Violating these, and many other do's and don'ts, can cause you to lose property and get you into big trouble when you file for bankruptcy. If you make a mistake, even an innocent mistake, your attorney might not be able to reverse what you have done.

The best advice is not to act on your own - discuss what you want to do with your bankruptcy attorney first. You and your attorney should make your bankruptcy game plan together.

Here is the list compiled by my colleague, Jonathan Becker, of Lawrence, Kansas:

1. Don't forget to list all your bank, checking, savings, brokerage, credit union accounts.
2. Don't file if your income is greater than your expenses and you can pay your bills.
3. Don’t use your credit cards.
4. Don’t take credit card cash advances.
5. Don’t use convenience checks.
6. Don’t do balance transfers.
7. Don’t pay money to family.
8. Don’t pay money to friends.
9. Don’t tell a creditor that you intend to pay.
10. Don’t leave assets off of your paperwork.
11. Don’t file if you are about to receive a tax refund or inheritance. Discuss the timing with your attorney.
12. Don’t fail to tell your attorney about your small business, sole proprietorship, partnership, LLC, LLP, LC, corporation, or hobby, or your cosmetics sales.
    
13. Don’t purchase a home shortly before filing bankruptcy without consulting your attorney.
14. Don’t give or gift property to anyone; don't accept gifts of property.
    
15. Don’t pay more than $600 on any past due bill.
16. Don’t transfer property to anyone.
17. Don’t cash out retirement plans or 401k’s.
18. Don’t take out a second mortgage.
19. Don’t gamble.
20. Don’t hide assets or debts.
21. Don’t take out “payday loans”.
22. Don’t put your money in your kids’ bank accounts.
23. Don’t omit or ‘save’ a credit card for after your bankruptcy.
24. Don’t fail to list debt to family or other “insiders.”
25. Don't write bad checks.
26. Don’t borrow money.
27. Don’t forget to tell your attorney about liens you may have on your home or unpaid judgments so they can be avoided.
28. Don’t make major financial decisions without talking to your attorney.
29. Don't get married before filing if your spouse has a high income.
30. Don’t misrepresent facts to your attorney.
31. Don’t run up your credit cards in advance of filing bankruptcy.
32. Don’t fail to appear at State court hearings, trial or proceedings; coordinate with your attorney.
33. Don’t hide from your attorney. Keep her up-to date with your address, phone number and email address.

United States Code §707 (b) (2) (A) (i) (I) and (II). Reference: Chapter 7 Discharge.

Reigning in on the relative ease of filing and obtaining discharge of unsecured debt in chapter 7 is central focus of BAPCPA, but most debtors pass the means test leading blogger Steve Jakubowski to ask if the bark of the means test is worse than its bite?

If a consumer debtor’s household income is above the statewide median income, the consumer must use IRS guidelines, not actual expenses, for certain household living expenses to determine if he has excess disposable income to pay his creditors.

In chapter 7 cases, the means test is calculated on an official form designated Form B22A. B22A first compares a consumer’s household income to a statewide median. If lower, the consumer debtor may file chapter 7. If higher, the consumer debtor must fill out the balance of B22A, forced to use IRS allowances for many expenses before arriving at a number referred to as “disposable income”. If the consumer debtor has left over income over a 60-month time period of:

• 25% of consumer’s unsecured debt or $6,000, which ever is higher, or

• $10,000 [$166.67 per month]

the consumer debtor’s case is presumed to be an abuse of chapter 7 and is subject to dismissal on motion of the United States Trustee or any party in interest. A consumer debtor who owes more than $40,000 in unsecured debts is presumed to have the ability to repay if he can afford to pay $166.67 per month over 60 months as derived under the B22A formula.

To avoid the result of a presumed abuse per Code §707 (b) (2) (A) (i) (I) and (II), a consumer debtor must file a chapter 13 case. Congress believed that chapter 13 cases led to more unsecured non priority debt getting paid.

In chapter 13 cases, debtors must fill out Form B22C, a different version of the means test. B22C determines the amount a consumer debtor will repay and for what period of time in a chapter 13 plan. If household income is below median, the period is 36 months. If above median, the period is 60 months. B22C allows more deductions from gross income to determine disposable (left over) income.

The overwhelming number of chapter 13 debtors filing during BAPCPA’s first 30 months in the District of Kansas Topeka Division have household income below median and pay nothing to non priority unsecured creditors. The overwhelming number of debtors with above median income are allowed to file a chapter 13 case with little or no payment to unsecured non priority creditors as B22C allows more deductions from gross income.

Example: Voluntary retirement contributions at debtor’s employer can be deducted in chapter 13, but not chapter 7 cases. Legislative history indicates Congress’ policy was to encourage chapter 13 cases with this provision. But 401K plan managers also greatly benefit.

Secured debt, 401K loans, child support, and taxes can all be deducted from gross income to arrive at disposable income in chapter 13. By allowing deduction of taxes, child support, secured debt and contributions to retirement plans, Congress favored home mortgage lenders, car manufacturers/lenders, child support collectors, and tax collectors over the interests of credit card companies.

A debtor who chooses chapter 13 gets the benefit of continuing to pay back 401K loans and contributing to 401K plans. The additional amounts a debtor can deduct for 401K plans can be $100's to $1,000's per month.

The downside of chapter 13: debtors are subject to oversight for at least a 36 month period while paying down debt.

Many, many debtors are opting for chapter 13 cases that offer the best of both worlds- higher income households are allowed to pay down large secured debt payments on houses and cars and contribute to 401K plans at their creditors’ expense(compared to prior Bankruptcy Code provisions). The number of chapter 13 case has surged all over the United States. Two-thirds of the cases filed In the Topeka Division are chapter 13 cases, virtually a reversal of the percentages of cases filed pre-BAPCPA.

There are many debtors in divisions of the federal districts around the United States, including the Kansas City Division in Kansas federal court, where prevailing income is higher than statewide median, so more funds will be “trapped” by the means test. However, those households frequently owe second mortgages, high car payments, and have 401K plans available. IRS Guidelines for allowable expenses are higher in some categories for higher income households. Those deductions often result in no disposable income for unsecured claims.

The point is that the small Mt. Everest that higher income households must climb to use bankruptcy court for debt relief in the wake of Bankruptcy “reform”. The stated goal of Congress to eliminate the individual Judge’s discretion made on a case-by-case basis of individual’s “ability to repay” has succeeded. But the special interest exceptions to the credit card industry’s “Means Test” results in very little additional repayment to unsecured non priority creditors in the great majority of cases. Any highly qualified attorney can guide higher income debtors through bankruptcy and relieve overly burdensome debt, regardless of BAPCPA’s means test.

Under pressure from creditor lobbying efforts, Congress and the Clinton administration in 1994 funded a bi-partisan blue ribbon panel dubbed the Bankruptcy Review Commission. Its mission was a comprehensive study of the bankruptcy system in response to creditor interests’ complaints of widespread but undocumented abuses.

Democrats’ poor showings in 1992 and 1994 elections left Congress controlled by Republicans. President Clinton agreed to a commission to find the facts. The credit industry argued a significant number of Americans had the “ability to repay” their debts, but egged on by greedy bankruptcy attorneys, debtors were choosing instead to slough off debt. Debtors were cast as well-to-do credit card abusers who were financially irresponsible, increasing the cost of borrowing for others. Little or no evidence was ever offered to back up creditors’ arguments.

Creditors’ actual motivation: to slow down their losses that had steadily increased as more and more Americans defaulted on high interest credit card debt and turned to bankruptcy courts for help. The probable real reason for increased bankruptcy case filings: Independent studies showed the rate of bankruptcy cases filed in the 1990's correlated directly with the expansion of consumer credit by primarily big banks.

Following the unfortunate death from cancer of its first chairman, Mike Synar of Oklahoma, the Commission’s work began by 1996. Hearings were conducted across the U.S. The Commission concluded no major overhaul was needed in the Bankruptcy Court system, found no major abuses, and most profoundly determined the overwhelming number of cases were caused by circumstances beyond debtors’ control. Four frequent factors cited were 1) Loss of job; 2) Divorce; 3) Medical catastrophe, and 4) Death or disability of a family member.

The Commission’s report was not even formally released before Senator Charles Grassley (R-Iowa) pronounced it dead on arrival and put finishing touches on a bill drafted by a Visa lobbyist. Some of its provisions were blatant overreaching. In 1998, Senator Grassley introduced a bill to reward creditors’ steady campaign contributions (primarily to Republicans, but also to prominent Democrats on the Senate Banking Committee and House Financial Services Committees). Due to great differences in versions of the bill passed in the House and Senate, the first bill stalled. New bills introduced in 1999 in both houses were reconciled in a post-election lame duck session and sent to the President. It contained many ill considered provisions, and President Clinton vetoed that bill on December 19, 2000, in the waning days of his second term in office.

President George W. Bush telegraphed Capitol Hill before taking office he would sign any bankruptcy reform bill that both houses of Congress agreed to. George Bush’s number one campaign contributor in his 2000 presidential campaign was reportedly the MBNA Employees Political Action Committee. The attacks of 9-11-2001 delayed a House/Senate conference’s efforts to reconcile differences in each chamber’s bills. The Senate was in the hands of Democrats and consensus could not be reached. Congress adjourned in 2002 with no bill. A similar effort in the 2003-2004 Congress failed when Senator Chuck Schumer (D-NY) included a provision making injuries and fines/penalties from violence outside abortion clinics non dischargeable in bankruptcy. The provision appeared to have a chilling effect on free speech and was opposed by groups on that basis. That poison pill in the Senate version killed the bill in the House.

The re-election in 2004 of President Bush and Republican majorities in both Senate and House led Bill Frist, then Senate Majority Leader, to try to deliver on promised Republican legislative goals. A bill overriding state class actions was passed. Flush with victory, Frist then found a week on the Senate’s calendar and scheduled the Bankruptcy bill for consideration. In early March, 2005, proponents were allowed several days of Senate floor debate, but no committee hearings were scheduled. The House, under a rule, announced the Senate’s bill would come to a vote without mark up, committee hearings, or debate; there would be an up-or-down vote by House members. That process would avoid the inconsistent versions of the bill that killed earlier efforts. Opponents of the law could already claim partial success; their efforts since 1998 had watered down many of the most objectionable aspects of the bill. The bill’s final form remained a patchwork of special interest provisions. But opponents such as Senator Edward Kennedy succeeded in making substantial improvements by amendment during the bill’s Senate floor debate.

President Bush signed BAPCPA into law on March 20, 2005, with a 180-day implementation period. In that time period, over 2 million bankruptcy court cases were filed. Later studies revealed many persons who filed in the “gap” would not have filed a case for months or years, but were convinced they had to act before the law changed. For many who filed, it was a good strategy. Others acted rashly, filing chapter 7 cases out of reflex, not following a well informed decision making process. Those persons filing chapter 7 will be denied any bankruptcy relief for 4 to 8 years, and many will need bankruptcy relief for new debt problems. The United States Trustee asserts many cases filed in the gap did not benefit the debtor.

BAPCPA left the predecessor Bankruptcy Reform Act of 1978 substantially intact, despite efforts to harm consumers’ fresh start. Here is a brief history of bankruptcy in the United States.

For homes purchased in the past two years, the figure shoots up to an alarming 30%, according to Reuters. These are the highest numbers of homes under water since the Great Depression of 1929.

Eight million families are in danger of losing their homes due to mortgages that are greater than the value of the homes. See what fellow blogger, Gene Melchionne, has to say on the Mortgage Law Network about what this means for all Americans, particularly retirement funds.

Evidence at trial proved he gave money to his wife and his brother prior to filing his bankruptcy case and he lied on his paperwork. He falsely said he had no bank accounts and he had made no transfers of money to relatives nor closed any bank accounts. He also charged $125,000 on credit cards within a year of filing the bankruptcy petition for airline tickets, jewelry and other goods.

He was convicted of making a false statement and bankruptcy fraud, both federal crimes, which could result in five years in federal prison and a fine up to $250,000 on each count.

This Kansas trial dramatically illustrates a violation of the first rule in bankruptcy: disclose, disclose, disclose. Read more about the requirement for honesty and full disclosure in a post on the Bankruptcy Law Network by my fellow blogger, Karen Oakes and "Tell the Truth, the Whole Truth and Nothing But the Truth" by Steve Otto, and "How Will the Judge Know If I Don't Tell the Truth?" by yours truly.

No real estate creditor shall ever assess, charge or collect, from either the debtor or the real estate collateral, any assessments, fees, costs, expenses or any other monetary amounts, exclusive of principal, interest, taxes and insurance, that arose from the date of the filing of the bankruptcy petition to the entry of the Order of Discharge except as may be allowed by court order or an allowed proof of claim.

Mortgage companies will no longer be able to add attorneys fees and other unapproved fees to a chapter 13 debtor's mortgage loan without disclosing the fees to the bankruptcy court. Debtors will be given the chance to dispute the fees while the bankruptcy case is active. The order is designed to force the lender to get court approval of all fees and end the abusive practice of presenting a bill for "unpaid fees" after the bankruptcy case is over, some times years later, when the borrower goes to refinance his loan or sell his home.

Read more about phony fees being added to mortgages on the Bankruptcy Law Network by Michael Doan and on the Mortgage Law Network by Jonathan Ginsberg

Home foreclosure is a growing problem in Kansas and across the nation. Mortgage fraud and subprime lending have left many homeowners stuck with home loans they can no longer afford.

My office recently convened a task force to investigate this problem. Consumer advocates met with representatives from lending and real estate industries to determine ways we can stem the tide of home foreclosure in Kansas.

While my office continues to investigate reports of mortgage fraud, there appears to be a great need for increased consumer awareness on this issue. When facing a lending crisis, homeowners can greatly reduce the number of pitfalls by following a few basic steps.

The most important advice for anyone facing foreclosure is to contact your lender or the company who sends you your bill as soon as possible. It may be possible to negotiate or re-structure the terms of your loan to make your payments more affordable.

Home foreclosure is a harsh legal process that moves quickly. Unfortunately, homeowners in this situation are often targeted by scams, including offers of assistance from “mortgage rescue” companies. Consumers facing foreclosure should obtain legal advice immediately and never sign anything without having it reviewed by their attorney.

In addition to contacting an attorney, you may also seek advice from a housing counselor. Housing counseling agencies offer guidance on buying a home, renting, reverse mortgages and default and foreclosure prevention. The Department of Housing and Urban Development (HUD) maintains a list of approved agencies at www.hud.gov.

If you absolutely cannot afford to keep making your mortgage payments, check all your options before walking away from your home. You may be able to sell your home or negotiate with your lender to avoid losing any equity or tarnishing your credit record.

Home foreclosures occur for a variety of reasons. As your Attorney General, it is my duty to make sure that Kansas families are treated fairly in the home buying process. My office will continue to investigate this issue and do everything we can to safeguard homeowners. For more information on this and other consumer issues, visit www.ksag.org.

2-18-08

She was the first Kansas lawyer to be board certified in consumer bankruptcy law. Her partner, Mark Neis, was second. Today, they are the only board certified consumer bankruptcy specialists in Topeka and two of ten in Kansas.

Board certification means that Jill has met rigorous, objective standards and has demonstrated expertise in consumer bankruptcy law. She goes the extra mile to keep current on bankruptcy law changes by attending national seminars, participating in daily e-mail updates and by attending several times the hours of continuing legal education required by Kansas.

You expect certification from your doctor - expect it from your lawyer too. Hiring an attorney with expertise in any specialized field of law, such as bankruptcy, can be a bewildering experience. As a client, you want to make sure your attorney is experienced in consumer bankruptcy law. Choosing a board certified specialist in one way to make sure.

Judge Dale L. Somers denied an attempt by a debtor to add her spouse two months after she filed her case by amending her petition filed with the Court. In Re Cheryl R. Daly, 07-22628-13, (Bankr. D.Kan. 01-28-2007).

It would be possible for the nonfiling spouse to file his own case and then consolidate the two cases for administration.

Earned income credit is money the federal government gives to low-income individuals and families in the form of tax credit, which is paid in the form of a tax refund even if no taxes are paid or owed.

H 2060 has been referred to the House of Representatives Judiciary Committee. If passed into law, it would be effective upon publication in the statute books.

My fellow blogger, Dana Wilkinson of the Bankruptcy Law Network, wishes for an EIC exemption in her recent post, "Wanted-Exemption for Earned Income Credit." Perhaps her wish will soon be granted for Kansans.