Filing Bankruptcy in Connecticut During COVID19 Pandemic

                 COVID19 has affected all of our lives in so many ways including how my bankruptcy clients interact with me for filing their bankruptcies in Connecticut. With the emphasis on safety first I have developped a completely remote process to telephone or zoom conference with my bankruptcy clients with effective use of email to deliver the requisite notices and requirments and receive back the documents I need for their filings. After the initial client inquiry I schedule either a tele-conference or zoom conference depending on the client's preference and their computer capabilities to review with them the information and documents I need for their filing. In preparation for this conference I email to my clients my retainer letter with required Debt Relief Agency disclosures and other relevant documents for this conference. During the conference I review these documents with them including the credit report authorization form they need to return and credit counseling courses required; ask them questions to complete the bankruptcy worksheet and bankruptcy documents required checklist and review the timelines and process for Chapter 7 or 13 depending on which chapter is appropriate for them.  I send them followup email(s) based on the results of this conference with forms and the list of diocuments needed to complete their bankruptcy filing including an authorization to e-file their bankruptcy without their actual signatures on the bankruptcy petition and schedules. The Bankruptcy Court for the District of Connecticut has issued an order allowing the use of this form in lieu of actual signatures due to the impact of COVID19. Once the bankrutpcy petiton and schedules are ready for filing I email my clients these documents for their review to confirm their accuracy before filing them. After they are filed the bankrutpcy court will schedule a telephonic creditors meeting which the Unites States Trustee has adopted as a safe method to conduct these meetings due to COVID19. After the creditors meeting the process continues to be conducted remotely including any court hearings, if scheduled, which the Bankruptcy Court now holds on the zoom.gov platform. In conclusion, if you need to file bankruptcy, but are concerned about doing it safely my remote procedures in conjunction with those adopted by the Bankruptcy Court allows you to do so safely with no threat to your health from COVID19.

I Need to File Chapter 7 Bankruptcy When Should I File?

     The premise of this post is that the debtors in question need to file Chapter 7 bankruptcy to discharge their debts and focuses only on the timing of their bankruptcy filings. Also this post refers to the Means Test which is a qualification test and potential roadblock to filing Chapter 7 which is explained in more detail in prior posts on this Blog. The following are some common scenarios based on my experience with past clients with explanations of the appropriate filing times.

     1) Engaged Persons:

           

              A) In a situation where only one of the two future spouses has debt problems filing Chapter 7 before the marriage will be appropriate especially if the combined income of the married couple will put them over the household median and make the filing subject to the means test.  Important to remember once married even if only one spouse files the non-filing spouse's income is included in the means test. There also is the clear advantage of having the future spouse obtain the fresh start from their debts before their marriage thereby eliminating any turmoil these debts may cause between spouses.

             B) Where both parties need to file Chapter 7 it will make sense for them to file as individuals before their marriage if their individual incomes are below the household median for the means test and above if combined. If the combined incomes will not put the married couple above the median income than filing after marriage will likely make more sense as long as their monthly combined net income less their joint expenses does not leave them with too much excess income. One main reason is that they can file together as a married couple thereby eliminating the fees and expenses of two individual filings. Filing together also holds true if one future spouse due to their income cannot file individually under means test, but will qualify together with spouse who may have low income or children that will increase household size so they will avoid means test filing as married couple.

           

      2) Foreclosure Scenarios:

                A) Debtor wants to delay foreclosure and prolong stay in home. Under this scenario as long as there are no other pressing needs to file right away, for example a pending wage execution, delaying the filing till right before a foreclosure auction or on the debtor's law day if there is a judgment of strict foreclosure will maximize the additional delay bankruptcy can provide.

               B)  In a situation where the debtor is already out of the property and not interested in delaying foreclosure best to wait if possible till after title passes via the foreclosure thereby debtor's ownership interest in property terminated prior to bankruptcy along with any liabilities as property owner.           

    3)  Other Scenarios:

             A) Expecting parents may need to wait for the birth of their child to increase their household   size to bring their income below the household median to avoid the means test. There also are the increased expenses of a new born baby that in some cases will eliminate any problematic excess monthly income to qualify for Chapter 7 filing.

            B) Debtor needs to file asap. These situations include where the debtor has:

                 i) Pending Wage execution they want to stop;

                   ii) Pending Bank execution they want to reverse: 

                   iii) Pending judgment they want to avoid;

                   iv) Future income increase means test issue;                                          

                   v)  Need emergency filing to stop auction/law day;and

                   vi) Been worn down by creditor harassment

       

    The above scenarios are just some of the examples I can provide as to appropriate bankruptcy timing. One of my next posts will deal with debtors and divorce including timing and filing issues that are unique to couples at all stages of the divorce process.

       


   

I Want To File Chapter 7 Bankruptcy My Spouse Does Not What Should I Do?

     As a Connecticut bankruptcy attorney I sometimes meet with prospective married clients who seek to file Chapter 7 bankruptcy individually. Initially I have to bring to their attention that despite their request to file on their own their spouse's income has to be taken into consideration to determine their ability to file both under the means test which has been discussed in prior posts on this blog as well their joint income compared to their joint expenses. Assuming the non-filing spouse's income does not pose a roadblock to filing a Chapter 7 bankruptcy the next issue I address with these clients is the advisability of filing jointly with their spouse instead of individually. The whole idea of the fresh start from a Chapter 7 filing is defeated if only one spouse files and receives a discharge of their debts, but the other spouse is still left with his own burdensome debt that could have been discharged in a joint filing. In these cases there is usually an initial reluctance on the part of the spouse who wants to avoid filing bankruptcy which requires my meeting with them and stressing the advantages of filing jointly to remove all of the family debts not just their spouse's. The fees and costs are almost the same for filing together so that does not pose a barrier to a joint filing. Each situation is unique and in some cases where it may be advisable for the benefit of both spouses to file jointly one spouse may just be philosophically or emotionally opposed to filing bankruptcy. In such cases I do my best to convince the reluctant spouse that their family will truly benefit from the Chapter 7 filing by filing jointly and sometimes I am successful. In other cases when I am not and one spouse still wants to proceed they can as long the other spouse is willing to cooperate to the extent of providing the necessary income and expense information for their spouse's Chapter 7 filing.

     There are clearly situations where it does make sense for only one spouse to file. One common situation is a recently married couple where one spouse has accumulated debt prior to their marriage, but the other spouse is in relatively good financial shape and their combined income still allows for a Chapter 7  filing by the one spouse. This allows the non-filing spouse to preserve their good credit. It also makes even more sense for the spouse with the problem debt to file Chapter 7 before getting married especially in cases where there may be a means test issue due to the prospective spouse's income once they are married. Another fact scenario where it is advisable for only one spouse to file Chapter 7 is where the other spouse may possess non-exempt assets that would be taken or sold for the benefit of creditors if they file jointly. There also may be situations where delaying one spouse's Chapter 7 filing to allow for a joint filing is advisable. One example of this situation is where one spouse may have tax debt that will become dischargeable if the filing is delayed. Another example is where one spouse may have made a preferential transfer payment for a debt due to a relative within the past year. When the appropriate time has expired to allow both spouses with problem debt to file it definitely makes sense to do so. Again as stated above each situation is unique based on the particular facts involved and stresses the need for any spouse considering filing bankruptcy to meet with an experienced bankruptcy attorney to determine how and when to file.