YOUR BANKRUPTCY QUESTIONS ANSWERED
1: What is the difference between Chapter 7 and Chapter 13?
In a Chapter 7, you are able to discharge your non-priority unsecured debts without the need for a repayment plan.
In a Chapter 13, you pay all or a portion of your debts over a 3-5 year period through a court ordered repayment plan.
2: Do I need a lawyer to file for bankruptcy?
You are not required to have a lawyer to file for a bankruptcy. However, for more successful results you should seek professional help from an experienced bankruptcy attorney.
3: Should I file for bankruptcy?
You should consider filing for bankruptcy if you are experiencing any of the following problems:
- You have a high amount of unsecured debts, including credit card or medical debts;
- You are having trouble reducing your debts because you are only able to pay the minimum payment, if that, each month;
- You are behind on your mortgage payments, in foreclosure, or a sheriff’s sale pending;
- You are behind on your vehicle payments and on the verge of your vehicle being repossessed;
- You’re creditors are constantly harassing you;
- You have a judgment against you; or
- You have old IRS liabilities.
4: How often can I file for bankruptcy?
You cannot receive a discharge in a Chapter 7 if you have received a discharge in prior Chapter 7 within the last eight (8) years. In addition, you may not get a discharge in a Chapter 7 if you have received a discharge in a prior Chapter 12 or Chapter 13 case in the prior six (6) years, unless you repaid your creditors in full or paid 70% of the claims and the repayment plan met the good faith and best efforts standard.
You cannot receive a discharge in a Chapter 13 if you received a discharge in a prior Chapter 7, 11 or 12 within the past 4 years. Additionally, you may not have received a discharge in a Chapter 13 case within the previous 2 years.
5: What is an automatic stay and what does it do?
An automatic stay is a court order that goes into effect when you file bankruptcy. Once your bankruptcy case is filed, your creditors must cease all collection efforts against you. This means that they cannot harass or threaten you with calls or letter. Creditors also can not sue you or proceed with any lawsuits against you. Additionally, your property can’t be repossessed, the IRS must cease collection activities, your mortgage company can’t begin or continue with foreclosure proceedings and lawsuits and wage garnishments are barred or suspended.
An automatic stay does not stop criminal proceedings, paternity suits or child support related litigation. In addition, an automatic stay does not protect a cosigner who has not filed a bankruptcy on their own or with you.
6: Must I list all my debts on my bankruptcy petition?
Yes, you are required to list all of your debts, under penalty of perjury, on your bankruptcy schedules. You are listing all of your debts on your bankruptcy schedules in order to receive a discharge from all your dischargeable debts. You may choose to pay back any of your debts after your case has been discharged. Also, after your bankruptcy case is filed, you may be able to reaffirm some debts, such as debts for cars, houses, furniture or jewelry. This is done by signing a reaffirmation agreement, which essentially says you will continue to make payments to keep the collateral you want to keep.
7: Will I be able to discharge cosigned debts in bankruptcy?
Yes, you are able to discharge most cosigned debts. However, the person who has cosigned or guaranteed a debt for you will remain liable for the debt regardless if you receive a discharge in your bankruptcy. However, if you file a Chapter 13 and pay 100% of the creditor claims then that will extinguish the cosigners’ liability.
8: Will I be able to stop foreclosure proceedings by filing for bankruptcy?
Yes, the automatic stay stops a foreclosure proceeding. The foreclosure proceeding can be stopped right up to the time of the sale. If you are considering filing for bankruptcy to stop foreclosure proceedings, you should seek the advice of a bankruptcy attorney. An attorney can help you to determine the course of action to stop the foreclosure proceeding and to determine if a Chapter 7 or Chapter 13 would be more beneficial to you.
9: Will filing for bankruptcy stop a wage garnishment or wage assignment?
Yes, once your bankruptcy petition is filed wage garnishments must immediately stop. You will need to take provide a copy of your bankruptcy petition to your employer who is obligated to cease withholdings from you paycheck. However, some deductions, such as child support and alimony, will continue to be garnished from you paycheck.
10: Can I keep my personal items when I file for bankruptcy?
Yes, you will be able to keep your personal belongings, i.e., furniture, TV, etc., as long as any of the items do not create an asset that will exceed the exemptions that your state law provides for you.
11: Can I keep my vehicle, real estate or other financed items when I file for bankruptcy?
Yes, you may be able to keep your car, house and other financed items as long as they are protected by your states exemptions and have no equity. In order to keep your car, house or other financed items, such as vehicles, furniture, and jewelry, you may be asked to sign and file a reaffirmation agreement with the bankruptcy court stating that you will continue to make payments. Chapter 7 and Chapter 13 may treat financed items in different ways. Contact a bankruptcy attorney in order to find out how your financed items will be treated.
12: Am I able to keep an “emergency” credit card?
No, you must list all your debts, including all credit cards, on your bankruptcy petitions.
13: Will I be able to discharge all my debts in bankruptcy?
No, you may still owe certain debts, including some taxes, alimony and child support, fines, restitution and certain other non-dischargeable debts. A discharge may not be granted if you act fraudulently with respect to creditors in a bankruptcy case, such as by concealing information from the court.
14: Can I eliminate student loans by filing for bankruptcy?
No, student loans cannot be discharged unless you show there is “undue hardship.” Proving undue hardship requires proving to the court that you are unable to maintain a minimal standard of living and pay the loan at the same time. In addition, you must prove that the conditions making repayment a hardship are unlikely to improve substantially in the future. This is determined on a case by case basis. Contact a bankruptcy attorney to further explain your options if you think you qualify under this standard.
15: Can I add an additional creditor after I file my bankruptcy petition?
Yes, you can add an additional creditor to your bankruptcy petition. However, that debt must have existed prior to the time of filing your bankruptcy petition. In addition, the court may require an amendment fee.
16: How can I get a copy of my credit report?
You are able to get a copy of your credit report from the following places:
- Equifax: visit www.equifax.com or call 1-800-685-1111;
- Experian: visit www.experian.com or call 1-888 397 3742;
- Transunion: visit www.transunion.com or call 1-877-322-8228; or
- Annual Credit Report: visit www.annualcreditreport.com or call 1–877–322–8228.
17: Is there a certain amount of debt needed to file for bankruptcy?
No, there is no minimum amount of debt required to file bankruptcy. However, in most cases, someone who files owes considerably more than they can pay. In certain situations, a person’s debt amount may be so low that it doesn’t necessitate filing for bankruptcy.
18: Can my spouse and I file a bankruptcy together?
Yes, the Bankruptcy Code allows a husband and wife to file bankruptcy in one joint case. There are situations where only one spouse may need to file instead of both husband and wife. The Bankruptcy Code allows for just one spouse to file. However, you are only protected by the Bankruptcy Code if you are the one who files bankruptcy.
19: What is a reaffirmation agreement?
A reaffirmation is an agreement by which a bankruptcy debtor becomes legally obligated to pay all or a portion of an otherwise dischargeable debt. This agreement must be filed with the bankruptcy court where you filed. Signing this reaffirmation agreement is voluntary. If you want to keep the property you will either need to sign and file a reaffirmation agreement with the bankruptcy court or stay current on your payments. To determine your best course of action contact a bankruptcy attorney.
20: How are my creditors notified that I have filed for bankruptcy?
Your creditors are notified of your bankruptcy filing by the clerk of the bankruptcy court. The clerk will mail out a notice to all your creditors once your bankruptcy petition and schedules are filed.
21: What is a conversion in bankruptcy?
A conversion is changing a case from a Chapter 7 to a Chapter 13 or changing a Chapter 13 to a Chapter 7. Converting a bankruptcy case to an alternative Chapter is done because of changes, financially or otherwise, during your bankruptcy case and is done to better serve your position. However, you are not permitted to keep converting your case from one Chapter to the other.
22: Can creditors continue to collect and harass me after I have filed for bankruptcy?
No, creditors may not continue to collect or harass you after your bankruptcy case has been filed. In a majority of cases, creditors may either try to call you or send you collection letters after your case has been filed. They may be doing this because they have not yet received notice of the bankruptcy, the letters are automatically generated by computer and your name has not been taken out yet or they may have transferred your debt to another collection company. In all of these cases, what you need to do is let creditor know that you have filed and give them your bankruptcy number. Additionally, you may need to provide a copy of the bankruptcy filing to the creditor. If the creditor continues you to contact you after this point you should contact your attorney immediately.
23: What is the difference between a secured debt and an unsecured debt?
A secured debt is a debt in which a creditor has a security interest. Vehicle or mortgage loans are secured debts because if you don’t make the payments, they have the option to repossess your vehicle or initiate foreclosure proceedings to take the house back.
An unsecured debt is a debt in which the creditor does not have a security interest. Credit cards, medical bills and utilities are examples of unsecured debts.
24: If I file for bankruptcy, will I ever be able to get credit again?
Yes, you will be able to get credit after bankruptcy but it will normally be at a higher interest rate. Your best option when you get a credit card is to pay off the balance monthly and stay current on your payments. Doing this will help improve your credit and will help you in the future to get lower interest rates.
Another option is to get a secured credit card. A secured credit card is backed up by your own personal funds. This is another way to get credit and improve your credit rating.
25: How long will a bankruptcy remain on my credit report?
A bankruptcy will appear on your credit report from seven (7) to ten (10) years.
26: Will bankruptcy affect my credit rating?
Yes, filing for a bankruptcy will negatively affect your credit rating. But if you are seeking bankruptcy help then it’s likely your credit situation is probably already in a poor position. What filing for bankruptcy will do is clean up your credit problems. Then when you get your discharge you will be able to start rebuilding your credit from a clean slate.
27: Can I keep my retirement savings?
Yes, most individual retirement savings plans are not affected when you file bankruptcy. You can keep your 401(k) and other ERISA qualified (federally protected) retirement savings. As for non ERISA retirement savings plans contact an experienced bankruptcy attorney to determine if your savings plan can be protected and how much can be protected.
28: Will I be able to eliminate IRS tax liabilities by filing for bankruptcy?
No, generally IRS tax liabilities are non-dischargeable in bankruptcy. However, there are some exceptions to the rule. These exceptions are very detailed, such as the taxes must be income taxes; you did not commit fraud or willful evasion; the debt is at least three (3) years old; you filed a tax return; and the tax debt must have been assessed by the IRS at least 240 days before you file you bankruptcy petition. Contact a bankruptcy attorney in order to see if your tax liabilities are dischargeable in bankruptcy.
29: What is the Fair Debt Collections Act?
The Fair Debt Collection Practices Act is federal law which regulates the activities of those who regularly collect debts from others.
30: How will the Bankruptcy Abuse Prevention and Consumer Prevention Act (BAPCPA) affect my ability to file a bankruptcy petition?
The BAPCPA has increased documentary burdens on individuals filing for bankruptcy. It has also increased the complexity and cost of cases. Review a list of changes to the personal bankruptcy law by clicking here http://abiworld.net/bankbill/changes.html.
31. Do I have to take credit counseling classes?
Every debtor filing for bankruptcy must receive credit counseling from an “approved nonprofit budget and credit counseling agency” within 180 days prior to filing a bankruptcy. Click here to view a list of approved agencies. http://www.usdoj.gov/ust/eo/bapcpa/ccde/cc_approved.htm.
In addition, every debtor will have to receive additional counseling on budget and debt management before they can receive a discharge. Click here to view a list of approved agencies. http://www.usdoj.gov/ust/eo/bapcpa/ccde/de_approved.htm.
FREE LEGAL EVALUATION
Again, take a few minutes to complete the free bankruptcy evaluation. Your information will be directly forwarded to an experienced bankruptcy lawyer at Bizar & Doyle. You can also call 888-536-0213 to be directly connected to a bankruptcy lawyer.