Bankruptcy FAQ
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Do I need a lawyer to file bankruptcy?
No, an individual or married couple can file without an attorney, which is known as filing “pro se.” However, it is our opinion that no one should file without an attorney, as bankruptcy law can be complex. While you may know enough to get a discharge, without a good experienced attorney you might stumble into some pitfalls along the way.
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Do you tell everyone to file?
No. We give you an honest evaluation of your case and only decide to file when you have made that decision. We also engage in debt negotiation, which has kept several of our clients from filing.
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What will bankruptcy do to my credit?
A chapter 7 will remain on your record for 10 years. A chapter 13 will remain on your record for 7 years. Most likely if you are considering bankruptcy you already do not fall into the category of a great credit risk, so you are already borrowing with higher rates as is. While filing will not help your credit, it can significantly change your debt to income ratio so that soon you might be a much better credit risk than you are currently.
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I own a business. Does my business have to file also?
No. However, filing only for your business will not relieve any of your personal debts, including those debts shared with the business.
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Is the trustee going to come to my house and take my stuff?
The trustee will not show up at your place unannounced. In fact, usually you will not see the trustee except for a single encounter in court at the 341 meeting. However, the trustee has the right to investigate your assets to confirm their value. As long as you are honest about your assets and have nothing to hide, the trustee is not someone to be scared of.
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My house is being foreclosed soon. Can a bankruptcy stop that?
Yes. Filing a bankruptcy will immediately halt a foreclosure sale. Depending on the situation with your arrears and which chapter you file under, the creditor might file a “motion to lift stay” to still proceed with the foreclosure. But at a minimum your filing will stop a foreclosure sale for at least several months.
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Who is the trustee?
The trustee is appointed by the court to oversee your case and is usually an attorney. The trustee holds your 341 hearing, confirms your assets and liabilities, and makes any distribution of your assets to creditors, if applicable. In a chapter 13, the debtor makes monthly payments to the trustee, and the trustee then distributes it among creditors.
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Is the initial consult free?
Yes. We offer a free initial consultation. It usually takes 30 minutes to an hour.
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What do I have to bring to the first meeting with your firm?
For our initial consultation, please bring the following: (1) Last 6 months paystubs for you and spouse (if married) (2) Current credit report from at least one of the three major bureaus (3) Last filed Fed and State tax return (4) Current statements and letters from bill collectors as well as any information pertaining to lawsuits/garnishment/foreclosure proceedings.
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I am currently being garnished. Can a bankruptcy stop that?
Absolutely. Filing stops all creditor actions, including collecting on judgments won against you before your filing. Additionally, in most cases we can also get rid of any liens based on that judgment as well.
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Can I keep my retirement plan?
Almost without exception the answer is yes.
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If I file a chapter 7 do I have to give up my house and car?
No. This will also vary based on the facts of your case, but there is no set rule that you have to surrender your house and/or your car. Many debtors retain both after filing.
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Do I have to give up all of my property if I file a bankruptcy?
No. This answer will vary by case; however, many debtors keep all their property when they file. Additionally, you can always surrender whatever property you wish without facing a deficiency.
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Who finds out I filed bankruptcy?
Your filing is a public record. At a minimum your creditors, the court and the trustees are aware. Additionally, it will be on your creditor report. However, people do not usually search through public records to see who has filed bankruptcy.
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I feel morally obligated to pay all my creditors. Will filing prevent me from doing that?
No, you can always voluntarily pay all of your creditors after the bankruptcy. However, you will have the benefit of knowing the debt has been legally discharged and can pay them what you feel obligated to pay, without worrying about rising interest rates and late fees.
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There is one family member I do not want to list, can I not list them and pay them back?
No, you should list all your creditors. You can always choose to pay your family members back after the bankruptcy voluntarily.
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There is one credit card I really want to keep, can I not list them and keep the card?
No, you should list all your creditors. The card might get canceled whether you list it or not.
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When I file, do I have to list all of my assets and liabilities?
Yes, you have to list everything you own and everyone you owe. Do not assume you will lose all your property, in fact you might not lose anything. Also remember you can always voluntarily repay any creditor after the bankruptcy anyway, so you should not feel hesitant about listing your debts.
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Can creditors call after I file?
No. When you file you are protected by the “automatic stay” and all creditor collection efforts against you directly must stop.
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Creditors keep calling. Do I have to file to make it stop?
Filing bankruptcy will force creditors to stop calling because of the automatic stay. However, you might be able to stop creditor phone calls before you file after you have retained our services. Third party collectors will have to honor your request to re-direct phone calls to our office under the Fair Debt Collections Practices Act (FDCPA). Original creditors might also honor your request. For further ideas on how to deal with creditor phone calls, read this.
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What do I bring to the 341 meeting?
Your drivers license and your social security card.
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Will I have to go in front of a judge?
Maybe. The judge will not be at your mandatory 341 meeting; however, if you have to make another court appearance you might have to go in front of the judge at some point.
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Do I have to go to court at all?
Yes, at a minimum you will have to make one court appearance for your 341 meeting of creditors. At that meeting the trustee will ask you questions about your case. Creditors have the opportunity to ask questions as well, but usually do not show up. Even in a chapter 13 this could be your only court appearance. However, it is possible you will have to make one or more additional court appearances depending on the particularities of your case.
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Can any of the fees be paid in installments?
Yes, both the filing and attorney fees can be paid in installments.
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What are your attorney fees for filing a bankruptcy?
Fees range based on the complexity of the case, and we cannot give you a quote until we sit down with you and review the particulars of your case. All chapter 7 fees must be paid prior to filing the case, whereas a Chapter 13 fee can be partially paid prior to filing, with the remainder paid through the plan.
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What are the court costs for filing a bankruptcy?
The filing fees for a chapter 7 are $299.
The filing fees for a chapter 13 are $274.
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How can I determine if I am eligible for a chapter 13?
Any individual with regular income is eligible to file a chapter 13; however, if the debtor filed a chapter 7 within the previous 4 years and received a discharge the debtor will not receive a chapter 13 discharge.
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If I qualify for a chapter 7, is there any reason I would still want to do a chapter 13?
Sure, some reasons that debtors who qualify for a chapter 7, but still file a chapter 13, include: (1) the debtor wants to retain more property than the allowable exemption limits and would have to forfeit that property in a 7, so the debtor chooses to keep the property and pay off the excess over time in a 13 (2) The debtor is sufficiently behind on the mortgage and car payments and cannot pay off the arrears immediately, as would be required in a chapter 7, so chooses to pay off the arrears over time in a 13 (3) the debtor wants the protection of the bankruptcy court while it pays off its debts over time.
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How can I determine if I am eligible for a chapter 7?
A debtor almost always is ineligible to file a chapter 7 if it does not qualify under the means test. The means test is a determination made by the court whether the debtor makes too much income to qualify for a chapter 7. Simply put, if the test determines the debtor has too much disposable income, the debtor cannot file a chapter 7.
If a debtor filed a chapter 7 bankruptcy before and received a discharge, the debtor cannot file again for 8 years after the previous chapter 7 filing date.
If a debtor filed a chapter 13 bankruptcy within the previous 6 years and received a discharge, the debtor cannot file a chapter 7 unless the 13 plan that received a discharge paid off at least 70% of the debt owed to the unsecured creditors.
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What is the difference between chapter 7 and chapter 13?
A chapter 7 bankruptcy is the total discharge of your liquidated debts. The process involves no payment plan to the trustee, and the majority of the time no payment at all to the trustee. The only way one typically has to pay anything to the trustee is when the debtor wants to retain more assets than the allowable exemption limits. A debtor can file a chapter 7 whether employed or unemployed.
A chapter 13 bankruptcy is a monthly payment plan of 3-to-5 years, whereby the debtor pays off his/her debts to the creditors through the trustee. The payment plan starts within 30 days of filing. The amount of the payment plan is determined based on the debtor’s income and amount of property retained. It can be objected to by creditors and/or the trustee, before a plan is finally submitted to the judge. It must be approved by the judge. A debtor needs a source of regular income to get a chapter 13 approved.
