After a bankruptcy, people often ask their Chester County bankruptcy attorney how to improve their credit.  One definite way is by "piggybacking".  Essentially, someone gives their credit card permission to "piggyback" off of their good credit by making you an authorized user.  The person does not have to physically give you a card.  You just ride on the hopes that they maintain good credit behavior.  

You can still piggyback off of someone's credit.  There was a bit of drama about 6 years ago as some "industrious" businesses started facilitating the sale of piggybacking.  My biggest warning to everyone -- make absolutely sure the person will keep paying their bills and maintaining their good credit.  You absolutely do not want to have a situation where the person hurts you down the road.  You must get a good, positive read on their potential.  

Also -- be honest with them.  Tell them you don't even need to touch the credit card.  You just want to get some wind in your sails to get a good jump-start on rebuilding credit.  

A Chester County Chapter 13 creates a process where creditors must file a proof of claim.  This is typically done for any debt included in the bankruptcy.  Some creditors do not file a proof of claim.  

If a creditor does not file a proof of claim, the debtor's Chester County bankruptcy lawyer or the trustee can do so.  Typically, the proof of claim filed by the debtor's lawyer or the trustee involve a car loan or mortgage.  This is one to make sure the plan with the Trustee aligns with what is owed on the secured property.  

The proof of claim must include the debtor's name, amount owed, and additional information, including the date of the last payment made and the original obligation.  If a third party files the proof of claim, they must file an appropriate power of attorney for the creditor.  

Avoidance Powers in a Chester County Bankruptcy

Last month I wrote about the Trustee's turnover powers.  Now, this month, I'm going to review the Trustee's avoidance powers under 11 U.S.C. 547 & 548.  

This power is one of the long-arm powers of the Trustee, where they essentially say "Stop what you're doing and give it back."  Specifically, they can avoid both pre-petition and post-petition transactions, even if those transactions were otherwise legally valid.  They do all of this to try and benefit the creditors.  

First, under 547, the Trustee can seek to avoid an agreement because it is a preferential transfer.  This is a transfer of money or property that occurred 90 days prior to filing.  

Examples of Avoidance

Sometimes, you don't care about avoidance in this case.  Some debt collectors could harass you to the point where you pay them a ton of money and they you later file for bankruptcy.  The Trustee could avoid that agreement, get the money back from the creditor, and then distribute the funds pro-rate to all creditors.  Other times, if you repaid a debt to a family member or friend, the Trustee could seek to get that money back.  This is the wrong type of preference.  

The Trustee can get the money back by just writing letters and the recipient agrees or, in the alternative, the Trustee can file an adversarial complaint.  

You filed for bankruptcy.  You attended your 341 hearing/Meeting of the Creditors along with your Chester County bankruptcy lawyer.  There were no problems and you received a discharge letter in the mail.    Now, you can start getting credit.  Remember the discharge date.  Why?  

Some creditors will not extend credit to people until a time period has elapsed from their discharge date (not filing date).  Frequently, creditors will want the discharge letter as proof of the discharge of your debts and the date.  Make copies of this letter and store them safely and separately.  

Every lender has different credit guidelines.  These are their internal rules for who they will extend a loan/credit to.  Some creditors will require you get a co-signer.  If this is a requirement, it generally should be avoided if possible.  Getting a co-signer takes time and is a pain in the neck.  But, if that's what it takes, make the call appropriately.  

Remember -- cash is king in the beginning after discharge.  You will start getting secured credit card offers (see this article about rebuilding credit through secured credit cards) and will still have to pay your bills.  Get a safety net of cash and reduce your living expenses 

Other Income on Means Test

So, in previous months I've covered normal income on the means test and less normal income.  Now, I want to cover "income from all other sources", which is included on Line 9 of the means test for Chester County bankruptcies.  

Again, it does not matter whether this income is taxable or not.  Think hard -- do you deliver newspapers?  Babysit?  Have a part-time job?  Are an Avon salesperson?  All this income must be included.  Private disability income is not included as "other income".  Do you have a lunch truck and only get paid in cash?  You must include it.  Again, think about all of your side jobs, gigs, hustles, and work.  This will all be added in.  

Reimbursements

If, however, you are receiving reimbursement from expenses from work, you do not have to include this as income.  Mileage reimbursement?  You are all good and do not have to include it.  Again, this makes sense -- you are essentially being brought back to zero with these reimbursements as you spent the money and will be getting reimbursed.  

Line 10 is the subtotal and Line 11 is the total (where both spouses are added up).  This is where you must double-check your Chester County bankruptcy lawyer's numbers and your own.  Make sure they make sense and the income makes sense.  

Chester County Schedule A

A Chester County debtor must list all real property of which you have legal, equitable or future interest on Schedule A, which is part of the bankruptcy petition.  This is "real property" owned as a co-tenant or under community property laws and real property in which you have a life estate or a right or power excisable for your benefit.  Generally, however, it is for a home, condo, building. or town home.  You must list everything, including property that you do not reside in (i.e. a vacation home or rental property).  

You should go over with your Chester County bankruptcy lawyer your requirements and obligations and bring up any questions with respect to your property.  

Things to Put On Schedule A

In addition to putting the address of the real property on your Schedule A, you must also list the value o the property.  This is the "estimated current market value of the property" or fair market value.  This number should not include any mortgages or lines of equity.  The amount of any claim secured by the property should appear on the far right column.  This will include any mortgages, lines of credit, or additional secured debt on the property.  

You do not need to put the creditor's name on this section of the petition as you will have to list it on Schedule D for secured debts.  If the property has no debt attached, you should put "none" under the "Amount of Secured Claim."  

PACER Explained

I previously referenced that a Chester County bankruptcy lawyer should look on PACER to see if their client had previously filed for bankruptcy.  But, what is PACER?  

PACER is an online repository for bankruptcy filings that is over 25 years old.  It is a web-based product run by the Administrative Office of U.S. Courts. It bills itself as "a national index for U.S. District, Bankruptcy, and Appellate courts".  You get charged quarterly for the use of PACER.  So, you also have to have an account set up.  The fees are 10 cents per page, so you must learn how to search judiciously and effectively.  You do not have to be an attorney to have PACER access.  You just must complete the requirements.  

Learning PACER

PACER has a host of tutorials via video.  They are campy and old, but effective.   To access PACER, you must get an account by registering.  You will also have to set up to go to free PACER training.  You will have to go through training modules and complete the class, which typically takes a day.  

Trustee Turnover Powers in Chester Bankruptcies

I've discussed frequently that the Trustee has substantial power and authority.  The Trustee has a duty to administer assets in a Chapter 7 estate.  Sometimes, the Trustee will use their "long-arm" powers, which are turnover powers and avoidance powers.  This means that sometimes the Trustee can reach out to property of the estate to satisfy creditors.  Frequently, a Chester County bankruptcy lawyer will battle with a Trustee if there is a contentious issue.  Most often, however, the cases are fine and there is no adversarial proceedings.  

Turnover powers are provided to the trustee pursuant to 11 U.S.C. 542.  If a person lists an asset and it is held by a third party and the Trustee seeks to liquidate the asset, they can force the third party to turnover the property (regardless of whether the person wants it).  Most of the time, this is rare.  If it does happen, the third party is normally scared and gives over the property in a timely matter.  If, however, the person ignores the Trustee, they can file a motion in the form of an adversary proceeding.  

If, the Trustee just wants to further investigate the bankruptcy, they can force the turnover of anything that can help administer the estate.  This includes seeking a turnover of books, documents, records, and statements that involve the debtor.  

I previously discussed how, as a Chester County bankruptcy lawyer, I must include normal income in a means test on a bankruptcy.  Pension and retirement income must also be included.  This includes IRA and 401(k) withdrawals.  It does not, however, include Social Security benefits.  This is important and I will repeat it -- Social Security benefits are not included in calculating income on the means test.  But, if someone else in the household is receiving Social Security (and is a non-filer), you must include it on Line 7.  You must provide these statements to the trustee to validate the pension and retirement income.  This income is included on Line 6 of the means test.  

On Line 7, you have "amounts paid on a regular basis for household expenses".  This includes contributions from all household members and non-household members (i.e. your adult daughter helps you with your bills).  You also have to include child support on this line but it later gets subtracted (dumb, right?).  

Unemployment compensation is also included in the form.  It is put on Line 8.  Again, this is calculated over the last 6 months.  

You and your Chester County bankruptcy lawyer may have received a letter closing the Chapter 13 case.  This is done after 90 days after the final distribution of the Chapter 13 plan.  The bankruptcy judge in the Eastern District of Pennsylvania will have issued a final decree discharging you from your Chapter 13.  

But, you or a creditor can request, by motion, to reopen a bankruptcy in the court (it must be in the court which closed the case).  If the Chapter 13 is reopened, a trustee will not be appointed by the U.S. Trustee unless the court believes that a trustee is necessary to protect the interests of creditors and the debtor or to insure an efficient administration of the case (look to Bankruptcy Rule 5010 for more guidance).  

Again, this rarely happens, but it is important to understand what may occur in your Chapter 13.