|Katherine:||Hello everyone, thank you so much for joining us today on This Needs to Be Said. Our friend, bankruptcy attorney, Peter Daigle, is joining us again today and we’re going to get into a lot of how to prepare for bankruptcy but a lot of Chapter 13 and we’re going to sprinkle in a little bit of Chapter 11. Peter, thank you so much for joining us again on This Needs to Be Said. How are you?|
|Peter Daigle:||Oh, great, Katherine. Thanks for asking. I’m looking forward to today.|
|Katherine:||Awesome. Now, we’ve talked a great deal about what bankruptcy is and what goes in it and how to get over our nerves and the emotional part of talking to an attorney like yourself, but once we’ve decided that’s what we’re going to do, we’ve decided we’re going to go ahead with bankruptcy, our attorney has told us that’s the best option, how do we get together, and I’m sure there’s a checklist out there but, still, I would like to have this conversation with you. How do I get ready?|
|Peter Daigle:||Sure, this is a really good question. So, everything that you’ll need to prepare for the case are things that are written down in the bankruptcy code, so these aren’t things that are discretionary but are things that are required that you produce as part of the filing, and so when the items I’m going to list for you are gathered up, they’re sent to the bankruptcy trustee prior to meeting with him or her and so that they can assure that everything that you’ve submitted is in order, so, for example, one of the requirements of the bankruptcy, whether it both, be Chapter 7 or Chapter 13 is that you produce tax returns, so at least for the last year for a tax return. We like to see the last couple of years to see if you have sold anything or transferred something that may have triggered a transfer that could be problematic in the bankruptcy but, essentially, the reason why they’re looking for your tax return is to see if you have any solvency for capital gains or if you have any interest on accounts that may not have been disclosed when you petitioned, so your tax return’s required.
Also your pay stubs are required, and the reason why your pay stubs are required is they want to make sure you’re in the right bankruptcy. If you’re making over the median income then the Chapter 13 would be more appropriate than Chapter 7, and so the trustees going to look at those pay stubs to see that, in fact, your below the median income.
The next thing that you’re going to be required to produce is some evidence of your home value as well as a copy of your mortgage statement, and you … We genuinely submit using Zillow, which is a website which anybody can obtain the value of their house on for free, or if you have a broker’s opinion or an appraisal, but generally the easiest way to do is using Zillow, and also a copy of your mortgage statement, and, again, the reason is that the trustee wants to see how much equity that you have in your home and if you have equity in your home, then in fact a homestead has been filed to protect that equity, so that’s the reason why the value would be required.
The next thing that the trustee would look for is a copy of any divorce agreement that you would have if you had been divorced to see whether or not you’re entitled to any property, you know, sometime down the road. A common example is that the house will be sold when the youngest child turns 18 and then the money from the house will be split, and so if you have that type of arrangement in a divorce then that would be a consideration of the bankruptcy.
Copies of pension, 401K, IRA account to make sure that the money was put away properly, that’s an exemption of bankruptcy, they’re protected. A lot of folks have a annuity that they’ve purchased over the years and they think that they’re there for retirement but, in fact, they are not ERISA qualified retirement plans, they’re just annuities that they’ve purchased and so that’s an example of something that would not be exempt from bankruptcy, so we ask for copies and the trustee would ask for copies of your retirement accounts and investments and security accounts that you have to review them and make sure that they’re protected.
The next thing that you have to acquire is to show the value of your automobile and the amount that you owe on it to make sure that that’s within the exemption, so those are sort of the essentials that you’d need in preparation, and whether it be a Chapter 7 or a Chapter 13, those are the requirements, and if you have a small business then you’d be submitting a profit and loss on that business also, and then once we receive the documents, or the lawyer/attorney receives them, he’d prepare all the bankruptcy schedules and petition and then send those documents, copies of them, to the trustee to review within a week before your meeting with him. So that’s about it.
|Katherine:||So, the most surprising thing for me in this was an annuity is something that would not be protected in the bankruptcy. I wonder why is that, can you tell me?|
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|Peter Daigle:||So, yeah, so the general thought is that if you have an asset that could be sold to pay your creditors then you should sell the asset, okay? Now the obvious things that you have are a luxury car or boat, or motor home or a second home or something like that, that you don’t need to exist. Retirement accounts are protected because they figure everybody’s going to need a retirement account at some point down the road, but if you’ve received an inheritance or a settlement from a personal injury claim or you just made money, and you put it away in an annuity, that’s something that could be sold or liquidated to pay your creditors, so it’s not protected from the bankruptcy unless it was put in through an IRA or some other type of it’s called the ERISA Qualified Plan, where you have a retirement account that the annuity was purchased from, so if it was purchased as part of a retirement account and put away that way then it would be protected but if it’s just bought based upon money that you had received from another source, it would not be protected, so these are the types of things that we would ask, or your attorney would ask, with the filing of a case and whether or not you have an investment like this or not.|
|Katherine:||Okay. Okay. Now, we talked about the personal, and I know you talk about if we have a small business, that would be considered too, so that spills over into Chapter 11.|
|Peter Daigle:||Right. So, in a Chapter 11, what you’re really looking to do is see whether or not the corporation’s viable or not, okay? So what that means is you’re going to have to demonstrate at some point that whatever you’ve … Whatever you’re proposing to your creditors in terms of your plan goes, it would be approved and so that your business will exit the Chapter 11 successful, and so what you’re going to be providing is evidence of valuation of what your business has, whether it be a profit/loss or a budget going forward or something to demonstrate that this corporation is going to make it and so that creditors, as well as the United States trustee, can look at this and say, “Okay, this business is going to make it and this is a good plan.” And so basically full disclosure when you’re preparing and going through those because the creditors have to sign off on the plan and they’re going to want to know that this is in the best interest of them versus the filing of a Chapter 7 and liquidating the company.
So if they liquidated the company, they would get less than they would through a Chapter 11 and so you’re encouraging them to hold on and to take less of a dividend so the company survives, but it will be more of a dividend than they would get with a Chapter 7 and the company survives and they’ll continue to do business with them down the road versus just being out of business.
|Peter Daigle:||And so really what the … Without giving all the specifics, it’s really just the financial information to show that this is going to work and that’s the reason behind 11.|
|Katherine:||Okay, okay. What we’ll do is save our other question that I wanted to ask you during this interview is what to do after bankruptcy, after we do these things, especially after a Chapter 11 because I did have a lot more questions about that one once you’ve had to get your creditors to agree to this plan, do you continue business, how can you confidently continue business, so I’ve got a few more questions but I know our time is up here, so thank you again for coming on, this needs to be said but before you go, Peter, tell people how to get in touch with you.|
|Peter Daigle:||Sure, thank you Katherine. Sure. Obviously any type of email or phone call, I’m happy to give you a free consultation for any specific question that you have pertaining to your case. So you can reach me at 508-771-7444, 508-771-7444, or through my website would be the next way to go, would be daigellawoffice, http://www.daigellawoffice.com . If you go onto the website, you can reach me by email, you can do an inquiry, you can do a live chat, there’s lots of ways we allow you to connect with us, so thank you for allowing me to give that information.|
|Katherine:||Awesome, so next time we’ll do a follow up to this interview. I want to say thank you and until next time. Have a good day.|
|Peter Daigle:||Thank you, Katherine. Bye, bye now.|
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