Bankruptcy

Table of Contents

1 Bankruptcy

Please read our IMPORTANT NOTICE AND DISCLAIMER.

For people and businesses with debt problems, we file bankruptcy petitions, workout debt-repayment plans and renegotiate debts with creditors, assist in debt consolidations, negotiate with the Internal Revenue Service (IRS), and generally consult with clients regarding solutions to their debt problems.

1.1 Links

1.2 Bankruptcy - Frequently Asked Questions FAQ

1.3 General

Few people want to file bankruptcy. Most people do so as a last resort. They have been paying their debts for years and for one or several reasons cannot manage to make the required minimum payments on their debts any longer. Many people who file bankruptcy do so because they have incurred sudden, uninsured medical expenses. Other people have been through a divorce or marital separation and cannot afford their debts now that many of their living expenses have doubled. Some people suffer injuries that prevent them from working, such as car accidents. Some people lose jobs or have a sudden and steep reductions in income for other reasons. And yes, some people have simply taken on more debt than they can afford.

There are 5 different bankruptcy Chapters. Below you will find some general information on each chapter (except the rarely used Chapter 9, which is used by municipalities). Generally the debtor chooses which Chapter to file under depending on his or her objectives and needs. The debtor's rights are different under each chapter.

The main advantage of filing bankruptcy is the discharge of debt and protection from creditors. Discharge means that the creditors cannot harass you for payment of the debts. It is as if you never owed the creditor. The creditor cannot take your property and cannot sue you for the repayment of the debt. Not all debts are discharged automatically by filing bankruptcy and certain debts often must be repaid to retain secured property, as is the case in car loans and home loans.

The primary disadvantage to filing bankruptcy is that it is reflected on your credit history and in some cases can result in the loss of property. When people consider filing bankruptcy, they are often already in financial trouble and their credit history has already suffered. Poor credit references generally can be reported for 7 years, while bankruptcy can be reported for 10 years. Thus, in some cases filing bankruptcy will mean an additional three years of poor credit. On the other hand, people who do not file bankruptcy often take certain actions that extend the general 7-year time period. Additionally, if the creditor chooses to sue, the creditor can wait 3 years to sue and then attempt to collect the judgment for an additional 10 years. Thus, the total time period for people who do not file bankruptcy can easily be 13 years or longer.

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1.4 Debt Relief Agencies and the Bankruptcy Code

The United States Bankruptcy Code now requires that bankruptcy attorneys label ourselves Debt Relief Agencies and make the following statement: "We are a debt relief agency. We help people file for bankruptcy relief under the United States Bankruptcy Code." That statement is misleading. The Republican controlled congress, with the help of a few key Democrat senators and representatives beholden to the credit card industry, wanted to blur the distinction between attorneys and debt relief agencies. They did not want debtors to know who to trust. The credit card industry paid more than $100 million over several years to change the laws and rules in their favor. This is known as bribery in home town America; it is known as lobbying in Washington, DC. Bankrutpcy attorneys have an obligation to review your financial situation and advise you of your options. Debt management companies have no such obligation to you. In fact, most of them have an incentive to make you pay as much of your debt back as possible - even if they know your repayment plan will fail in the long run.

1.5 History of Bankruptcy

Despite the common perception that bankruptcy is new deal social program, the concept is actually very old. In England during the 1700's debtors' prisons fell into disfavor. The British discovered that putting people in jail for not paying their debts did not help pay back the debts and was a burden on the society. Therefore, the British eliminated debtor's prisons and developed the bankruptcy system. When the Constitution was written in this country, the Constitution's framers gave the power to the Federal government to write a uniform bankruptcy law for all of the States.

Through the years bankruptcy has changed though from its original form. The original bankruptcy law in the United States was primarily a creditor's remedy. It was designed to provide an efficient method for the creditors to seize the debtors' property and sell it to pay off the debt that is owed. Bankruptcy today is primarily a debtor's remedy in which the debtors seek protection from the collection activities of their creditors.

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1.6 Alternatives to Bankruptcy

There are options other than bankruptcy. Some people find that the Consumer Credit Counseling Service (CCCS) can help them get back on track. CCCS is a nonprofit agency that helps people develop a plan to pay back part or all of their debts. They may be able to lower or eliminate interest on credit cards and develop a plan to get the debtors current on their important debts. However, before getting into an arrangement with CCCS to repay your creditors, you should speak with an attorney so that you understand all of your options. Most attorneys will not charge for the initial consultation. The danger of not speaking with the attorney is that if you delay too long to obtain legal advice, you may lose property that you would otherwise keep if you file bankruptcy. Many people who attempt CCCS eventually end up filing bankruptcy.

In addition to CCCS, there are other private debt consolidation businesses. Many of our clients have expressed a dissatisfaction with these companies though I am sure that some people have found that they have helped. These private companies generally charge a higher fee than CCCS for essentially the same service. You should also understand that the creditors have no legal obligation to speak with these private debt companies. You may pay them a fee and the creditors may continue to harass you for the payment. Thus, any fee that you pay them could be wasted. Additionally, many of these credit management companies are outright scams bilking people out of millions before they are shut down by the authorities.

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1.7 Chapter 7: Liquidation

Chapter 7 is designed for debtors in financial difficulty who do not have the ability to pay their existing debts. Under Chapter 7, a trustee takes possession of all your property. You may claim certain property as exempt under governing federal or state law. In many or most cases, the exemptions shelter all of the debtor's possessions so that the debtor does not lose any property by filing bankruptcy. If the trustee takes property that is not exempt, the trustee will then liquidate (sell) the property and use the proceeds to pay your creditors according to priorities set by the Bankruptcy Code. The purpose of filing a chapter 7 is to obtain a discharge of your existing debts. If, however, you are found to have committed certain kinds of improper conduct described in the Bankruptcy Code, your discharge may be denied by the court, and the purpose for which you filed the bankruptcy petition will be defeated. Even if you receive a discharge, there are some debts that are not discharged under the law. Therefore, you may still be responsible for such debts including, but not limited to, certain taxes and student loans, alimony and child support, criminal restitution, and debts for death or personal injury caused by driving while intoxicated from alcohol or drugs. Under certain circumstances you may keep property that you have purchased subject to valid security interest.

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1.8 Chapter 9: Municipal Corporation

Chapter 9 is used by cities that must file bankruptcy protection.

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1.9 Chapter 11: Reorganization

Chapter 11 is designed primarily for the reorganization of a business but is also available to consumer debtors. Its provisions are complex and any decision to file a chapter 11 should be made in consultation with an attorney. It is often more flexible than other Chapters. However, its complexity makes it much more expensive to file and successfully complete than the other Chapters.

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1.10 Chapter 12: Family Farmer

Chapter 12 is designed to permit family farmers to repay their debts over a period of time from future earnings and is in many ways similar to Chapter 13. The eligibility requirements are restrictive, limiting its use to those whose income arises primarily from a family owned farm.

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1.11 Chapter 13: Repayment of All or Part of the Debts of an Individual

Chapter 13 is a lot like a debt consolidation. It is is designed for individuals with regular income who are temporarily unable to pay their debts but would like to pay them in installments over a period of time. You are only eligible for Chapter 13 if your debts do not exceed certain dollar amounts set forth in the Bankruptcy Code.

Under Chapter 13, you must file a plan with the court to repay your creditors all or part of the money that you owe them, using future earnings. The Plan can provide that you pay the debts for 5 years (or a shorter time period if you pay 100% of your debts). Most Plans provide that the debtor will pay less than 100% of the debts. In fact, in many cases the Plan will provide for only 2-10% of the unsecured debts being paid. Your plan must be approved by the court before it can take effect.

After completion of payments under you plan, your debts are discharged except alimony and support payments, student loans, certain debts including criminal fines and restitution and debts for death or personal injury caused by driving while intoxicated from alcohol or drugs, and long-term secured obligations.

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1.12 Creditor Collection Abuses

Creditors often violate the law when collecting debts. Both South Carolina and Federal law regulate the collection of debts. In many cases, the debtor's attorney's fees must be paid by the creditors if the debtor sues and wins. Unfortunately, many creditors resort to lies, deception, and illegal harassment to get debtors to pay their debts.

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1.13 Client Instructions

1.13.1 Client Handouts

Credit Spreadsheet Form (Excel) Examples of Creditors Listed on Bankruptcy Petitions Examples of Business Creditors Listed on Bankruptcy Petitions Directions to Columbia First Meeting of Creditors (Section 341 meeting) Directions to Spartanburg First Meeting of Creditors (Section 341 meeting) (html) Directions to Spartanburg First Meeting of Creditors (Section 341 meeting) (pdf) Directions to Bankruptcy Court, Columbia, SC

1.13.2 Creditors, Examples

1.13.2.1 Examples of Creditors to List, Business Debtors
  • attorneys for creditors
  • automobile accidents or other injuries or damages even if the company has not been sued yet, or the insurance company paid the claim, or you do not know whether any damages were sustained by someone.
  • automobile loans
  • bank loans
  • checks written with insufficient funds
  • collection agencies (the names, addresses, account numbers, etc. for each collection agency debt should be listed separately)
  • contracts
  • cosigned debts (i.e. where the company helped someone get a loan)
  • cosignors and guarantors of debts (i.e. where someone or some business or agency cosigned company debts, e.g. HUD, FHA, VA Administration, parents, siblings, you personally, etc.)
  • credit cards, including those in which you believe you or the company are only an authorized user
  • credit unions
  • debts to relatives, friends, acquaintances, or affiliated companies or businesses
  • debts that creditors claim have been written off
  • department store or other store bills
  • electricity (past due only)
  • federal income or employment taxes
  • finance and loan company debts
  • gasoline companies
  • guaranteed debts (i.e. debts that you have cosigned on or guaranteed where the primary responsibility for payment is with someone else like your children’s auto loan or a loan by your business)
  • installments debts for appliances, furniture, televisions, electronic equipment, and other purchases
  • judgments against the company
  • leases
  • loan companies
  • loans by officers to the company
  • mail order businesses
  • mortgages for home, land, and mobile home purchases
  • past due bills
  • past due lease and rent-to-own payments
  • personal, signature loans, and credit lines
  • real estate taxes
  • rents past due or lease agreements
  • repossession deficiencies (voluntary or involuntary and whether or not you know the balance due and even if the creditor has not contacted the company to pay the deficiency)
  • savings and loan associations
  • signature loans
  • state taxes for employment or income
  • stores
  • taxes of any kind, including property taxes, income taxes to local, state, and federal authorities, licensing fees, etc.
  • telephone bills (past due amount only)
  • utilities
  • other debts of any kind whether the company is liable now or may be in the future.
1.13.2.2 Examples of Creditors to List, General
  • 401k repayment loans
  • attorneys for creditors
  • automobile accidents or other injuries or damages you caused or may have caused, even if you have not been sued yet, or your insurance company paid the claim, or you do not know whether any damages were sustained by someone.
  • automobile loans
  • bank loans
  • books and record clubs
  • checks written with insufficient funds
  • collection agencies (the names, addresses, account numbers, etc. for each collection agency debt should be listed separately)
  • contracts
  • cosigned debts (i.e. where you helped someone get a loan)
  • cosignors and guarantors of your debts (i.e. where someone or some business or agency cosigned your debts, e.g. HUD, FHA, VA Administration, your parents, siblings, etc.)
  • credit cards, including those in which you believe you are only an authorized user
  • credit unions
  • debts to relatives, friends, acquaintances
  • debts that creditors claim have been written off
  • dental bills
  • department store or other store bills
  • doctor bills
  • ex-spouses to whom you must transfer property or who is jointly liable on debts or to whom you must pay back-due alimony or child support.• electricity (past due only)
  • federal income or employment taxes
  • finance and loan company debts
  • gasoline companies
  • guaranteed debts (i.e. debts that you have cosigned on or guaranteed where the primary responsibly for payment is with someone else like your children’s auto loan or a loan by your business)
  • hospital bills
  • installments debts for appliances, furniture, televisions, electronic equipment, jewelry, and other purchases
  • judgments against you
  • loan companies
  • mail order businesses
  • medical
  • mortgages for home, land, and mobile home purchases
  • past due bills
  • past due lease and rent-to-own payments
  • personal and signature loans
  • real estate taxes
  • rents
  • repossession deficiencies (voluntary or involuntary and whether or not you know the balance due and even if the creditor has not contacted you to pay the deficiency)
  • savings and loan associations
  • signature loans
  • state taxes for employment or income
  • stores
  • taxes of any kind, including property taxes, income taxes to local, state, and federal authorities, licensing fees, etc.
  • telephone bills (past due amount only)
  • utilities
  • other debts any kind whether you are liable now or may be in the future

1.13.3 Court Directions

1.13.3.1 Bankruptcy Directions, Columbia, 341

Directions to the Strom Thurmond Federal Building Address: 835 Assembly Street, Columbia, SC 29201 US Trustee's Office, Room 958-1

  1. Take I-26 toward Columbia until it becomes 126 into Columbia.
  2. Take 126 to the traffic light at Assembly Street. Turn right onto Assembly.
  3. Take Assembly Street to Laurel Street. (Approx. 3 city blocks from 126).
  4. At the corner of Assembly and Laurel Streets, the Strom Thurmond Federal Building is to your right, diagonally across from the United States Bankruptcy Court which is located at 1100 Laurel Street. The Strom Thurmond Federal Building is the tall building behind the building on the corner nearest the street.
  5. Go to the room number listed on your notice of commencement - probably 958-1 - and wait for Kurt Gibson to arrive.

If you cannot locate the Federal Building, telephone the Gibson Law Firm at (864) 261-7040.

1.13.3.2 Bankruptcy Directions, Columbia Court

Directions to Bankruptcy Court, Columbia, SC

Court Address: 1100 Laurel Street, Columbia, South Carolina 29202 (803) 765-5436, extension 3045

Hours: 9:00 a.m. to 4:30 p.m., Monday through Friday

Take I-26 toward Columbia until it becomes 126 into Columbia.

Take 126 to the traffic light at Assembly Street. Turn right onto Assembly.

Take Assembly Street to Laurel Street. (Approx. 3 city blocks from 126).

At the corner of Assembly and Laurel Streets, the Strom Thurmond Federal Building is to your right and the US Bankruptcy Court is at the same intersection diagonally across from the Strom Thurmond Building. The Bankruptcy Court building faces Laurel Street and is a large white building with lots of steps leading up to its doors. If you cannot locate the Bankruptcy Court, telephone the Clerk of Court at the number listed above or telephone the Law Offices of Kurt D. Gibson at ((864) 261-7040).

Once you are inside the Bankruptcy Court building, go through the metal detectors and the filing counter is in front of you off to the right side. Give the Clerk the envelope you have been provided by the Law Offices of Kurt D. Gibson. Be sure that the Clerk stamps one copy with a date and time and returns it to you.

If necessary or if requested by the Firm, immediately inform the Law Offices of Kurt Gibson by telephone ((864) 261-7040) of the bankruptcy case number stamped on the return copy of the petition so that the creditors can be notified to cease repossession or collection activities.

The return copy of the Bankruptcy Petition then should be personally delivered to the Gibson Law Firm or, if not possible, it should be placed in the mail in the return envelope provided to you by the Firm

1.13.3.3 Bankruptcy Directions, Spartanburg341

Directions to the Bankruptcy Court, Spartanburg, SC

Address: 201 Magnolia Street, Spartanburg, SC

Take I-85 toward Spartanburg to Exit 69, Business 85. (The sign on I-85 has one arrow pointing to Charlotte and another arrow pointing to the right for Spartanburg. Follow the right arrow toward Spartanburg.)

Take Exit 4 off Business 85. When you come to the circle exchange at the end of the Exit 4 ramp, take the circle toward your right 1/8 to 1/4 of the way around the circle and turn to your right again. This is the Ashville Highway, Route 56. You should pass a Starvin Marvin gas station on your right before the first traffic light and a Taco Bell on your left just after the first traffic light.

Take the Ashville Highway to Magnolia Street. Magnolia is the fourth traffic light from I-85 and it runs diagonally from the Ashville Highway. Turn right on Magnolia.

Travel approximately 1 mile on Magnolia Street, past the railroad tracks but before you reach the fourth traffic light on Magnolia Street. The Federal Courthouse is on your left (across from the Spartanburg County Judicial Center) at 201 Magnolia Street. Most of the parking on the street is free, but the spaces are scarce at times.

You and all of your packages will pass through a metal detector when you enter the building. Therefore, leave all knives, guns, tape recorders, cell phones, beepers, large belt buckles, etc. in your vehicle. Also, you will have to leave umbrellas at the front desk. If you do not want to do this, you should leave your umbrella in your vehicle.

Once in the building, go through the metal detector and turn right. The officers at the door can tell you where the hearings are being held. The hearings will generally be held on the first floor. If you have problems finding the hearing room, ask the officers at the front door or other courthouse personnel where the Bankruptcy hearings are being held.

Please wait outside the hearing room or courtroom until your attorney arrives. You can discuss any questions you have about the hearing procedures with your attorney prior to the hearing.

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Also accepting clients across the upstate of South Carolina, including Abbeville, Anderson, Central, Clemson, Greenville, Easley, Pendleton, Pickens, Sandy Springs, Seneca, Spartanburg, Walhalla and more.