1. What exactly is bankruptcy?
Bankruptcy is a Federal Law mandated by the US Constitution designed to give you
a fresh start - free from harassing creditor phone calls, lawsuits, repossessions and
garnishments.
2. Should I file for Bankruptcy?
Financial problems can lead to stress and will disrupt your personal and family life and
even destroy relationships. Many people are afraid to file bankruptcy because of some
misinformation or misunderstanding of the law and how it works.
3. If I file for Bankruptcy, will I lose my Property?
Not usually. The Bankruptcy laws provide exemption allowances for real and personal
property. An exemption allowance is a dollar amount that can either represent the actual
value of the property or the value of your equity in your property. The law is very
generous in allowing you to exempt equity in your home, automobiles, household goods
and furnishings, clothing, jewelry, bank accounts, stocks and bonds, pension and 401k
plans.
4. If I file for bankruptcy, can I keep my house and car?
Yes. You can file a bankruptcy and keep your house and car provided you continue to
make payments to the bank pursuant to the terms of your loan.
5. If I am married, do I have to file jointly with my spouse?
No. You can file separately. The only caveat is that you will have to factor yours spouses
income and expenses in calculating your monthly budget for purposes of passing the
means test.
6. If I file Bankruptcy, is it true that I won't be able to get credit for 7 years?
No. In fact, many people have a better chance of getting credit after they file Bankruptcy.
Most people who are considering filing Bankruptcy however already have a negative
credit report due to non or late payments, repossessions, charge offs or judgments. A
bankruptcy which wipes the slate clean and improve your credit worthiness.
7. Can I still file Bankruptcy if I'm current on all my payments and I've never been late?
Yes. I have many clients who look good on paper and appear to be "making it" but realize
that they are just "Robbing Peter to pay Paul." If you have no money left after paying
your normal monthly living expenses then you are already bankrupt.
8. I am an honest person and want to pay my debts, I don't want to cheat my creditors?
Bankruptcy is not about cheating your creditors. Bankruptcy laws are designed to provide
you with relief from the stress and burden of debt to allow you to get a "fresh start."
9. What is the difference between a Chapter 7 and a Chapter 13 bankruptcy?
Chapter 7 Bankruptcy is referred to as straight bankruptcy and Chapter 13 Bankruptcy is
known as a wage earners reorganization plan. Under the new law, your household income
and the number of dependents in your household will determine whether you qualify for
a Chapter 7. If you make too much money, you may have to consider filing a Chapter 13
Bankruptcy.
A Chapter 7 usually takes about 3 to 4 months from start to finish while a Chapter 13
takes between 3 to 5 years. In a Chapter 13, you pay whatever income is left over at
the end of the month and that money is distributed by the Trustee to your unsecured
creditors.
10. What debts cannot be discharged under Bankruptcy?
Here a quick summary of the debts that cannot be discharged in bankruptcy: taxes; debts
incurred by fraud; debts for intentional or malicious injury another; debts for personal
injury or death caused in a motor vehicle accident while intoxicated; and, student loan
debts.
11. How often can I file for Bankruptcy?
You can file a Chapter 7 bankruptcy 8 years after your last Chapter 7 discharge or 6
years after your last Chapter 13 discharge. You can file a Chapter 13 bankruptcy 4 years
after you have been discharged in a Chapter 7 or 2 years after your previous Chapter 13
discharge.
12. How much does it cost to file Bankruptcy?
The filing fee for a Chapter 7 Bankruptcy is $299, while the filing fee for a Chapter 13
Bankruptcy is $274.
13. How does the filing of a Bankruptcy case (either a Chapter 7 or a Chapter 13)
affect collection activities or other legal proceedings (like a garnishment)?
The filing of a Bankruptcy case automatically stays (or stops) all collection and other
legal proceedings pending against the debtor. Any creditor who intentionally violates the
automatic stay is in contempt of court and is liable for actual damages.
14. If I file for Bankruptcy, will my name be published? Who will know that I filed?
When you file for Bankruptcy, your case is published on the PACER Network. Most
people have never heard of PACER and you have to have an account to access PACER
information. Your creditors will get notice of your case but most other people will not
find out unless you tell them.
15. Can my employer or any governmental agency discriminate against me if I file for
Bankruptcy?
No. It is illegal for private or public employers to discriminate against you because you
filed for bankruptcy. It is also illegal for local, state, or federal governmental units to
discriminate against a person as to the granting of licenses (including a driver's license),
permits, student loans, and similar grants because you have filed for bankruptcy.
16. When must I appear in court and what happens?
The first (and often only) court appearance you have to attend is the "meeting of
creditors" or 341 hearing. This hearing usually takes place about a month after the case
is filed. At this hearing the debtor is put under oath and questioned about his or her debts
and assets by the hearing officer or trustee.
17. Who is the bankruptcy trustee and what is their function?
The bankruptcy trustee supervises your case. They evaluate your schedules, statements,
and exemption claims and make sure that your information is legitimate and proper. The
trustee stands in the shoes of your creditors to make sure that they are treated properly.
18. May a utility company refuse to provide service to a debtor if the company's
utility bill is discharged through bankruptcy?
No. The utility company may require a security deposit but it is illegal for them to refuse
to provide utility service to you.