation. It asks for certain subcategories that most people don’t think about. Primarily one that I generally see is on transportation. There’s a question here that you fill out, what your transportation costs are. What’s your car payment? And most people put down a hundred dollars, a hundred fifty dollars. But I can promise you in a family of four with the situation we discussed earlier, with two adults and two children – they have two vehicles. They’re driving all over town, especially during school years, dropping the kids off, picking them up. They’re going to work; they’re coming back. Most people, especially in Oklahoma, they drive a hundred miles easily. So transportation costs are included and all of your gas. Most people spend between two hundred and four hundred dollars a month on gas, minimum. Then there’s oil changes. A lot of people don’t think about that. You get to deduct your oil changes. You get to deduct for the cost of your wiper blades. You get to deduct the cost of buying new tires. And most people say I do that once a year, how do we deduct that? Well, we try to average that over a year, and divide it by twelve and come up with a monthly amount. So there’s things like that that have to be included that a lot of people aren’t worried about at the time that they are in the financial situation that they’re in. They know that they spend that money but they don’t keep track of it usually and that’s what my job is, to walk you through that.

Once you retain our services and we become your bankruptcy attorney, then we have to file your case. But remember that before we file your case you have to have the credit counseling. We’ve already talked about that. You have to go online and it has to be approved through a credit counseling provider that’s approved to the United States Trustee’s Office. I have several different ones to choose from in my office, and I provide everyone with whichever one that they want to do. You can do it on a computer. You can do it by telephone. There’s places you can do it in person. Everyone has a different cost and a different method, but generally speaking they are about and hour and a half long.

I’ve not seen one over sixty dollars and most of them are in the thirty-five dollar range, thirty-six dollar range. Once you receive that certificate, you sign your petition and we file it. Once we file it, then the court dates that. Now this is where it changes from a Chapter 7 to a Chapter 13. In Chapter 7 you’ll go to your court date, you’ll finish your second class, which is called a financial management class. We’ll file that certificate, complete your 341, and then you will wait on your discharge, unless there’s some additional information the Trustee needs, like tax returns or maybe you haven’t got your tax refund yet.

Which brings up an interesting point: In bankruptcy we have what we call a bankruptcy estate. And the bankruptcy estate includes any money that you earned in the prior year. So for example, for 2009 if you filed bankruptcy in December of 2009 and you receive a refund in February of 2010, then your refund, with exceptions, is property of your estate. So a calculation has to be made about that and you need to be aware that filing is important — when you file, when you don’t. There’s a lot of determinations and a lot of things that need to be discussed with your bankruptcy attorney. And in Chapter 13 you will show up with your 341 and you will do your second class just like you do in a Chapter 7, except that you’ll have a plan in place. And that plan is important because it says this is what I’m going to pay my creditors over the next 36 to 60 months. This is what I’m going to keep and this is what I’m going to pay for. And how we do that is we look and your secured and unsecured debt. Obviously your secured debt includes cars and houses. Most people want to keep those. And your unsecured debt gets paid at a general percentage, like 50 percent on the dollar, 10 percent on the dollar, depending on what your income is.

But in both cases, Chapter 7, Chapter 13 are very beneficial and they can achieve a peace of mind for you and give you a fresh start. All we ask is that you give us the opportunity to discuss it with you. A lot of people wait to the last minute, until they are in dire straits before they come to see us. And if they would have come in just a few months earlier, they could have avoided a lot of that stress and a lot of that problem, and discuss some options and maybe avoided bankruptcy altogether. Thank you very much for your time and I hope to see you.

Larry White: Thanks, Jeff. Once again a lot of good information. If you would like to talk to Jeff personally, he can be reached at area code 405, 616-4949 or at DebtKillerOK.com.