Credit Counseling Before Bankruptcy

Everyone who files a bankruptcy must get a credit counseling certificate before the bankruptcy can be filed. There are almost no exceptions.

You do not have to pay your bills in a debt repayment plan through a credit counselor.  In fact, the credit counselors say 1 to 3% of people who do the pre-bankruptcy counseling can afford to pay their bills.  This requirement was put into the law to deter you from filing bankruptcy.

All you have to do is “attend” a one-time briefing to discuss your finances and get information about your bankruptcy and non-bankruptcy options, then you are given a certificate. You can do this in person, over the telephone, by mail or over the Internet.  We will assist you in getting this briefing.  If you have not already done this step, please wait and discuss with us how best to accomplish this.

Here are approved credit counselors we recommend:

Consumer Financial Education Foundation of America (CFEFA) by Internet and telephone, $35 (paid through our office prior to case filing)

Hummingbird Credit Counseling and Education on the Internet, $49 (paid through our office prior to case filing)

Housing and Credit Counseling, Inc., in person in Topeka, Lawrence and Manhattan, $45, (paid to HCCI at time of counseling) 1195 SW Buchanan, Suite 101, Topeka, KS 66604-1183, 785-234-0217.

Consumer Credit Counseling Service, Inc., in person or telephone, $50 for individual, $75 per couple, Salina, Wichita, Hays, Hutchinson, Garden City, (paid to CCCS at time of counseling)

A FREE internet service for getting your certificate of credit counseling for bankruptcy.  This service is internet only and goes not guarantee delivery of your certificate. The web site says the process takes up the five days after you enter your information.  Do not use this service if you need to file your bankruptcy case right away, but if you are not in a hurry, free is free. You will be responsible for getting your certificate over the internet and bringing it to us. Some people have reported to us being charged $5.00.


AFTER bankruptcy financial education course

Bankruptcy Trustees in Kansas

Chapter 13 Bankruptcy Trustee – Topeka

Chapter 13 Bankruptcy Trustee – Kansas City, Kansas

Chapter 13 Bankruptcy Trustee – Wichita

Chapter 7 Bankruptcy Trustees

Chapter 12 Bankruptcy Trustee

U.S. Trustee Region 20 – Wichita

Executive Office of the United States Trustee

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What Can I Do If I Can’t Afford My Chapter 13?

by Peter Orville of Bankruptcy Law Network
You always have options if there are significant changes in your life during your Chapter 13. If you’ve been laid off, become sick, split up with your spouse or just can’t keep up with the rising price of gas, don’t give up hope. Your Chapter 13 is flexible…it can be modified to Full Article…
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13 Reasons Chapter 13 Bankruptcy Ends Your Bill Problems

Chapter 13 bankruptcy is a powerful tool that may be able to help you end your bill problems. Here are 13 reasons Chapter 13 bankruptcy makes sense written by my Bankruptcy Law Network colleague, Doug Jacobs.

  1. Flexibility: you can dismiss the case at any time or even convert it to a Chapter 7. You can modify a plan if income changes or you decide to give up a house or a car. You can refinance or sell a house during the plan.View Post
  2. A Chapter 13 will save a house from foreclosure as long as you can make the payments.
  3. You can strip a wholly unsecured second mortgage; or value a car if you’ve had it more than 910 days.
  4. You can challenge the costs added to your mortgage by the lender.
  5. Trustees want the plan to succeed and will work with you to get it confirmed.
  6. There are more debts that can be discharged including some divorce payments and damages for malicious and willful acts.
  7. Your attorney’s fees can be spread out rather than all due before filing.
  8. A Chapter 13 can be filed for one spouse even when married. (This is true of Chapter 7s also, but there are more advantages to having one spouse in a Chapter 13 plan.)
  9. You can avoid having to reaffirm a car in order to keep it.
  10. You can cure a tax problem or a Domestic Support Obligation (child support or alimony) over 60 months.
  11. You can stretch out your payments for a car or other secured debt.
  12. You won’t lose non-exempt property.
  13. Depending upon your income a Chapter 7 case can be challenged by the US Trustee, but not a Chapter 13.


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Free Pre-Bankruptcy Credit Counseling provides free pre-bankruptcy credit counseling.  This service is internet based only.  It does not provide in-person or telephone service.  It is funded by charitable donations.

Do not use this service if you need to file bankruptcy right away.  This service does not guarantee delivery of the certificate.  It may take up to five days after you enter the date into the software.  You will be responsible to get the certificate to your attorney.

If you are not in a hurry and have internet service, this free service may be for you.

Credit counseling must be obtained within the past 180 days to file bankruptcy.

Topeka Attorneys Observe U.S. Supreme Court Bankruptcy Argument in Lanning

We watched the arguments before the U.S. Supreme Court in Washington, D.C., yesterday in the bankruptcy case of Hamilton v. Lanning.

We are not involved in this case.  We attended as observers.  The case deals with the formula for determining how much a debtor has to pay her general creditors in a chapter 13 bankruptcy payment plan.  You can read the transcript or listen to the recording of the 60 minute hearing.

Jan Hamilton is the chapter 13 bankruptcy trustee in Topeka.  He objected to confirmation of Stephanie Lanning’s chapter 13 plan because she is not proposing to pay the disposable income determined by the means test.  Her previous six months’ income average was extraordinarily high due to two job lump sum severance payments she received in the fifth and sixth months prior to filing her bankruptcy.  She then lost her job and got a new job for less wages.  She cannot afford to pay the amount the means test dictates and proposed to pay less.

The bankruptcy court denied the trustee’s objection and said the means test is a presumption, a starting point, that the court has the discretion to look forward to determine a debtor’s projected disposable income.  The trustee appealed to the U.S. Court of Appeals for the Tenth Circuit, which affirmed.  The U.S. Supreme Court accepted the trustee’s appeal based upon opposing circuit court opinions between the mechanical approach and the forward looking approach.

At the argument, we saw Chief Justice Roberts and Justice Scalia vs. Justice Ginsberg and Justice Sotomayor–strict construction of the means test statute vs. finding an “escape” for this debtor who did not pass the means test because of job buyout and could not afford to pay the means test result.  Justice Alito seemed to share concerns with Justices Ginsberg and Sotomayor.  Justice Thomas, Justice Breyer and Justice Stevens did not ask any questions or make comments.  Justice Kennedy made a brief comment or two.  Justice Scalia evoked laughter a few times.

I was surprised and impressed by the Court’s command of bankruptcy law.  I did not expect that.  (I did not know yesterday that the Espinosa bankruptcy decision would be issued today.)  I am told the Court is hot for argument, meaning they have already read the briefs and taken a preliminary vote, prior to argument.  The Court peppered both sides with questions in a respectful way.  The trustee spoke about 90 seconds before Justice Ginsberg asked the first question.  He got several other minutes of his prepared speech made in spurts here and there and did a two minute rebuttal at the end. The trustee was a better advocate, in my view, but there was sympathy for the debtor’s plight. There also was deference to the government position.

All of the justices who spoke accepted the reset of current monthly income (CMI) period in 11 U.S.C. 101(10) though Justice Ginsberg thought it “odd” and Justice Sotomayor was concerned that debtor could reset CMI by failing to do something she was supposed to do (file I and J).  There was a discussion of judicial discretion.  The questioning Justices were not very interested in the debtor’s options in this case (delaying filing, filing a 7, converting to 7, dismissing and refiling).  Justice Ginsberg said conversion resulted in less money to creditors.  She also said dismissing and refiling was a waste of time and resources.

This case boils down to does the means test statute control or is there an “escape” for a debtor who is victim to a harsh result if the statute controls? Who knows what the result will be.  It is very difficult to tell from the argument.  I left the room thinking the debtor might win, but I know there is strong strict construction sentiment on the Court.

The juxtaposition of the parties was very odd.  It was strange having the government on the side of the debtor against the 13 trustee.  The government position was quite the opposite of the position the U.S. Trustee has taken on many other means test issues.  One has to wonder what would happen if the government was on the trustee side of the case.

Stephanie Lanning was present at the argument of her case.  She was represented by Tom Goldstein of Akin Gump, a veteran Supreme Court litigator. He runs a pro bono project with law students for unrepresented Supreme Court litigants and also publishes the SCOTUS blog.

Mr. Souter, the clerk of the court, also wore a morning coat with the traditional vest and pants.  The court marshal, the first female to hold the office, also wears a morning coat, although she was seated and I did not notice.  The solicitor general was represented by Sarah Harrington.  She wore a morning coat with tails over a skirt.  I am told all participants in SCOTUS arguments used to wear formal attire.  I read today that Elena Kagan, the newly appointed solicitor general and first woman to hold that office, and rumored to be on the short list for appointment to the U.S. Supreme Court, has broken with tradition and appeared before the Court in a dark pants suit.  Other women in her office wear a morning coat at their option.  None of the attorneys in the Lanning case wore formal attire, all were dressed in dark, business suits.

Each side had 30 minutes for argument.  The debtor and government split the time.  I thought the time would go very fast, but it felt like an eternity.  Everyone in the room was excited to be present but the tension was thick.

Clifford White, EOUST executive director, was present as were numerous chapter 13 trustees and other UST personnel.

A larger than normal number of members of the SCOTUS bar were present, I don’t know why.  I would think bankruptcy and tax, the topics of the day, would not be that popular.  Any member of the SCOTUS bar is allowed to come to argument and sit with the bar on a space available basis. NACBA member Dan Press  of Virginia was present.  Mark Neis sat with the bar as did the chapter 13 trustee from Wichita, KS and Gil Weisman of Becket & Lee (eCast attorney).  My daughter and I sat with invited guests right behind the bronze rail.  Each side is allowed six guests.  Hamilton graciously offered us two of his six seats.  He also invited his wife and step-son, Will Griffin, the chapter 13 trustee from Kansas City, Kansas, and the chapter 13 trustee from Maine.  Many people stood in line outside in the rain for the chance to be admitted to observe the argument.

The Courtroom was completely full.  You sit amazingly close to the Justices.  We were on the center aisle about six rows of chairs and two aisles back from the chief justice. Security was very tight and our movement was controlled every step.  We were commanded to remain seated and silent several times.  Hamilton was so close to the justices, he had to physically turn to address the each of them as he was questioned.

Hamilton had a moot court last week at Georgetown Law School before a group of law professors and others from around the area.

Win or lose, Hamilton and his staff attorney, Teresa Rhodd, did a fine job, for which all of us in Kansas can be proud.  They have spent hundreds of hours these past several months preparing.  We were able to find only a half dozen cases from Kansas in the Supreme Court since Brown v. Board of Education in the 1950s.  The Court accepts less than 100 cases per year out of ten thousand or more applications. The odds of a Topeka bankruptcy case before the Supreme Court of the United States is extremely small.

It was a fantastic experience to see an U.S. Supreme Court argument live.   I would recommend it to all of you.

Bankruptcy Means Test Meaner as Family Incomes Drop

As the economy worsens, unemployment rises and family incomes are dropping, getting bankruptcy help gets a little tougher.

The bankruptcy income guidelines go down a few hundred dollars for Kansas cases filed on or after March 15, 2010.  While this change probably won’t disqualify many debtors, the downward trend is disturbing and more evidence the means test is a mean test.

Here are the new Kansas median income figures by family size used for part one of a two part-test to determine bankruptcy eligibility:

  1. $41,210
  2. $57,561
  3. $63,212
  4. $72,352

But do not despair if your income is higher than these numbers and you need bankruptcy help.  You are not automatically disqualified. These numbers are used in part one of the means test to figure out whether Kansans may get rid of their general debts such as credit cards and medical bills in bankruptcy.

You have a second chance to pass the bankruptcy means test [Read more…]

Debtor May Be Converted to 7 with No Discharge

In re Rogers, Case No. 08-21487
January 2009, Judge Somers

In a case in which assets may be liquidated, a 13 may be converted to a 7 even though debtors may not be eligible for a 7 discharge.

Digest by:  Jan Hamilton, Trustee

Surrendered Collateral Doesn’t Count on Bankruptcy Means Test?

In re Miller, Case No. 07-22927
December 2008, Judge Somers
This decision ties to the concepts enunciated in the various Lanning decisions, i.e., to
what extent may post petition changes in circumstances be considered in determining
what is to be paid by an above the line debtor.  Digest by Jan Hamilton, Trustee.

Income and Expenses After Bankruptcy Change Chapter 13 Means Test


In re Tholl, Case No. 07-22677
December 2008, Judge Somers
Court reviewed and followed the Melvin decision regarding changes of income and expenses after the filing of the chapter 13 bankruptcy but prior to confirmation of the chapter 13 bankruptcy plan.

Chapter 13 Bankruptcy Payments

Chapter 13 bankruptcy debtors are responsible for making their plan payments to the trustee.   No excuses.

This is true even if your payments are supposed to be deducted from your paycheck.  If no deduction is taken out of your check or if your employer does not remit the money to the trustee, you are still responsible for the payment.

Watch your pay stubs to make sure the payments are being deducted.  If not, make the payment yourself and call your attorney to troubleshoot.  Your case will be dismissed if payments are not made and you will lose the benefits of chapter 13 bankruptcy.

You can check whether the trustee has received payments by setting up an account with the National Data Center.

Neither Topeka nor Kansas City, Kansas, chapter 13 bankruptcy trustees accept cash nor any kind of electronic bank transfer (ACH transactions).  You can set up bill payer service at your bank and arrange for your bank to send the trustee a check if you don’t have employer pay. The Topeka trustee has an electronic payment service provided by a third party.

What Happens to Divorce Debts in Bankruptcy?

Debts in the nature of support of child or former spouse are not discharged in either chapter 7 or 13 bankruptcy.

What about property settlement debts?  If the divorce decree contains a hold harmless obligation that makes one spouse indemnify the other spouse, then the hold harmess oglibation is a separate debt to the spouse and is not dischargeable in chapter 7 bankruptcy 523(a)(5) or 523(a)(15).

The hold harmless obligations can be discharged in chapter 13 bankruptcy as long as the debt to the former spouse not a Domestic Support Obligation (DSO).  This is possible because property settlement debts under 523(a)(15) are not excepted from discharge in chapter 13 cases.  See Schuett v. Finkey, 2008 Bankr. Lexis 1555 (Bankr. D. Neb. May 21, 2008).

Why Did They Stop Sending My Mortgage Statements After Bankruptcy?

Most home mortgage lenders who send monthly statements to their borrowers will stop sending statements once a bankruptcy is filed.   They will stop withdrawing automatic payments form your bank account.  They claim sending the statements and withdrawing your funds might be seen as a violation of the bankruptcy automatic stay on collection and they don’t want to run afoul of the bankruptcy law.

Some Courts such as the Kansas bankruptcy courts have local rules allowing mortgage statements to be sent to debtors who want to retain their properties and continue paying the mortgage payments.

If you have filed bankruptcy and wish to keep your real estate that has been pledged as collateral for a loan, you must pay your mortgage payments.  Not getting a statement does not get you off the hook – you don’t get a free house.  YOU MUST PAY YOUR MORTGAGE PAYMENTS TO KEEP YOUR PROPERTY OUT OF FORECLOSURE. [Read more…]

Cold Weather Rule Applies in Bankruptcy

The Cold Weather Rule protects Kansas residential utility customers who cannot fully pay their winter electric or gas bill from shutoff.  The Cold Weather Rule will be in effect from November 1 to March 31.

The Cold Weather Rule generally prohibits any disconnection of service when the local National Weather Service forecasts that the temperature will drop below 35 degrees or will be in the mid-30s or colder within the following 48 hours.  The rule applies to utilities regulated by the Kansas Corporation Commission such as Westar Energy and Kansas Gas Service.

How do you sign up?

  • If you can’t pay your entire bill, call your utility company to make pay arrangements:
    • Agree to pay 1/12 of the overdue amount of your bill, plus 1/12 of your current bill, all disconnection and connection fees, and agree to pay the remainder in equal payments over the next 11 months; or
    • Negotiate a payment plan to pay the overdue amount off quicker than 12 months.
  • Remember, you must also pay your full bills for new service you use while paying off the overdue amount.
  • Apply for federal, state, local or special funds for which you are eligible.
  • If you are behind in a previous payment plan and cannot catch up, you need to make a new payment agreement with the utility.
  • If you have illegally used service, you must pay for the value of the illegally used service.

What will the utility company do?

  • Utilities must inform you of the Cold Weather Rule payment plan as well as other payment plans available to you. Remember, under the Cold Weather Rule payment plans, you always have the option of spreading your payment over a total of 12 months.
  • Utilities must send written notice to customers 10 days before disconnection, plus make a phone call or personal contact the day before.
  • Utilities must tell customers about agencies that have funds to help pay utility bills.

Questions? 1.800.662.0027

Timeshare Debt Allowed on Means Test, Adult Child Disallowed

In re Hays, Case No 07-41285
April, 2008, Judge Karlin

13 Trustee objections to debtor’s attempts to claim living expenses for non-dependent debtors as well as for secured debt on a timeshare. Court followed Law and disallowed adult child expenses. The Court allowed the debt on the timeshare to be deducted. The decision is very thorough and is a recommended read.

Digest by:  Jan Hamilton, Trustee

Nonworking Adult Son Not Counted in Household

In re Law, Case No. 07-40863
April 2008, Judge Karlin

Court sustained 13 Trustee’s objection to confirmation as debtor included: adult son in household size, tax levy on Line 33 and duplicated it on Line 49 and unencumbered vehicle on line 28. The decision is a good analysis of the status of B22C case law as of the date of the decision.

Digest by:  Jan Hamilton, Trustee

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