When getting ready for your bankruptcy, regardless of whether you are filing a Chapter 7 or Chapter 13, the key is to gather the proper documentation. This could mean credit card statements, mortgage statements, student loan statements or auto loan statements.
You may be thinking of settling certain debts instead of filing bankruptcy. This is a great option for some people, especially if you have some non-exempt property that may be subject to liquidation. It is not uncommon to have some cash, or a bonus check coming or even too much equity in your car and the best thing to do is to sell your asset and settle some debts. It is non uncommon to get at the very least a 30-50% reduction on your debt if you have a lump sum to make the payment immediately.
Switching back to documentation, you may find yourself in a dispute regarding the amount owed on certain debts. This is huge in Chapter 13 cases where creditors are required to prove up how much you owe them in what’s called the “proof of claim”. This is another situation where you can argue about how much is owed. In this situation, it is integral to keep records and documentation. In this context, you may find proof that you made payments that are not accounted for. In Chapter 13 cases, mortgage companies often inflate the amounts owed and add in extra late fees and charges. Here you just need to present evidence that you made the payments or are current thus foregoing the late charges.
You could also compare statements and even credit reports to the amount listed on the proof of claim. If the numbers don’t add up the court may waive debts amounts in your Chapter 13.
Student loans are another area of debt becoming a problem. Courts have enabled this behavior on the part of spotty companies and they have taken their leave to indulge. Documentation is integral to your attorney to put on your case. In Hann vs. Educational Credit Management Corp. BAP No. NH 11-084, the debtor was able to present evidence that the $55,000 debt alleged in the proof of claim was wrong. If the court rules in your favor, it has the effect of adjusting your amount owed forever.
