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  1. 7. Mail Documents to Your Trustee The bankruptcy trustee is a official appointed by the court to oversee your case. Pay attention to mail you receive from the trustee after filing. The trustee will send you a letter asking you to mail them certain financial documents, like tax returns, pay stubs, and bank statements. If you don’t mail the the trustee the requested documents, you will not get a discharge of your debts. 8. Take Bankruptcy Course 2 As soon as possible after filing your bankruptcy forms, you also need to take your second mandatory bankruptcy course. The second course, called the Debtor Education Course, is similar to the credit counseling course. But it is designed to educate you on making smart financial choices so that you won’t have to seek bankruptcy relief in the future. Course 2 can be completed online or by phone and takes at least 2 hours to complete. The fee for the course ranges from $10-$50. But the fee may be waived if your household income is under 150% of the federal poverty level. If you don’t complete the course, you will not obtain a fresh start. So make sure to complete the course as soon as possible after filing. 9. Attend Your 341 Meeting Finally, you need to attend your 341 meeting. The location of the 341 Meeting depends on where you filed your bankruptcy case. Usually, the 341 Meeting takes place about a month after filing. The main purpose of the 341 Meeting is to ensure that you are not hiding any expensive assets that should be distributed to creditors. If your papers were done correctly, you should have no trouble answering the questions. Most meetings last only about 5 minutes. Creditors are allowed to attend, although they almost never do. Important note: You must bring your government-issued ID and social security card to the meeting. If you don’t bring them, the trustee cannot verify your identity and the meeting cannot go forward. You should also bring a copy of your bankruptcy forms to the meeting, along with your last 60 days of pay stubs, your recent bank statements, and any other documents that your trustee has asked for. In most cases, the trustee “closes” the case at the end of the meeting. In that case, unless something very unusual happens, you get a letter two months later from the Court stating that your debts have been discharged. 10. Optional - Dealing with Your Car Finally, there’s an additional step in the bankruptcy process if you own a car with outstanding debt. If you want to surrender the car to the lender, the lender will file a motion with the bankruptcy court to ask permission to retake the car. Alternatively, you might choose to keep the car by “reaffirming” the car debt and continuing making payments on it. In that case, your lender would normally send you a reaffirmation agreement that you would need to sign and return within 45 days after your 341 meeting. The lender would then file the signed reaffirmation agreement with the court for approval. If the judge approves your reaffirmation, you would get a notice of reaffirmation along with your discharge. And you would be able to keep the vehicle as long as you stay current on your payments. Finally, you may also have chosen “redeem” the car by buying it back from the lender in one lump sum, usually obtained from a lender like 722redemption.com. If you chose redemption, you will be required to filing a motion in the bankruptcy case. upsolve.org
  2. 3. Complete the Bankruptcy Forms This is the most time-consuming step. The Bankruptcy Forms include 23 seperate forms totalling roughly 70 pages. The forms ask you about everything you make, spend, own and owe. If you download and print out the forms online, you will have to enter repetitive data and make lots of math calculations. So if you’re not able to hire a lawyer, you probably want to buy a bankruptcy software program or use Upsolve.org’s free online bankruptcy service. 4. Get Your Filing Fee Filing for Chapter 7 bankruptcy normally requires a $335 filing fee, which must be paid to the court in person in exact change. If you don’t have the funds to pay the filing fee now, you can complete a special form, asking to pay your fee in installments. You can ask to pay the $335 fee in up to 4 payments within 120 days of your filing date. If paying in installments isn’t even possible, you can submit another form to apply for a fee waiver. To qualify, your total household income must be under 150% of the federal poverty line. The court will decide whether you get a fee waiver after you file. If your application is denied, the court will order you to pay the fee in installments. 5. Print Your Bankruptcy Forms Once you have prepared your bankruptcy forms, you will need to print them out for the court. You must print them single-sided. The court won’t accept double-sided pages. You will also need to sign the forms once they are printed. Most bankruptcy courts require just 1 copy of the petition, but some courts like the bankruptcy court in Manhattan require 4 copies. So call your local bankruptcy court to find out how many copies you will need to bring. 6. Go to Court to File Your Forms Once you enter the doors of your local court house, you will be greeted by security guards, who will ask you to pass through a metal detector. Once you pass security, you will go to the clerk’s office. And you will tell the clerk, “I’d like to file for bankruptcy.” You’ll hand the Clerk your bankruptcy forms, along with your filing fee of $335 in exact change. Or if you are filing a fee waiver or installment plan, you hand the clerk the fee waiver form or fee installment form instead of the cash. The clerk will take your bankruptcy forms and ask you to take a seat in their waiting room. It shouldn’t take long for the clerk long to process your case - about 15 minutes. During this time, they will scan your forms and upload them to the court’s online filing system. As soon as they are done processing your forms, the clerk will call you back to the front desk. The clerk will give you: Your bankruptcy case number The name of your bankruptcy trustee The date, time, and location of your meeting with your trustee (this is called the “Meeting of Creditors” or “341 Meeting”) At this point, your case has been filed! Congrats! Something very important has just happened. Your debt collectors are now legally prohibited by bankruptcy’s Automatic Stay from contacting you to collect your debts, from garnishing your wages, or foreclosing on your property. This lasts until the end of your bankruptcy case, at which point most, if not all, of your debts will hopefully be erased. But you’re not home yet - there are other steps you need to complete to get a fresh start! upsolve.org
  3. 1. Collect Your Documents Before getting started, you need to collect all your financial documents so you understand the current state of your finances. First, you need to obtain a copy of your credit report from Experian, TransUnion, or Equifax to learn how much debt you owe. You can obtain your credit report from all three at AnnualCreditReport.com. Some of your debts may not be listed on your credit report, like medical bills, personal loans, or tax debts. Make a list of any missing debts as you will need to list all of them on your bankruptcy forms. In addition to your credit report, you will need the following documents: Tax returns for the past 2 years Pay stubs or other proof of your income for the last 6 months Recent bank account statements Recent retirement account or brokerage account statements Valuations or appraisals of any real estate you own Copies of vehicle registration Any Other Documents Relating to Your Assets, Debts, or Income. Having these documents next to you will help you get an accurate picture of your finances. 2. Take Credit Counseling An important first step to the bankruptcy process is credit counseling. Everyone who files for bankruptcy is required to take a credit counseling course that is approved by the Department of Justice. Credit counseling courses like this one give you an idea of whether you really need to file for bankruptcy or whether you could get back on your feet through some type of informal repayment plan. You will provide the credit counseling agency with your income and expenses. Together, you will review the options for repaying the debt, like debt consolidation, or debt settlement. In many cases, this exercise only confirms that you don't have any feasible options for addressing the debt other than bankruptcy. But it’s a valuable exercise even still. The course takes at least one hour and can be completed online or by telephone. The course fee ranges from $10 to $50, depending on the provider. But if your household income is under 150% of the federal poverty line, you should be able to get this fee waived. Once you complete the course, you will receive a certificate of completion. Keep it. You will need to give a copy of this certificate to the court when you file your bankruptcy forms in Step 5. upsolve.org
  4. 13. You’ll have to go to class. Before you file, you’ll be required to take a 90-minute credit counseling class, says Mark. Later, before your bankruptcy is officially concluded, you’ll take a second, two-hour session. You can attend in person, by phone or online. Cost: no more than $50 per class. And if you’re receiving free or discounted legal services, or you’re living on Social Security disability payments, you can get the fees waived. 14. It can pay to be proactive. If you’re considering bankruptcy, it pays to get advice early — especially if you’re getting notices of foreclosure or lawsuits, says Sommer. Having that information early can help you make strategic decisions. For instance, many experts recommend waiting until the situation causing your financial crisis (job loss, medical problem) is over or at least stabilized before you file, so that you don’t just rack up more bills. In some situations, consumers need the immediate protection from foreclosure or collection that bankruptcy provides. Knowing your options early can help you better navigate your situation. creditcards.com
  5. 11. A bankruptcy doesn’t protect joint account holders. A bankruptcy dissolves your obligation to a creditor. But if anyone else is also on the hook for one of your debts, such as a joint account holder or co-signer, your bankruptcy makes that bill his or hers alone. And that’s a situation that commonly occurs after a divorce, says Rick McElvaney, program director for the Center for Consumer Law at the University of Houston Law Center. Best bet: Before you finalize a divorce, pay off bills or have the obligations transferred into the name of one party or the other. 12. It’s public. “Many people believe that since bankruptcy involves personal financial information, it involves privacy,” says Jack Williams, co-author of “Tax Aspects of Bankruptcy Law and Practice.” “It’s public information. The world, if they’re interested, can see everything about your financial situation in the last few years.” On the plus side, unless you’re a famous name, few (if any) will care. creditcards.com
  6. 8. You may be able to get free or low-cost legal help. Some law firms may have discount programs, so ask about the option, says Mark. In addition, the bar association might have a list of firms that do low-cost or pro bono work. And your local legal aide office might be able to help. Some cities, including Philadelphia, have organizations such as the Consumer Bankruptcy Assistance Project, which help low-income consumers. One tip: Avoid nonlawyers who say they can help with a bankruptcy, says Sommer, who is a supervising attorney with the project. Instead of saving money, “you can end up losing several times that amount,” he says. 9. Bankruptcy goes on your credit history. The safe rule of thumb: A bankruptcy will stay on your credit history about 10 years, says Mark. But the older that bankruptcy is, the less power it has to scare lenders and impact your credit score. 10. It may not make your credit any worse. If you’ve had financial problems (chronic late and missed payments, charge-offs, etc.), it might not have much of an effect. And you could actually see your credit improve a year or so after bankruptcy, says Sommer. In general, you can be considered for an FHA loan about a year after a Chapter 13 and about two years after a Chapter 7, says Mark. For a conventional loan, it would be about twice that, he says. creditcards.com
  7. 6. You have to qualify for a Chapter 7. Consumers must show through income (if they are below the state median) or through both income and expenses (if they are above the state median) that they can’t repay their debts. But since bankruptcy is often a last resort, filers who need Chapter 7 are having no problems qualifying, Sommer says. 7. Bankruptcy is not cheap. Costs vary depending on your attorney and location. But in general, a Chapter 7 can run $1,500 to $2,500, while a Chapter 13 can run $2,000 to $4,000, says Sommer. One source for local bankruptcy attorneys: NACBA.org. With a Chapter 13, you can include bankruptcy costs in your plan and pay them over three to five years. With Chapter 7, that’s not an option. And initial consultations are usually free, so don’t be afraid to interview several attorneys and let them know price is a factor, says Todd Mark, vice president of education for the Consumer Credit Counseling Service of Greater Dallas. creditcards.com
  8. 3. Where you live matters. When it comes to which assets you can keep in bankruptcy, rules vary widely by state. In addition, income and expense limits used for determining whether you qualify for a Chapter 7 will vary by location. Also attorney’s fees and filing fees will vary. 4. You get to keep assets. Filing bankruptcy doesn’t mean giving up all your possessions. You keep your personal property, such as clothes, electronics, household furnishings and other exempt assets. Depending on your state laws, the type of bankruptcy you file, and your finances, you can sometimes retain larger assets, such as cars and the family home. 5. The two types of bankruptcy are very different tools. If you were out of work and got behind on the house payments but can now meet your mortgage, a Chapter 13 might be your best option. If you don’t own a home but are struggling with medical bills, then Chapter 7 might be a better choice. Like any major financial decision, you need to gather information. Write down the assets that are important to you, and what you need to get from your bankruptcy. When you talk with an attorney, go through the list and find out how the two types of bankruptcy (combined with the laws in your state), would impact each item. creditcards.com
  9. 1. There are two main types of personal bankruptcy. Chapter 7 allows the filer to walk away from debts entirely. This option is used by those whose debts are so high or income so low that after basic expenses they don’t have the money for a payment plan. Chapter 13 allows the filer to draft a plan to repay all or part of the debts over three to five years. 2. Consumers don’t use bankruptcy frivolously. People turn to bankruptcy when they have major life events that significantly reduce their income, increase their bills or both, says Henry Sommer, past president of the National Association of Consumer Bankruptcy Attorneys. The most common reasons for bankruptcy: divorce, unemployment and medical bills, says Sommer. “In 50 to 60 percent of cases, there are medical problems present,” he says. Filing bankruptcy also halts, at least temporarily, collection attempts and foreclosures. If you’re unemployed or recently re-employed but facing foreclosure because of missed payments, Chapter 13 can help you save your home, says Sommer. “In fact, it’s one of the most common uses for Chapter 13,” he says. The reason: If you can afford your mortgage payments on your salary (or expected salary), Chapter 13 allows you to repay missed payments over three to five years. It can also stall a foreclosure long enough for you to get re-employed. creditcards.com
  10. First, you need to know whether you need to file bankruptcy. Filing bankruptcy is a way to stop a garnishment as soon as the bankruptcy petition has been filed. Chapter 7 bankruptcy is a very effective tool for erasing credit card debt, medical debts, and most other unsecured debt. But you can only be use it once every 8 years. Chapter 13 bankruptcy is another type of bankruptcy available to consumers. The main difference between Chapter 7 and Chapter 13 is that you pay a portion of your debts making monthly payments to the Chapter 13 Trustee. You only pay as much as you are able to based on the means test and your actual income and expenses, without regard for interest rates on unsecured debt. Debts like student loans, child support, alimony, and recent tax debts will not be eliminated when your bankruptcy discharge is granted under any type of bankruptcy. Also, if you have any cosigners, they will not be protected by your personal bankruptcy. Temporary debt relief is immediate in all types of bankruptcy as the automatic stay prohibits creditors from contacting you as soon as you or your bankruptcy lawyer file your bankruptcy petition. It also stops a garnishment right away. That's one of the most important bankruptcy basics that everyone should know. Depending on the filer's credit score when the Chapter 7 bankruptcy is filed, it may initially drop a little. However, once the debt relief becomes permanent when the bankruptcy discharge is entered, most people are able to rebuild their credit score within less than one year. In the United States, filers in 96% of all Chapter 7 consumer bankruptcy cases are able to keep all of their property even after their bankruptcy filing. upsolve.org
  11. Economic democracy is described as an integral component of an inclusive democracy in Takis Fotopoulos' Towards An Inclusive Democracy as a stateless, moneyless and marketless economy that precludes private accumulation of wealth and the institutionalization of privileges for some sections of society, without relying on a mythical post-scarcity state of abundance, or sacrificing freedom of choice. The proposed system aims to meet the basic needs of all citizens (macroeconomic decisions), and secure freedom of choice (microeconomic decisions). Therefore, the system consists of two basic elements: (1) democratic planning, which involves a feedback process between workplace assemblies, demotic assemblies and a confederal assembly, and (2) an artificial market using personal vouchers, which ensures freedom of choice but avoids the adverse effects of real markets. Although David Pepper called this system "a form of money based on the labour theory of value", it is not a money model since vouchers cannot be used as a general medium of exchange and store of wealth. Another distinguishing feature of inclusive democracy is its distinction between basic and non-basic needs. Remuneration is determined separately according to the cost of basic needs, and according to degree of effort for non-basic needs. Inclusive democracy is based on the principle that meeting basic needs is a fundamental human right which is guaranteed to all who are in a physical condition to offer a minimal amount of work. By contrast, participatory economics guarantees that basic needs are satisfied only for public goods or are covered by compassion and by a guaranteed basic income for the unemployed and those who cannot work. Many advocates of participatory economics and Participism have contested this. As part of inclusive democracy, economic democracy is the authority of demos (community) in the economic sphere—which requires equal distribution of economic power. Therefore, all macroeconomic decisions (overall level of production, consumption and investment, amounts of work and leisure implied, technologies to be used and so on) are made collectively and without representation. However, microeconomic decisions are made by the individual production or consumption unit through a proposed system of vouchers. As with the case of direct democracy, economic democracy is only feasible if the participants can easily cooperate. wikipedia.org
  12. Hungarian historian Karl Polanyi suggested that market economies should subordinate themselves to larger societal needs. He states that human-beings, the source of labor, do not reproduce for the sole purpose of providing the market with workers. In The Great Transformation, Polanyi says that while modern states and market economies tend to grow under capitalism, both are mutually interdependent for functional development. In order for market economies to be truly prosperous, he claims social constructs must play an essential role. Polanyi claimed that land, labor, and money are all commodified under capitalism, though the inherent purpose of these items was never intended "for sale"—what he labels "fictitious commodities." He says natural resources are "God-given", money is a bookkeeping entry validated by law, and labor is a human prerogative, not a personal obligation to market economies. Schweickart's economic democracy is a form of market economy, at least insofar as the allocation of consumer and capital goods is concerned. Firms buy raw materials and machinery from other firms and sell their products to other enterprises or consumers. "Prices are largely unregulated except by supply and demand, although in some cases price controls or price supports might be in order – as they are deemed in order in most real-world forms of capitalism." Without a price mechanism sensitive to supply and demand, it is extremely difficult for a producer or planner to know what and how much to produce, and which production and marketing methods are the most efficient. Otherwise, it is difficult to motivate producers to be both efficient and innovative. Market competition resolves these problems, to a significant if incomplete degree, in a non-authoritarian, non-bureaucratic fashion. Enterprises still strive to make a profit. However, "profit" in a worker-run firm is calculated differently than under capitalism. For a capitalist firm, labor is counted as a cost. For a worker-run enterprise it is not. Labor is not another "factor of production" on par with land and capital. Labor is the residual claimant. Workers get all that remains, once other costs, including depreciation set asides and the capital assets tax, have been paid. Because of the way workplaces and the investment mechanism are structured, Schweickart's model aims to facilitate fair trade, not free trade, between nations. Under Economic Democracy, there would be virtually no cross-border capital flows. Enterprises themselves would not relocate abroad, since they are democratically controlled by their own workers. Finance capital stays mostly at home, since funds for investment are publicly generated and are mandated by law to be reinvested domestically. "Capital doesn't flow into the country, either, since there are no stocks nor corporate bonds nor businesses to buy. The capital assets of the country are collectively owned – and hence not for sale." According to Michael Howard, "in preserving commodity exchange, a market socialism has greater continuity with the society it displaces than does nonmarket socialism, and thus it is more likely to emerge from capitalism as a result of tendencies generated within it." But Howard also suggested, "one argument against the market in socialist society has been that it blocks progress toward full communism or even leads back to capitalism". From this perspective, nonmarket models of economic democracy have also been proposed. wikipedia.org
  13. While there is no single approach or 'blueprint' for social control of investment, many strategies have been proposed. For example, Gar Alperovitz claims many real-world strategies have already emerged to democratize and decentralize the ownership of wealth and capital. In addition to worker cooperatives, Alperovitz highlights ESOPs, credit unions and other cooperative forms, social enterprises, municipally-owned utilities and public banks as starting points for what he has termed a "Pluralist Commonwealth". Alternately, David Schweickart proposes a flat-rate tax on capital assets to replace all other business taxes. This "capital assets tax" is collected and invested by the central government. Funds are dispersed throughout society, first to regions and communities on a per capita basis, then to public banks in accordance with past performance, then to those firms with profitable project proposals. Profitable projects that promise increased employment are favored over those that do not. At each level, national, regional and local, legislatures decide what portion of their funds is to be used for public capital expenditures, then send the remainder to the next lower level. Associated with most banks are entrepreneurial divisions, which promote firm expansion and new firm creation. For large (regional or national) enterprises, local investment banks are complemented by regional and national investment banks. These too would be public institutions that receive their funds from the national investment fund. Banks are public, not private, institutions that make grants, not loans, to business enterprises. According to Schweickart, these grants do not represent "free money", since an investment grant counts as an addition to the capital assets of the enterprise, upon which the capital-asset tax must be paid. Thus the capital assets tax functions as an interest rate. A bank grant is essentially a loan requiring interest payments but no repayment of principal. While an economy of worker-self-managed enterprises might tend toward lower unemployment than under capitalism - because banks are mandated to consistently prioritize investment projects that would increase employment - Schweickart notes that it does not guarantee full employment. Social control of investment serves to increase employment. If the market provides insufficient employment, the public sector becomes the employer of last resort. The original formulation of the U.S. Humphrey-Hawkins Act of 1978 assumed that only in this way could full employment be assured in a market economy. Economic Democracy adopts this approach. Social control of investment then blocks the cyclical unemployment typical of capitalism. wikipedia.org
  14. In worker self-management, each productive enterprise is controlled by those who work there. Workers are responsible for the operation of the facility, including organization, discipline, production techniques, and the nature, price, and distribution of products. Decisions concerning distribution are made democratically. Problems of authority delegation are solved by democratic representation. Management is chosen by the worker, not appointed by the State, not elected by the community at large and not selected by a board of directors elected by stockholders. Ultimate authority rests with the enterprise's workers, following the one-person, one-vote principle. According to veteran World Bank economic adviser David P. Ellerman it's the employment contract that needs to be abolished, not private property. In other words, "a firm can be socialized and yet remain 'private' in the sense of not being government-owned." In his book, "The Democratic Firm", Ellerman stated: Alternately, in Schweickart's model, workers control the workplace, but they do not "own" the means of production. Productive resources are regarded as the collective property of the society. Workers run the enterprise, use its capital assets as they see fit, and distribute the profits among themselves. Here, societal "ownership" of the enterprise manifests itself in two ways: 1) All firms pay tax on their capital assets, which goes into society's investment fund. In effect, workers rent capital assets from society. 2) Firms are required to preserve the value of the capital stock entrusted to them. This means that a depreciation fund must be maintained to repair or replace existing capital stock. This money may be spent on capital replacements or improvements, but not to supplement workers' incomes. Italy's Legacoop and Spain's Mondragon multi-sectoral worker-cooperatives have both been able to reach significant scale and demonstrate long-term sustainability. According to a study conducted by Massachusetts Institute of Technology, the greatest lesson to be learned from these European experiences is the importance of developing an economically integrated network of cooperatives rather than a single cooperative. The report goes on to say:
  15. Advocating for an "alternative economic system free of capitalism's structural flaws", economist Richard D. Wolff says reform agendas are fundamentally inadequate, given that capitalist corporations, the dominant institutions of the existing system, retain the incentives and the resources to undo any sort of reform policy. For example, Wolff goes on to say: According to David Schweickart, a serious critique of any problem cannot be content to merely note the negative features of the existing model. Instead, we must specify precisely the structural features of an alternative: "But if we want to do more than simply denounce the evils of capitalism, we must confront the claim that 'there is no alternative'—by proposing one." Schweickart argued that both full employment and guaranteed basic income are impossible under the restrictions of the U.S. economic system for two primary reasons: a) unemployment is an essential feature of capitalism, not an indication of systemic failure; and b) while capitalism thrives under polyarchy, it is not compatible with genuine democracy. Assuming these "democratic deficits" significantly impact the management of both the workplace and new investment, many proponents of economic democracy tend to favor the creation and implementation of a new economic model over reform of the existing one. For example, Dr. Martin Luther King Jr. claimed "Communism forgets that life is individual. Capitalism forgets that life is social, and the Kingdom of Brotherhood is found neither in the thesis of Communism nor the antithesis of Capitalism but in a higher synthesis. It is found in a higher synthesis that combines the truths of both". Regarding the gap between productivity and purchasing power, Dr. King maintained: According to historian and political economist, Gar Alperovitz: "King’s final judgment stands as instructive evidence of his understanding of the nature of systemic challenge — and also as a reminder that given the failures of both traditional socialism and corporate capitalism, it is time to get serious about clarifying not only the question of strategy, but what, in fact, the meaning of changing the system in a truly democratic direction might one day entail." Trade unionist and social activist Allan Engler argued further that economic democracy was the working-class alternative to capitalism. In his book, "Economic Democracy", Engler stated: Assuming that "democracy is not just a political value, but one with profound economic implications, the problem is not to choose between plan and market, but to integrate these institutions into a democratic framework". Like capitalism, economic democracy can be defined in terms of three basic features: Worker self-management: each productive enterprise is controlled democratically by its workers. Social control of investment: funds for new investment are returned to the economy through a network of public investment banks. The market: enterprises interact with one another and with consumers in an environment largely free of governmental price controls. Raw materials, instruments of production and consumer goods are all bought and sold at prices largely determined by the forces of supply and demand. In real-world practice, Schweickart concedes economic democracy will be more complicated and less "pure" than his model. However, to grasp the nature of the system and to understand its essential dynamic, it is important to have a clear picture of the basic structure. Capitalism is characterized by private ownership of productive resources, the market, and wage labor. The Soviet economic model subordinated private ownership of productive resources to public ownership by collectivizing farms and factories. It further subordinated the market to central planning—but retained the institution of wage labor. Most proposed models for economic democracy generally begin with democratizing the workplace and the ownership of capital. Other proposals advocate replacing the market with some form of planning, as well. wikipedia.org
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