Bankruptcy Official Form 423

Did you receive Bankruptcy Official Form 423? Not sure what to do with it? Read on to learn more about this important bankruptcy form.

Bankruptcy Courses

If you are on the receiving end of Bankruptcy Official Form 423, then it is safe to say that you are in the middle of a bankruptcy.

The law requires bankruptcy filers to complete two classes. First, a debtor must complete a pre-filing class. Second, a debtor must complete a post-filing class.

Bankruptcy Official Form 423 informs debtors of their requirements to complete the second class. Officially, the class is called a “Financial Management Course.”

Where to Take a Financial Management Course

Luckily for bankruptcy filers, many companies provide the Financial Management Course. Most providers offer online courses these days.

It pays to shop around! The bankruptcy court does not set the price of the Financial Management Course. Providers are free to charge whatever they want for this important class.

Bankruptcy law requires that the Financial Management Course consist of no less than two hours of instruction. So snuggle up with your laptop and cup of coffee.

Important Form 423 Information

Official Form 423 tells debtors several important pieces of information. For instance, debtors only have a certain amount of time to complete their Financial Management Course. In fact, the bankruptcy court will close a bankruptcy case without a discharge if a debtor does not complete the class on time.

A debtor can reopen their bankruptcy case to file their missing certificate. However, the bankruptcy court charges a $260 filing fee just to reopen the case. As you can see, missing the deadline for the Financial Management Course is an expensive mistake!

Form 423 also tells debtors that they need to file their course completion certificate with the court. Some debtors forget to file their certificate with the court. Again, the bankruptcy court will close a debtor’s case if the debtor forgets to file the certificate.

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How to Amend Your Bankruptcy

Have you ever wondered how to amend your bankruptcy case? Read on to learn more about this important subject.

Bankruptcy Amendments

From time to time you may need to amend your bankruptcy case. You may have forgotten about a creditor or failed to list an asset. Perhaps your bankruptcy trustee has pointed out an error in your paperwork. In any event, bankruptcy amendments allow you to fix or supplement your bankrutpcy documents.

Do not rely on bankruptcy amendments to fix sloppy mistakes. In fact, you must sign bankruptcy paperwork under penalty of perjury. Criminal prosecution is possible for providing false or misleading information on bankruptcy paperwork!

How to Amend a Bankruptcy

The first question is a simple one: is your bankruptcy case still open? If your bankruptcy case is closed, you cannot amend your paperwork. You should contact an attorney if you think that you need to amend your bankruptcy and your case is closed. In fact, the rules here are tricky.

Assuming your case is still open, you can move forward with an amendment.

The basic steps to amend a bankruptcy form or schedule are:

  1. Prepare the amended document.
  2. Fill out the amendment cover sheet.
  3. Draft a proof of service.
  4. Serve the amendment paperwork on the United States Trustee, your Bankruptcy Trustee, and any affected creditors.
  5. File the amendment, cover sheet, and signed proof of service with the clerk of the bankruptcy court.

The bankruptcy court’s website houses the form you will need for the amendment cover sheet.

Don’t Wait to Amend Your Bankruptcy

As discussed above, you can only amend your bankruptcy when your case is still open. If you wait too long, you will not need to make any changes to your bankruptcy.

And remember, bankruptcy is a process that requires full and complete disclosure. Failing to disclose information can be a crime in bankruptcy. Waiting to long to amend your bankruptcy might lead the bankruptcy court to believe that you were not making the required disclosures.

Thinking about declaring bankruptcy in the Sacramento area? Contact my office at (916) 333-2222 to schedule a consultation to see if bankruptcy is right for you. 

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Bankruptcy Motion to Compel Abandonment

Own a business? Filing a Chapter 7 bankruptcy? You may need to file a Motion to Compel Abandonment. This will let you keep operating your business while you are in bankruptcy.

The Trouble with Businesses and Chapter 7 Bankruptcy

When a person declares Chapter 7 bankruptcy, everything they own is temporarily “owned” by the bankruptcy estate. If a bankruptcy filer owns a business, the business is included in that estate.

The bankruptcy estate is administered by a bankruptcy trustee. The trustee is liable for acts of the business while it is operating during bankruptcy. Most trustee’s don’t like this liability.

In fact, not all bankruptcy trustees are comfortable with the bankruptcy filer running a business. Some of these trustees may demand that the bankruptcy filer stop operating their business during their case. This is not a very good outcome for the bankruptcy filer.

Motion to Compel Abandonment

One option for a bankruptcy filer in this situation is to request that the court “abandon” the business so that the trustee no longer owns it. If successful, the trustee won’t be able to demand that the bankruptcy filer cease business operations during the bankruptcy.

The Motion to Compel Abandonment is easy to understand. The bankruptcy filer informs the court that the business doesn’t have any liquidation value (if true) and requests that the court abandon the property back to the debtor.

Because the business doesn’t have any liquidation value, the court will determine that it is not an asset that requires administration by the trustee.

In bankruptcy terms, the court will determine that the business has an “inconsequential value” to the estate. The court will then order the business abandoned.

Conclusion

Not all businesses will require an abandonment motion in a Chapter 7 bankruptcy. Consult with an experienced bankruptcy attorney if you have a business and are considering declaring a personal Chapter 7 bankruptcy.

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How to Reopen Bankruptcy Case

Sacramento Bankruptcy Lawyer Rick MorinThe Bankruptcy Court has discharged and closed your case. Everything is going well. You probably do not want to think about going back to the bankruptcy court. However, in certain situations, you may need to reopen your bankruptcy. Read on to learn more about this procedure.

Why Reopen a Bankruptcy?

For most consumer debtors, the most common reason to reopen a bankruptcy is to enforce the terms of their discharge against a creditor. You can seek sanctions from the creditor by reopening your case with the bankruptcy court. You cannot seek to enforce the terms of your discharge in a state court.

The Bankruptcy Court will occasionally close a case without a discharge. This commonly happens when the debtor does not complete the financial counseling requirements or fails to pay their filing fee installments on time. In order to obtain a discharge, the court will require the debtor to reopen the bankruptcy case and fix the deficiency.

How to Reopen a Bankruptcy Case

Reopening a bankruptcy in Sacramento is surprisingly easy. The Debtor files a “Ex Parte Motion to Reopen” stating the grounds for reopening their bankruptcy case. There may be a filing fee depending on the reason for reopening.

The Bankruptcy Court does not charge a filing fee if the debtor is reopening their case to enforce their discharge. The Court charges a reopening $260 fee if the debtor forgot to file paperwork before their case was closed.

Here in the Eastern District of California, the Court will reopen the bankruptcy case and provide a time limit for the debtor to complete whatever task they set out in their reopening motion. If nothing happens by that deadline, the Court will close the case automatically.

My office represents debtors in bankruptcy proceedings in Sacramento and the surrounding areas. Please call my office at (916) 333-2222 if you are seeking bankruptcy representation in Northern California.  

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What is a Bankruptcy Adversary Proceeding?

Sacramento Bankruptcy Lawyer Rick MorinAn Adversary Proceeding in a bankruptcy case is a big deal. You can think of an Adversary Proceeding as a lawsuit that occurs within an existing bankruptcy case. Read on to learn more about this important bankruptcy tool.

In most consumer bankruptcy cases, there isn’t a lot to fight about. The bankruptcy filer discloses all relevant information about their financial affairs, the court reviews their materials, and the case is moved along the process without a lot of friction. Not all bankruptcy cases are so easy.

Some Bankruptcy Cases Involve Litigation

A small percentage of bankruptcies involve legal disputes that must be adjudicated by the court. To do so, a party must file an Adversary Proceeding. These legal cases are filed in the bankruptcy court.

For the most part, litigation surrounding a debtor’s financial affairs is halted when a bankruptcy is filed. This means that most disputes must be shifted to the purview of the bankruptcy court. The idea is simple. Because the bankruptcy court is already handling the debtor’s financial affairs, the court is the best place for any disputes to be heard during the bankruptcy.

Adversary Proceedings are Just Like Lawsuits in Federal Courts

Adversary Proceedings in bankruptcy are very similar to litigation in the federal district courts. The Federal Rules of Evidence apply, as do the Federal Rules of Civil Procedure. Some of these rules are modified by the Bankruptcy Rules. For the most part, a federal litigator would feel right at home in a bankruptcy Adversary Proceeding.

Parties to Adversary Proceedings can file motions, engage in discovery, and have a full trial to the merits of a legal matter. At least here in the Eastern District of California, the bankruptcy judges keep the Adversary Proceedings moving along. Don’t expect a typical Adversary Proceeding to languish on the court docket.

What to do if Served With an Adversary Proceeding

Have you been served with notice of an Adversary Proceeding? Do not ignore the summons. The bankruptcy court will move quickly if you do not participate. Keep this in mind: not all bankruptcy counsel accept representation in Adversary Proceedings. Make sure that you contact a qualified bankruptcy attorney quickly. Not responding to an Adversary Proceeding means that you will give up your rights.

My law firm helps both debtors and creditors litigate complex issues in the bankruptcy court. Please contact my office at (916) 333-2222 to discuss Adversary Proceedings in bankruptcy. 

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Don’t Forget Your Social Security Card

Sacramento Bankruptcy Lawyer Rick MorinThere is a lot to remember during the bankruptcy process. A very important part of each bankruptcy is the Meeting of Creditors. Are you prepared for yours?

Bankruptcy Meeting of Creditors

At your Meeting of Creditors (sometimes called a 341 Hearing by attorneys), you will be asked some questions. The questions are about your bankruptcy papers and financial affairs. The hearing is conducted under oath by your bankruptcy trustee.

The very first thing that the Trustee will do at your Meeting of Creditors is verify who you are. You can guess why. The court needs to ensure that the person being interviewed is the actual debtor. Why would someone else show up? Trust me, it happens.

The Trustee will request a government-issued photo ID. You are also required to show proof of your social security number. Photo ID is usually your California driver’s license, California ID card, passport, or military ID. Proof of social security number is typically your social security card or your medicare card. Why medicare card? Your medicare card is one of the only other government documents that contains your full social security number.

Why You Need Your Social Security Card

I occasionally see debtors appear at their Meeting of Creditors without one or both of these documents. Most often missing is the social security card. Some Trustees will not conduct the interview without proper paperwork. Others will move forward the interview but require you to come back to court at a later date with the required documents.

If you are like most people, you only want to go to the federal courthouse in Sacramento once. This means that you need to remember to bring your ID and social security card with you to court. Make a note in your calendar or put it in your phone. Don’t forget!

My law firm makes bankruptcy as easy as possible. Please call my office at (916) 333-2222 to discuss obtaining a fresh start with your finances. 

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How To Amend Bankruptcy List of Creditors

Sacramento Bankruptcy Lawyer Rick MorinYour bankruptcy petition should be as perfect as possible before it is sent to the court. However, issues can arise after filing. A common problem is the failure to list all creditors. Here is how to amend your bankruptcy petition to fix that problem.

Listing All Creditors is Important

When a bankruptcy petition is submitted to the court, the court mails an official notice to your creditors. The court can only send the notice of bankruptcy to creditors that it knows about. The court relies on debtors to supply the list of creditors.

Creditors can be listed on Schedule D or E/F of the bankruptcy petition. Schedule D is reserved for secured creditors. Schedule E/F is reserved for unsecured creditors.

Occasionally, a debtor forgets to list one or more creditors on the initial paperwork. Or maybe a new collection notice shows up after the bankruptcy has been filed. Good news: the courts permit you to amend your bankruptcy petition after filing.

How To Amend Bankruptcy List of Creditors

  1. List the legal name, address, and debt amount of the new debt on the appropriate bankruptcy schedule.
  2. Write a big “A” next to the name of the creditor. This tells the clerk of the court which debts are being added.
  3. In the Eastern District of California, you are required to prepare an Amendment Cover Sheet. You can download this form from the court website.
  4. Prepare a new Master Address List that contains only the name and address of the new creditor. There is a helpful tool on the court website that helps with this.
  5. Prepare a Proof of Service. You are required to mail the amendment and a copy of your 341 Notice to each creditor that you are now including in the bankruptcy along with two other parties listed below. You must file a Proof of Service with the Court to show that you have mailed the notice to the appropriate parties.
  6. Prepare three envelopes: one addressed to the new creditor; one addressed to your bankruptcy trustee; and one addressed to the United States Trustee’s Office. Include a fully copy of the amendment along with an unsigned Proof of Service. Put these in the mail.
  7. Sign your Proof of Service. You can now take your Amendment Cover Sheet, Amended Schedule, Master Address List, and Proof of Service to the Court for filing.

As you can see, making an amendment to your bankruptcy petition does take some work. It isn’t difficult to do, but the right steps must be followed. Skipping a step can result in an invalid amendment. This means that the new debt might not be included in your discharge.

I help make bankruptcy easy by handling the process from start to finish for my clients. Please call my office at (916) 333-2222 if you want to discuss how bankruptcy can help you. 

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Filing Bankruptcy in December? You Need to Read This.

Sacramento Bankruptcy Lawyer Rick MorinSomething big happened this month in the bankruptcy universe. The official forms provided by the United States Bankruptcy Court completely changed as of December 1, 2015.

Unlike official forms in other types of legal proceedings, these bankruptcy forms — often called the “petition and schedules” — are mandatory for all bankruptcy filers. Said another way, it is not possible to declare bankruptcy without using the official forms provided by the Court.

The folks who control what the forms look like have been working for a number of years to modernize the paperwork. For the most part, the content and questions of the forms have not drastically changed. Instead, changes are related to formatting and wording. The court also has separate forms for individual bankruptcy filers and corporate bankruptcy filers. The form numbers have changed as well.

The most obvious change people will notice is that a standard Chapter 7 bankruptcy petition is now much, much longer. Because of formatting changes, a typical bankruptcy will have an additional 10-15 pages of paper — maybe even more.

Most bankruptcy law firms utilize software that allows for the efficient production of the bankruptcy forms. I use “BestCase” here in my office. The software translates the data that I provide and places it in the appropriate spots on the bankruptcy forms. Pro se individuals can download forms bundles from the Bankruptcy Court that allow you to enter data directly onto the forms — but calculations are not done for you.

Don’t be caught off guard. If you are filing your own bankruptcy, from here on out you must use the new bankruptcy forms. The old forms are considered invalid and may not be accepted for filing by the clerk of the bankruptcy court. This is especially important if you are rushing to file to stop a garnishment or foreclosure — using the wrong forms could have disastrous results.

If you are filing for bankruptcy in the Sacramento area, you should call my office. I represent bankruptcy filers for Chapter 7 and Chapter 13 and can guide you through the process step by step. You can reach me at (916) 333-2222.

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When Are Chapter 13 Payments Due in Sacramento?

Sacramento Bankruptcy Lawyer Rick MorinChapter 13 bankruptcy is a reorganization bankruptcy where the court lets you repay some of your debts over time. Chapter 13 bankruptcy is great for people that do not qualify for Chapter 7 bankruptcy or just need some breathing room to figure out their finances.

Every Chapter 13 case involves a monthly payment by the debtor to the bankruptcy trustee. The trustee then distributes your plan payment to your various creditors in accordance with the instructions provided to the court in your Chapter 13 plan.

A debtor’s first Chapter 13 payment is due on the 25th day of the month following the month in which the bankruptcy was filed. For instance, if you file your Chapter 13 case August 12, your first payment will be due September 25.

Subsequent payments are due on the 25th day of each subsequent month. There is no grace period. The 25th means the 25th. A single missed Chapter 13 payment can put your entire bankruptcy in jeopardy. I always encourage my clients to pay their 13 payments early so there is no chance of a late payment.

The old fashioned way of paying involves sending a cashier’s check or money order each month in the mail. However, the trustees are now set up to accept electronic payments directly from your checking account via a service called TFS.

I like the TFS service because it establishes an audit trail. You don’t get that same level of assurance when you place your certified funds in the mail. Trust me, I have had my fair share of clients call my office in a panic because of a lost or mishandled Chapter 13 payment.

TFS does charge a small fee, but it is often less than the fee associated with obtaining a cashier’s check or money order from your bank. So TFS can help you save money too!

Please remember that the information listed above only applies to Chapter 13 cases assigned to trustees David Cusick and Jan Johnson in Sacramento. You should always check with your attorney and/or trustee to ensure that your Chapter 13 payments are being made on the appropriate schedule.

If you have questions about Chapter 13 bankruptcy in Sacramento, please call me at (916) 333-2222.

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Credit Reports After Bankruptcy

Sacramento Bankruptcy Lawyer Rick MorinI tell all of my clients to check their credit reports after bankruptcy. There are some dirty tricks that some creditors are using to impact your fresh start. But you don’t have to put up with it. Read on to learn more.

After your bankruptcy has been discharged, your credit report should list your unsecured debts as “discharged in bankruptcy” and the accounts should show a $0 balance. However, this is not always the case.

Some creditors will still report to the credit bureaus that you owe them money — even after your debts have been discharged in a Chapter 7 bankruptcy. They could be doing this because they are lazy, incompetent, or worse. They could be reporting that you owe them money in attempt to get you to repay a debt that you no longer legally owe!

Imagine trying to purchase a car after bankruptcy and being denied for a loan or charged a high interest rate. Not because of your bankruptcy, but because of some delinquent credit accounts still being reported on your credit report.

Some creditors are hoping that you will decide to pay them just so that they will clean up your credit report. This is not acceptable, and it is highly illegal.

My office takes aggressive action against creditors that fail to properly report debts after bankruptcy. Sometimes a warning will suffice. Other times, we can sue the creditor in federal court and obtain monetary sanctions. After all, even large credit card companies and banks are required to comply with the law.

This is why I tell my clients to check their credit reports 3, 6 and 12 months after their bankruptcy. This is the only way to see whether any creditors are misreporting discharged debts. If you see any debts that aren’t properly classified, you should contact my office immediately so that I can help fix this issue.

Having problems with credit reports after bankruptcy? Call me today at (916) 333-2222.

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Law Office of Rick Morin, PC. A 5-star law practice serving all of California. 

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The content on this website is intended for informational purposes only and should not be construed as legal advice. Any testimonials or endorsements do not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter.