The chapter 13 process in bankruptcy is surprisingly similar to a marriage. First a debtor seeks out a bankruptcy attorney. Like going to a social event looking for someone to spend the evening with, a debtor will ask around about who is a good attorney, who he can communicate with easily, and who has the time to devote to the "relationship." Once an attorney is located, the dating process begins. The debtor "courts" the attorney by telling them everything, bringing papers, documents and payment for the services. The attorney "courts" the debtor by answering questions, being available for phone calls, organizing and reviewing the paperwork and counseling the client. The case is filed. The courtship is over, the couple is engaged, and the confirmation process begins. There is discussion about the "plan" as there is about wedding details. But, with some work on both sides, the plan gets confirmed. The honeymoon period begins. Everything is great - the creditors have stopped calling, the debtor is making the monthly payments, the attorney has put the file in the "confirmed" box and off his desk, and the communication between attorney and debtor is peaceful and pleasant. For a while, just like in a marriage, things fall into a pattern: everything is going smoothly, and it's all fine. Then it happens: the debtor wants a new car, or to refinance or modify the house payment. In a marriage, the first thing that happens is a discussion of such a change. That should be the first thing in the Chapter 13 also: the debtor should talk to the attorney about how this will affect the existing plan. Unfortunately, often the debtor forgets to call the lawyer.Much like the discord in a marriage when one spouse takes unilateral action affecting the family economics, so too will a debtor's actions affect the chapter 13. Now there is a motion to bring and court approval of a modification of the Chapter 13 plan. And if the debtor acts completely unilaterally, without consulting his attorney, it can cause a motion to dismiss the plan. As in a marriage, calmly dealing with the problem can fix things, but not talking to each other will quickly end the relationship! Treat your chapter 13 attorney like a spouse: tell him about any changes you want or need to make. 

Pride. I'm not the kind of person that files bankruptcy, I often hear. Well, what kind of person is it that files bankruptcy? It's people who've gotten sick, even with health insurance; people who've divorced; people who've lost jobs; and people who got suckered into believing that the marvels of a consumer society were available to everyone. Bankruptcy is not a moral failing; it's a legal solution to an economic problem. Look around at the celebrities and the iconic corporations who have all filed for bankruptcy relief. Do we think that they are lesser people for starting over? Not usually. Walt Disney, one of the more famous debtors, is an American hero. The emotional decision to file is really exhaustion: when the defensive shield of these corrosive emotions is worn down, and rationality wins out.

Understanding Bankruptcy: A Fresh Start According to Attorney Michael Cibik, Bankruptcy is a legal way to get relief when debt becomes overwhelming. It doesn’t mean failure—it’s a tool to help people get back on their feet. The Two Most Common Types Chapter 7: Wipes out many debts (like credit cards and medical bills) in just a few months. You may have to give up non-essential assets, but you can usually keep basics like your home, car, or personal items. Chapter 13: Creates a 3–5 year repayment plan so you can catch up on debts while keeping your property. Immediate Relief As soon as you file with Michael Cibik, the automatic stay stops creditor calls, lawsuits, foreclosures, and wage garnishments. What Bankruptcy Can Do Erase qualifying debts Stop collections and foreclosure Help rebuild your financial future What Bankruptcy Can’t Do Erase student loans, child support, or most taxes Fix credit instantly Final Thoughts Bankruptcy is a fresh start, not the end of the road. Talking with an experienced attorney, like Attorney Michael Cibik, can help you understand the best option for your situation. Call and explore your options with a free consultation today!

The Massachusetts Bankruptcy Court, pursuant to an enforcement action brought by the United States Trustee, ordered sanctions and issued an injunction against a bankruptcy petition preparer in Lawrence, Massachusetts. The petition preparer, Pinnacle Financial Consulting, LLC ("Pinnacle") along with its owner, were ordered to pay monetary sanctions, return money to bankruptcy debtors and were enjoined from filing any future bankruptcy petitions in Massachusetts. The gist of the U.S. Trustee's complaint and the Court's findings was that Pinnacle engaged in the authorized practice of law when it charged consumers for the preparation of bankruptcy petitions. There were no lawyers at Pinnacle. However, the fact that Pinnacle's president went to law school (but never was admitted to the bar) was used to suggest to consumers that the company had legal expertise. In fact, Pinnacle touted a "Pinnacle System" that it suggested had significant value. Non-attorney bankruptcy petition preparers are not illegal, per se, but they are not allowed to advise clients or do anything more than simply type forms. By emphasizing its supposed expertise, Pinnacle was acting as more than just a typist, and it encroached on a province only allowed to licensed attorneys. It turns out for good reason. Consumers are usually harmed by operators who talk a good game but who are unregulated and unaccountable. In this case, Pinnacle falsely advertised its discharge rate, and it also guided clients on how to claim the Minnesota exemptions instead those in place in Massachusetts. Though consumers sometimes think that the bankruptcy system will protect them simply because they are needy and hard-up, that is not always the case. Bankruptcy is an adversarial process, and there is little recourse for a consumer who loses property or has his case dismissed due to filing errors or poor strategic choices.

Bankruptcy lawyers spend a lot of time working with and thinking about the Bankruptcy Code, which is the series of federal laws that govern what happens in any bankruptcy case. We even speak in "Code," referring to things by their section numbers, like "341 meetings" or "362 motions." And we tend to assume a level of knowledge about bankruptcy that others, including our clients, may not have. For example, when I have a new client that wants to file bankruptcy, I give them a packet of information about what she needs to do (like credit counseling, dealing with bank accounts), paperwork to fill out, and a list of documents to bring in (like paycheck stubs, bank statements and tax returns). All of that information has a role in preparing a bankruptcy filing. You have to complete your credit counseling before a case can be filed. You must file a list of property, debts, and a budget with the court, and you must provide certain documents, like paystubs and tax returns, to the trustee and the court. And as time goes by, you are shooting at a moving target-credit counseling certificates expire, paycheck records have to be updated, you get a new bank statement every month. So it's important that you know what you need to provide, and when you need to provide it. A few years ago I had a particularly difficult case in which filing was delayed several times. If we had paycheck stubs up to date, we didn't have bank statements; by the time the client brought in the bank statements, we needed more pay stubs. I finally sat down with the client to explain that we needed everything up to the current date at one time. they said, "you never said that you needed it all at once," and I realized she was right. Although it was implied, nothing in my paperwork said that I needed everything all at once. I had failed to clearly communicate what I needed her to do. Needless to say, I remedied that particular deficiency, but I'm sure there is still room for improvement. When you start answering all the questions and putting together copies of all the documents your bankruptcy attorney is going to ask you for, you could be forgiven for thinking that your attorney is just pulling your leg, or torturing you. But there really is a reason for everything we ask for. Some of it is needed because your attorney will have to provide the documentation to the trustee in your case, or to the court. And some of it is to protect you, to make sure that there isn't some potential problem lurking that will change the expected outcome of your case. We may not be great at explaining why we need all the information we ask for. And frankly, you may not want a detailed answer-my clients' eyes tend to glaze over when I start talking about such things. But there is a reason, and we do NEED it all. And we need it all at one time.

With more and more younger people acquiring debt, and more and more adults going back to obtain a college degree, it is not unusual that some of these future students have filed a bankruptcy. So if an individual has filed bankruptcy, and needs student loans to pay for his or her education, 'What are the chances he or she can get a student loan if he or she, or even his or her parent, has filed a bankruptcy?' The answer to whether a student loan is obtainable post-bankruptcy discharge depends on the type of student loan, private or federal, the borrower is seeking. A shorter answer is while federal student loans are based on the borrower's financial needs, private student loans take a borrower's credit worthiness into consideration. In fact, 11 U.S.C. 525 forbids any federal agency that provides grants and loans to student borrowers from discriminating against him or her if he or she has filed for bankruptcy. Further, since private student loans are generally credit worthiness based, even if you have not filed a bankruptcy, if your parents have, using them as a co-signor on a private student loan may not be a good course of action. Bottom-line, though, if you are considering filing for bankruptcy or have a bankruptcy discharge on your credit record, talk to your school's finance office to determine what monies you are eligible for.

Overwhelming consumer debt and unpaid tax debt can feel like a one-two punch. To recover from the consumer debt hit, some consumer debtors must pass a means test and prove they are poor enough to qualify for bankruptcy relief. This can be a problem if household income is above median for the state. But, the jab of unpaid tax debt is a hit that can really lay a debtor low. Believe it or not, sometimes taking the blow from tax debt can help a debtor to dodge the means test. Consumer debtors can face budget problems if their current monthly income exceeds median income for the state in which they live. Higher income debtors must take the "means test". This insidious device is a somewhat illogical mathematical calculation of just how broke a debtor is. Failure to pass the means test could result in disqualification for abuse of the bankruptcy system. To be a consumer debtor, the debts owed must be primarily consumer debt. Consumer debt is debt that was incurred by an individual primarily for a personal, family or household purposes. It is usually incurred as a voluntary obligation. Tax debt is owed to a government and is an obligation incurred by law. Tax debt is not considered to be consumer debt. So, if a great big whopping tax debt is more than the total of all consumer debt, the bankrupt debtor can sock it to them and avoid the means test no matter how great the family income. An above median income debtor who has $50,000 in credit card and other consumer debt but $50,001 in tax debt would not be a consumer debtor. The best thing about this is that some individual tax debt can be discharged or reduced in bankruptcy if it meets certain criteria.

Credit card companies file lawsuits to show they're upset and they miss your payment. If they win, they have a judgment against you. It's not unusual for debt collectors to say bankruptcy doesn't "work" then. They're wrong! Bankruptcy filings stop collection of debt in its tracks. That's why debt collectors lie about it. (You probably should not take legal advice from people who are your opponents, right?) It doesn't usually matter if the credit card has a judgment against you. We can stop those too. Ultimately a judgment is important. In some cases, what the judge ruled on in that case will be fixed for good. So if a judge ruled you committed fraud, that may make it harder to get out of the debt through bankruptcy. (It depends on your jurisdiction.) And a judgment can become a lien on your property. Some liens are hard or impossible to remove, even with bankruptcy. It depends on your situation. Most importantly, judgments can be used by the credit card company to get the government - the state or federal court - to help collect their money. This is where garnishments, property seizures, and other forceful takings of your stuff can start. It means you're losing control of your financial affairs and the other guys have it now. So taking the plunge and contacting a bankruptcy lawyer before a judgment is taken is a good thing. It gives you time to plan and prepare. It allows the case to be put together carefully. But even if you waited too long, it's probably not too late. But don't keep waiting - all that does is push your chance to get back on your feet down the road.

Conventional bankruptcy: This is usually when a business files bankruptcy in a response to a crisis. However, when a business files bankruptcy without at least some prior negotiation with creditors, no one can really be sure how a case will turn out. For example, many businesses have bank loans, and those banks have blanket liens on all the business' assets, including cash and accounts receivable. Just to run its basic affairs after the bankruptcy, the business will need to seek permission of the creditor to use that so-called "cash collateral". Also, the business may have filed bankruptcy as a result of a liquidity crisis and may need new cash just to continue operations. The debtor may need to quickly find and seek approval of debtor in possession ("DIP") financing just to keep the lights on and the doors open. Prepackaged bankruptcy: A prepackaged bankruptcy eliminates much of the uncertainty of entering Chapter 11. In this model of bankruptcy, the business negotiates agreements with creditors before the bankruptcy which are legally binding in the bankruptcy case. Section 1126(b) of the Bankruptcy Code specifically contemplates this type of case by providing that someone who accepts or rejects a plan before a Chapter 11 is deemed to have also accepted or rejected it within the bankruptcy case. There are various reasons for attempting to enter Chapter 11 with a creditor-supported plan in hand. Some reasons relate to general uncertainty and cost; others can relate to requirements in many bond or loan syndication agreements that require unanimous consent by holders outside of bankruptcy to modify the debt. This can make bankruptcy sometimes the only practical way to re-write a loan, even if almost all creditors agree to the modification. This is because that in bankruptcy a class of claims is deemed to approve a plan as long as a majority of creditors in a class and 2/3 of the dollar amount in the class vote for the plan. Another key advantage to a prepackaged Chapter 11 case is that the bankruptcy is short, minimizing its impact on the ongoing operations of the business. A prepackaged case can often be concluded in 30-60 days. It can also be cheaper than a conventional case because it is shorter, there is less court involvement, and certain aspects of a conventional bankruptcy are not present (for example, a creditors' committee is not always appointed, especially if unsecured creditors and executory contracts are not impaired under the plan, which is often the case in a prepackaged bankruptcy)