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Bankruptcy-- What it can and

can't accomplish  

by Joe L.Golson


The following is an outline of select areas of bankruptcy law which are significant as you contemplate a filing under Chapter 7. Often, someone who considers bankruptcy is unaware of the nuances of bankruptcy or certain creditors' rights in bankruptcy. You should be familiar with some of the applicable provisions as you prepare for filing. What follows is not, by any means, an exhaustive review of bankruptcy law; nor does it fully explain each provision of the bankruptcy code or rules which might apply because each individual's situation is unique and sometimes unanticipated events occur; however, this overview will provide you with broad guidelines so that you may be comfortable with your decision. I will begin with an outline of basic procedures in Chapter 7 case and conclude with a discussion of various Chapter 7 pitfalls.

Basic Procedure
A. Upon filing, you will be required to file a sworn list of creditors, a schedule of assets and liabilities, a list of exempt property, a schedule of current income and expenditures, a statement of your financial affairs and a statement of intent regarding consumer debts secured by property of the estate. You will also be required to surrender to the trustee all property of the estate. 11 U.S.C. 521. The order of relief is granted when you file. What this means, among other things, is that an automatic stay is triggered, prohibiting creditors from pursuing you or your property
outside of the bankruptcy proceeding.

B. The clerk of court will give notice of the bankruptcy to your creditors. 11 U.S.C. 342.

C. There will be a meeting of creditors called to question you about your debts and ability to pay. The U.S. Trustee calls this meeting and you are required to attend. The judge may not question you at this time. Other creditors and the trustee may question you. Unlike a trial, your attorney may not "object" to questions in a formal sense. It is an open opportunity for creditors to question you and you are required to respond in good faith. 11 U.S.C. 341.

D. A creditor of the trustee assigned to your case may object to your listed exemptions within 30 days after the meeting of creditors.

E. A creditor must file a proof of claim within 90 days after the first date set for the meeting of creditors. At the end of the case, if a surplus remains after all of the claims are paid in full, the court may grant an extension of time for filing of claims not filed during the initial 90 day period.

The trustee may object to any claim.

F. An objection to your receiving a general discharge of all of your debts must be filed by thetrustee or a creditor within 60 days following the first date set for the creditors meeting If no objections are filed, and if no motion to dismiss is pending, the court will ordinarily grant a discharge upon expiration of the 60 day period. Bankruptcy Rules 4004 and 1017; 11 U.S.C. 727.

G. A creditor may object to the dischargeability of a particular debt at any time if the debt: (1) is for a tax or customs duty; (2) is not listed in the schedules so that a creditor could file a proof of claim; (3) is related to alimony or child support; (4) is a government fine or penalty; or (4) is a
government insured student loan. Any student loans guaranteed or insured by the government will not be dischargeable. This means that you will continue to be liable for the payment even if you file bankruptcy.

A creditor may object to the dischargeability of a particular debt only within 60 days of the first date set for the meeting of creditors, if the debt: (1) is a consumer debt created close to filing; (2) is a result of fraud; (3) is a result of a wilful and malicious injury to a person or property of another. Bankruptcy Rule 4007; 11 U.S.C. 523.

Debtor Pitfalls
The debtor's goal in any Chapter 7 is to have as many debts discharged as possible. The general rule is that all debts created before the bankruptcy filing are discharged. Discharge destroys any person liability you may have on a claim or debt. (Discharge will not destroy liens; liens survive the bankruptcy.)

There are some very significant exceptions to the general rule that all debts will be discharged. As stated above, a creditor can try to have his claim excepted from discharge pursuant to the provisions of 11 U.S.C. 523. If the claim is not discharged, the debtor continues to be responsible for its payment; obviously, this could have severe consequences to the debtor seeking a "fresh start" which is the very purpose of the Chapter 7 filing.

There are ten categories of debt excluded from discharge under 523. These fall into two areas: debts that are not dischargeable due to the wrongful conduct of the debtor and debts that are not dischargeable due to public policy.

The debts not dischargeable due to the debtor's misconduct include those created by intentional torts, fraud, larceny, embezzlement, fiduciary violations, and drunken driving. The debts not dischargeable due to public policy include alimony and child support, taxes and customs duties, governmental fines, penalties and forfeitures, educational loans, unscheduled debts and certain debts surviving a prior bankruptcy case. A claim must fall within one of these exceptions to be
found non-dischargeable.

To prevail on a fraud exception, the creditor would need to show that there was a false, material representation of fact made by the debtor that the debtor knew was false at the time he made it, made with the intention of deceiving the creditor. Some courts have held that when a credit card is used, the debtor impliedly represents that the debtor has the ability and intention to pay for the goods and services charged. Those courts have therefore found that some credit card debt is
non-dischargeable under the fraud exception.

This is not the only potential problem that can arise with credit card or similar debt. 523 also provides that there is a presumption that certain consumer debt created right before filing a Chapter 7 is non-dischargeable. The presumption of non-dischargeability will apply if the debt is a consumer debt for so-called "luxury goods or services" incurred or within 40 days before the filing, owing to a single creditor aggregating more than $500. Further, the presumption of
non-dischargeability will apply if there are cash advances made by a creditor for more than $1000 that are extensions of consumer credit under an open end credit plan within 20 days of filing bankruptcy.

Luxury goods and services are not defined by the Bankruptcy Code and the determination of same will be contingent upon the facts and circumstances of each case. I can tell you that courts have characterized such items as a person computer, coffee maker, floral arrangements and three-wheel recreational vehicle as "luxury" items.

Any credit extended based on false financial statements is subject to exception from discharge. Statements made in the financial statements have to be materially false with the intent to deceive the creditor to fall within this exception. Note that a credit application should not qualify as a "financial statement" if it does not require a disclosure of debts.

It is crucial for the debtor to include all creditors in his schedules filed with the court. If a debtor knows of the creditor and does not schedule him, the creditor is denied participation in any distribution; to protect the creditor from this type of problem, the code provides that unscheduled claims may be non-dischargeable.

Debts created by willful and malicious injury will also be excepted from discharge. These types of claims arise from intentional actions by the debtor, done with malice which causes damage. It is important to note that ordinary negligence claims are dischargeable. A plaintiff with a personal injury claim would need to allege significantly more than simple negligence to have his or her claim deemed non-dischargeable in the bankruptcy court.

Dismissal may also be justified if the debtor is an individual who has primarily consumer debt and the court finds that the granting of relief would be a substantial abuse of the bankruptcy process. Substantial abuse has been found by courts if the debtor is actually able to pay his debts when due
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Featured Article

Use and distribution of this article is subject to our Publisher Guidelines whereby the original author's information and copyright must be included.


Debt consolidation mortgage:

 ‘home solutions’ for integrating arrears  

by Ann Gibson


PERMISSION TO REPUBLISH: This article may be republished in newsletters and on web sites provided attribution is provided to the author, and it appears with the included copyright, resource box and live web site link. Email notice of intent to publish is appreciated but not required: mail to: brent@actionleadership.com

Word count: 919

Summary: The importance of motivation in leadership cannot be denied. But most leaders overlook a critical component of motivation, the human dream. The article describes what dreams really mean in the realm of leadership.

In Leadership, Dreams Are The Stuff That Great Results Are Made Of
by Brent Filson

Leadership is motivational or it's stumbling in the dark. The best leaders don't order people to do a job, the best leaders motivate people to want to do the job.

The trouble is the vast majority of leaders don't delve into the deep aspects of human motivation and so are unable to motivate people effectively.

Drill down through goals and aims and aspirations and ambitions and you hit the bedrock of motivation, the dream. Many leaders fail to take it into account.

Dreams are not goals and aims. Goals are the results toward which efforts are directed. The realization of a dream might contain goals, which can be stepping stones on the way to the attaining dreams. But the attainment of a goal does not necessarily result in the attainment of a dream.

For instance, Martin Luther King did not say, "I have a goal." Or "I have an aim." The power of that speech was in the "I have a dream".

Dreams are not aspirations and ambitions. Aspirations and ambitions are strong desires to achieve something. King didn't say he had an aspiration or ambition that " ....one day this nation will rise up and live out the true meaning of its creed: ‘We hold these truths to be self-evident, that all men are created equal.'" He said he had a dream.

If you are a leader speaking to people's aspirations and ambitions, you are speaking to something that motivates them, yes; but you are not necessarily tapping into the heartwood of their motivation.

After all, one might aspire or be ambitious to achieve a dream. But one's aspiration and ambition may also be connected to things of lesser importance than a dream.

A dream embraces our most cherished longings. It embodies our very identity. We often won't feel fulfilled as human beings until we realize our dreams.

If leaders are avoiding people's dreams, if leaders are simply setting goals (as important as goals are), they miss the best of opportunities to help those people take ardent action to achieve great results.

When Thomas Jefferson wrote in the Declaration of Independence that "Governments derive their just powers from the consent of the governed," he was writing about a dream. Not one European government at that time was a democracy. There had been few true democracies in the West since the fall of the Athenian democracy more than 2,000 thousand years before. But Jefferson's "dream" motivated people to take action. In fact, that dream motivates people to act around the world today.

Understand the dreams of the people you lead. People will not tell you what they dream until they trust you. They won't trust you until they feel that you can help them attain their dreams. Acquiring that understanding can cement a deep, emotional bond between you.

Dreams are not fantasies. Going to the mountain may be a dream. Standing on the mountain may be a dream. On the other hand, having the mountain come to us is a fantasy. Dreams can be realized, fantasies can't. Focus on dreams, on what is objectively achievable, not on fantasies.

Dreams are positive, uplifting. The Old English word "dream" means "joy, music, and noise-making." But that positive, inspirational quality can have negative effects on an organization.

Negative dreams can damage an organization. For instance, union/management issues are often particularly inflammatory because of conflicting dreams, of both sides seeing the other as "the enemy." Your audience wanting to go back to the "good old days" can be a negative dream. Only a trusted leader can help people reshape their dreams.

Most people have a dream for their life and work. Even people in abject circumstances, such as prisons and concentration camps, dream of a fulfilling existence beyond their present circumstances. If they lose their dreams, they lose an essential quality of their humanity.

People won't be transformed by your leadership if you have a low opinion of and low expectations for their dream and/or if they are convinced that you can't help them attain that dream.

Many people don't consciously realize what they dream. But that doesn't mean that they are not influenced by their subconscious dream. A subconscious dream can motivate people to act without their clearly understanding why they are acting. Have the people you lead be fully conscious of the content and meaning of their dream or risk having your organization's activities be impeded by a dimly perceived yet none-the-less potent dream.

Each dream has a price. It's one thing to think it. It's another thing to do it. Know the price people will have to pay to attain their dream. Have them understand the price.

As a leader, dream with the people! Without hitching our wagons to stars, the wagons and the stars lose their true meaning in our lives.

Dreams give meaning to emotion and purpose to action. People who believe they're living their dream see their jobs as part of a higher cause and will work accordingly. Conversely, people who see their jobs as antithetical to their dream, may see that work as oppressive; and they too will work accordingly.

Dreams are supreme reality. Dream graffiti on a Paris wall during the 1968 student rebellion said, "Be realistic: Do the impossible!"

2005 © The Filson Leadership Group, Inc. All rights reserved.

About the Author


The author of 23 books, Brent Filson's recent books are, THE LEADERSHIP TALK: THE GREATEST LEADERSHIP TOOL and 101 WAYS TO GIVE GREAT LEADERSHIP TALKS. He is founder and president of The Filson Leadership Group, Inc. – and for more than 20 years has been helping leaders of top companies worldwide get audacious results. Sign up for his free leadership e-zine and get a free white paper: "49 Ways To Turn Action Into Results," at http://www.actionleadership.com


 
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