If you are facing the prospect of bankruptcy you shouldn’t feel alone. Even the oil industry has been hit with several bankruptcies and, according to Forbes.com, the latest is American Eagle Energy. “The Colorado-based company that buys and develops oil wells in the Bakken oil fields of North Dakota and Montana filed for chapter 11 bankruptcy protection on Monday in Denver’s bankruptcy court.” It seems that the recent plunge in oil prices has hit these companies hard. The company reported that it had $222 million in assets and $215 million in debts, but it recently reported missing its first interest payment on its debt. One may see the wisdom of this company filing for bankruptcy protection now before things spin too far out of control. That principle can apply to individuals as well. One benefit of seeking bankruptcy advice from a lawyer before things get too far out of control is that it allows the debtor to properly prioritize debt payments and plan for the most beneficial use of exemptions so that the debtor can come through the bankruptcy process and keep most or all of his property.
Debtor education a/k/a financial management course is similar to credit counseling. However, it must be completed after the filing of a bankruptcy case, whereas credit counseling must be completed before the filing of the bankruptcy case. Debtor education consists of 2 hours of coursework. Like credit counseling it can also be completed online for less than $10 whether it is being done by an individual or a couple. If you want to complete your debtor education by telephone or in person, expect to pay in the $20-$50 range. After filing a bankruptcy case the debtor should expect to receive several advertisements in the mail for debtor education courses that cost in the range of $30-$50. Anything you receive in the mail that gives the impression that you have to do your debtor education with any one particular provider IS NOT from the court. There are over 90 approved debtor education course providers for the Western District of Wisconsin, and you can choose from any one of them. If you are paying more than $10, and you have access to the internet, you are paying too much!
Before filing your consumer bankruptcy you must complete a credit counseling course that is approved in the district in which you are filing. Even if you are doing an emergency minimum filing you must get it done before you file. This may seem daunting. However, with the help of the internet, it can be done quickly and inexpensively. In the Western District of Wisconsin there are 74 counseling entities from which to choose. Many of them provide online courses for under $10. The online courses will require you to stay logged into the course for a complete hour even if you finish the course work in less than an hour. After your completion of the course material you will have to follow up with a counselor. This is usually done through an online chat session or a phone call that will last about 5-10 minutes. When you complete your one-on-one counseling a certificate will immediately be produced, and you can arrange for it to be emailed directly to you and/or your attorney. You should probably allow for at least an hour and a half in order to log in all of your information at the beginning, and complete the session with the counselor at the end. You will be asked for income, debt, budget and asset numbers during the course, so remember to have that info handy. If you are trying to get your certificate asap be aware that even though the online course is available 24/7 the follow-up counselor may not be. Call ahead to make sure the counselors will be available when you need them.
In an effort to ensure that all creditors are treated fairly, preference provisions of the Bankruptcy Code provide for the return of certain payments by the debtor to creditors. Generally, payments (not to an “insider”) by a debtor of $600 or more within 90 days prior to filing a bankruptcy may be required to be returned. If the payment was voluntary, then it will be returned to the trustee. If the payment was involuntary, like a garnishment, then the payment will usually be returned to the debtor. This makes the timing of the filing of your bankruptcy especially important when you are having your wages garnished.
A case originating out of the Western District of Wisconsin has brought fame to one of our local trustees, William Rameker. In the recent U.S. Supreme Court Case, Clark v. Rameker, the Court held that “funds held in an inherited IRA were not ‘retirement funds’ within the meaning of sec. 522(b)(3)(C)” of the U.S. Bankruptcy Code. Therefore, the Debtor in that case was not able to use the exemption usually used for traditional IRAs to protect her inherited IRA. Of course, this would not prevent you from exempting all or part of your inherited IRA with the wildcard exemption.