Hello! Welcome to The Law Center! I am Law Center attorney, Tom Morton "HOW CAN I HELP YOU?" With this question each year, Law Center attorneys begin their initial interviews with potential clients who are facing some type of financial problem and are coming to the Law Center for information about the Bankruptcy options available to them. Realizing that it is sometimes difficult just going to talk to a lawyer, we at the Law Center have prepared this booklet to follow-up our initial interview and to let you "take home" some of WHAT THE LAWYER SAID so that you and your family might review, at home, some of the bankruptcy options that could be available in your case to help give you a fresh start. Also, available on our web site OUR STATEMENT OF GOALS To achieve financial success and a sense of professional and personal achievement by helping people solve their legal problems in areas where the Law Center has a wide range of experience. OUR LAW CENTER MOTTO "HOW CAN WE HELP YOU?" OUR LAW CENTER PROMISE "COMPETITIVE FEES" At the Law Center, we understand that just raising the attorney’s fees and court costs can many times be one of the most difficult parts of your bankruptcy. That’s why we promise that our fees ARE and WILL stay very competitive. In our written fee quotes that accompany this booklet, you are given firm prices and a complete explanation of the attorney fees and costs process. Please read this Retainer Agreement carefully and don’t hesitate to ask your attorney any questions you wish at your FREE INITIAL CONSULTATION. Now, turn the page and let us tell you Who, Where and What we are and how we’ve G R O W N WE ARE The Morton Law Centers of Florida, P.A. The Morton Law Center of Tallahassee, P.A. The Morton Law Center of Pensacola, P.A. The first Morton Law Center was incorporated in 1981, in Florida. Since that time, our growth has been rapid, particularly our Bankruptcy practice. Presently we have Law Centers in Tallahassee and Pensacola. This means that we are filing Bankruptcy cases throughout the Northern District of Florida. Our volume of cases helps us keep up to date with the requirements of the bankruptcy Judges and Trustees in each district. This experience benefits you as we prepare your case to allow you to obtain MAXIMUM benefit from your bankruptcy filing. But, enough about us, let’s see "WHAT DOES THE LAWYER SAY ABOUT BANKRUPTCY?" WHAT DID THE LAWYER SAY ABOUT BANKRUPTCY? Copyright 2002, 2005, 2008 By TOM MORTON Senior Attorney, The Morton LAW CENTER of Pensacola, P.A. along with this booklet, are our Retainer Agreement (with fee quotes showing you the cost of bankruptcy) and a questionnaire for you to complete. This questionnaire lets you begin to evaluate YOUR personal situation and begin choosing the right bankruptcy options for YOU. It is good to know that, in this most difficult time in your life, you and your family are NOT ALONE! Law Center attorneys and support staff are here to help you—let us start by telling you a little bit about our firm………… B A N K R U P T C Y   $40,898 for a family of ONE $51,945 for a family of TWO $57,937 for a family of THREE $68,494 for a family of FOUR $75,394 for a family of FIVE If you pass the MEANS TEST we can file your Chapter 7 case. On the day that your case is filed EVERYTHING you own becomes the property of the Bankruptcy Court. I mean starting with your underwear, your clothes, your furniture, your cars, your guns, your boats, your home, your jewelry--anything and everything that you possess becomes the property of the Court and you CANNOT sell it or give it away without the Court’s permission. Secondly, on the day we file your case, the Court begins the process of canceling your debts. In other words, in return for your giving the Court everything you own it will cancel many of your bills. That is why Chapter 7 is called "Fresh Start" bankruptcy. By now, you are probably asking "What about my home and my car? I want to keep them and pay for them." That is where the LAW CENTER comes in. As your attorney, we prepare your bankruptcy papers to file with the Court. A major part of this process is identifying your RIGHTS under bankruptcy laws. These laws allow you to make certain elections and to keep certain items that you want. In addition, these laws allow you to exempt certain property so that the Creditors cannot take it away from you. In addition, just as there are certain things that the Bankruptcy Court cannot take from you, there are certain debts that you cannot cancel (and some that you cannot easily cancel). Again, the LAW CENTER will identify these for you so that you will know, before you file, what areas may pose problems for you in your case. Your FUTURE WAGES are exempted   Home Health Aids are exempted Pension, profit sharing, retirement plans, 401(k’s) and IRAs are also exempt Your LIFE INSURANCE and its’ cash value and annuities can usually be exempted. Florida has exemptions for WORKERS’ COMPENSATION and SOCIAL SECURITY benefits NOTICE WE HAVE NOT SAID YOUR CARS—cars work like this: If you own your vehicle outright and do not owe any money on it, then you can keep it, if the value does not exceed $1,000.00. You can also keep your car if you have pledged the car as collateral for a debt and if the car is worth LESS than you owe on it (in other words you have less than $1,000.00 equity in one car) then you can do one of two things: CAR OPTIONS (if you have up to $1,000.00 equity in the car) 1. You can keep your car and keep paying the car loan (most folks do this) 2. You can give the car back and cancel the car debt (Get Rid of That LEMON) REMEMBER, this choice of options is YOURS (NOT THE CAR FINANCE COMPANIES’) Now, let’s talk some more about your $1,000.00 or $4,000 per-person Personal Property exemption What happens if you go over your exemption? In orther words, when you add up the value of everything that you own (using fair market value prices) and it totals more than you exemption of $1,000.00 or $4,000 per-person. Again, you have two choices: 1. You can surrender those items over the exemption to the Trustee, who will sell them and pay the money to your creditors; or 2. You may keep your property and "buy" these items from the Trustee with money you earn or acquire AFTER you file your bankruptcy. This must be negotiated with the Trustee and CANNOT be guaranteed. The Trustee is the person appointed by the bankruptcy laws to administer your case for the Court. The Trustee is, many times, an attorney or accountant and they are paid by finding property that people hide or undervalue. CANCELLING YOUR DEBTS What debts are usually NOT cancelled by bankruptcy? TAXES STUDENT LOANS FINES PENALTIES ALIMONY CHILD SUPPORT ATTORNEY FEES (associated with child support) In addition, each of your creditors has a period of time after you file your case to OBJECT to their debt being cancelled. Should the Bankruptcy Court decide that their objection is valid, then that debt will NOT be cancelled. WHY WOULD THE COURT NOT CANCEL A DEBT? Sometimes, the Court will decide that people have acted in fraudulent ways, or have assets or income that would allow them to pay their bills. Then, the Court will rule that they have not filed their case in "good faith". If this happens, the Court can decide to dismiss your entire case. There is no way an attorney can know this will or will not happen in advance so we can make no guarantees. Frankly, though, in most cases creditors don’t file objections and the Courts don't find that the Debtor(s) acted in bad faith. You should be careful not to use a credit card within the 90 day period before you file your case. You should never attempt to transfer property out of your name before you file your case, as these transfers may be considered fraudulent or preferential and the Court can set them aside and get the property back. REMEMBER, there are many exceptions in bankruptcy law, and the bankruptcy law changes frequently and can out-date the information in this booklet. See your attorney. Not the end of the world. Not even the stigma of times past. This year it is expected that MILLIONS of Americans will take advantage of its' options to get a fresh start; reorganize their businesses, get creditors off their backs; pay for and keep their cars and homes; and relieve themselves and their families or businesses from financial distress. Is it for you? Perhaps. First, let’s talk about certain basics of bankruptcy and later we can look at your personal situation in detail. Although bankruptcy is Federal law, the State that you live in and file your case in is very important as Congress has allowed each State to establish their own EXEMPTIONS. EXEMPTIONS are what we call the items you get to KEEP. We are going to talk specifically about filing bankruptcy in FLORIDA, so if you speak with someone in a different State, remember, EACH STATE HAS DIFFERENT EXEMPTIONS A New Bankruptcy Law has gone into effect October 17, 2005. This law contains many changes the full extent of which no one knows. It is uncertain how many of the new laws provisions will be interpreted by the Bankuptcy Courts;and the U.S. Trustees office. Perhaps the major change is that you now will have to make a full, honest and complete disclosure of your entire financial situation; and then be subjected to a MEANS TEST to determine if you qualify for Bankruptcy relief. Under the New Bankruptcy Law our law firm is now considered to be a Debt ReliefAgency.As such we help people file for Bankruptcy Relief under the Bankruptcy code. Basically, there are four types of bankruptcies that concern individuals or businesses…….. CHAPTER 7 --- "Fresh Start" bankruptcy (the cheapest and easiest type) CHAPTER 11 --- For businesses and individuals in business needing to reorganize CHAPTER 12 --- For farmers and fishermen with current income. CHAPTER 13 --- The "Wage Earner" plan ( A Court-supervised Budget for 3-5 years) NOW, let’s look at each Chapter------------------------------->CHAPTER 7 – "FRESH START" BANKRUPTCY A Chapter 7 is usually the cheapest and easiest kind of bankruptcy to file. In fact, a large percentage of all bankruptcy cases are probably Chapter 7 cases. But what happens when you file Chapter 7? First of all, it has to be determned if you are eligible to file a Chapter 7. This is done by a MEANS TEST. Means TESTING requires you to supply your attorney with substantial financial information. To PASS the Means test you must generally not earn more than the following approximate amounts:FLORIDA’S EXEMPTIONS As we said earlier, what you can keep varies from State to State, so let’s look at Florida’s exemptions……. In FLORIDA, you can KEEP: Your HOMESTEAD—up to 160 acres in the unincorporated county and up to ½ acre in the city. This exemption used to be unlimited but now your situation must be evaluated to determine the extent of your homestead exemption. If you have recently moved to Florida this exemption might be restricted. $1,000.00 per debtor in PERSONAL PROPERTY if you keep your homestead; $4,000 per debtor in PERSONAL PROPERTY if you do not own or give up your homestead—this includes almost all of the things that you own, including clothes, furniture, pots, pans, jewelry and basically everything that is not real estate. It also includes bank accounts, utility deposits, stocks, bonds income tax refunds, stimulus payments and cash. THE CHAPTER 7 PROCESS   4. You cannot have more than $1,010,650 in secured debt and $336,900 in unsecured debt to be eligible to file a Chapter 13 bankruptcy. (850) 878-2864 WHO SHOULD FILE BANKRUPTCY? The decision to file bankruptcy is a personal decision that should be based upon the financial and emotional benefits to you and your family. When you fill out our questionnaire, you will learn the total amount of debt that you will potentially cancel by filing bankruptcy. BANKRUPTCY CAN HELP STOP creditor harassment CANCEL credit card debt STOP garnishment of wages CANCEL judgments STOP lawsuits in progress SAVE your home BUT, THERE MAY BE NO CREDIT AVAILABE AFTER BANKRUPTCY Many companies will never extend credit to you again; while most of us say that we don’t want any more credit, that fact is that everybody will probably need access to credit again. While bankruptcy does stay on your credit report for about 10 years, it is many times easier to get new credit after bankruptcy, than it was immediately before your filed. This is because creditors seem to understand bankruptcy more, and now they ask "why did you file?" Also, they know that a person can only have debts cancelled in bankruptcy once every eight years. So, if you have a job (and after bankruptcy you usually have fewer debts) a creditor might actually consider you less of a credit risk than you were before you filed. Particularly if you have a good reason for filing. THANK YOU FOR CALLING THE MORTON LAW CENTER WE’LL BE GLAD TO HELP WHEN YOU NEED US! Once you make the decision that Chapter7 is the right decision for you and your family, then it only requires a few basic steps on your part. Step 1: fully complete the quesionnaire which lists all of your property, your debts, your income and your expenses. Call for and attend the Free Initial Consultation with your Law Center attorney. Step 2: bring your completed questionnaire and the signed Retainer Agreement and your fees to the LAW CENTER. You do not have to make an appointment for this, just drop the paperwork and fees off with the receptionist (you will receive a reciept for your money) and then as soon as the Law Center has your official Petition and Schedules prepared (usually 7 – 14 working days) you will be called and scheduled for an appointment to go over and sign your papers. Step 3: the LAW CENTER will file your papers with the Court and the Court will notify us and all the creditors of the date of the Creditors’ Meeting. Step 4: (usually last) you and your Law Center Attorney attend the Creditors’ Meeting. This meeting usually lasts only a few minutes but it is very important and you will get a good idea which, if any, of your creditors might have any concerns about your case. THAT IS IT! In 95 out of 100 cases, there is nothing more for you to do; and in most Chapter 7 cases, you never see the Bankruptcy Judge. NOW, LET’S LOOK AT THE OTHER CHAPTERS OF BANKRUPTCY->CHAPTER 11 – BUSINESS REORGANIZATION This is the type of bankruptcy that you read about in the papers and see on television. It is for individuals and businesses that need relief from creditors. Chapter 11 allows them to reschedule, and even cancel, some of their debts. Often, a creative Chapter 11 reorganization can help not only the business owners, but also their employees and many times allow their creditors to get paid as well. At the LAW CENTER, certain Attorneys handle Chapter 11 cases and our staff will be happy to schedule an appointment for you. Simply call the LAW CENTER and ask for a Chapter 11 interview 1-800-535-6071 TOLL-FREE CHAPTER 12 --- FARMERS or FISHERMEN ONLY If you are a farmer OR fisherman and are having financial problems then Chapter 12 might be for you. It’s like a Chapter 11, but less costly and tailored to farmers and fishermen. Call the LAW CENTER and ask for a Chapter 12 interview CHAPTER 13 --- THE "WAGE EARNER" PLAN Most people consider filing a Chapter 13 when they own a lot of personal property that they don’t want to lose. In other words, they have listed all their property and its’ total value is more than their exemption of $1,000.00 per person. By the way, the person only counts for Husband and Wife and $2,000.00 is the maximum. Nothing for kids. People also like Chapter 13 when they are behind on their house or care payments and need to time to catch up. HOW DOES CHAPTER 13 WORK? Basically, Chapter 13 works just like a Chapter 7 except that in Chapter 13 you develop a budget (called the Chapter 13 Plan), get it approved by the Bankruptcy Judge and pay all of your budget’s net disposable income each month for 3-5 years to a Trustee who divides the payment between your unsecured creditors (they are the ones that don’t have any of your property as collateral). In return for these payments you get to keep all of your property and/or get to catch up on your house payment. At the end of your Plan, the balance that you owe to your unsecured creditors is cancelled. Chapter 13 cases are more involved than Chapter 7 cases and they cost almost twice as much. That’s because in a Chapter 13 there are usually more hearings involved; a budget must be developed and approved; and you are under the supervision of the Bankruptcy Court for 3-5 years. Despite these drawbacks for some situations, Chapter 13 can work wonders. There is also a means test for Chapter 13. 1. If you are behind on the payments on your home or car, the Chapter 13 Plan let’s you catch those payments up and forces the mortgage or finance company to accept your payments once the Bankruptcy Judge approves your Plan. 2. Payments are made on your unsecured debts (like your credit cards, signature loans and medical bills) over the life of the Plan (usually 3 years) but at the completion of your plan the balance of that debt is cancelled. 3. Chapter 13 controls those high interest charges that have stopped you from getting your debt under control.STOP CREDITOR HARASSMENT One of the great benefits of all the bankruptcy chapters is the requirement of the bankruptcy law that stops creditors from constantly calling and harassing you at your home and where you work. ONCE YOU HAVE RETAINED THE LAW CENTER, WE WILL HANDLE ALL FUTURE PHONE CALLS Call us today for a FREE INITIAL CONSULTATION Pensacola Office (850) 478-3409 TOLL FREE 1-800-535-6071 Tallahassee Office