Bankruptcy FAQ's
- Can I keep my house and other property after filing a bankruptcy?
- Can I choose which debts to list?
- Can I stop a foreclosure on my house?
- What is bankruptcy?
- What is the Bankruptcy Code?
- Where do I get a copy of my states local rules?
- Who can file for bankruptcy?
- Do I need an attorney to file bankruptcy?
- What if I am married?
- Will I lose my house, car, and other personal property?
- Does my divorce decree protect me if my ex-spouse has filed for bankruptcy and she has listed me as a co-signer on a Schedule D?
- Will filing bankruptcy affect my credit rating?
- How long will a bankruptcy show on my credit reports?
- Can I file for bankruptcy every few years?
- What chapter should I file under?
- What is a chapter 13 bankruptcy?
- What should I do if I cannot make my chapter 13 payments?
- What is a chapter 7 bankruptcy?
- What is a discharge?
Can I keep my house and other property after filing a bankruptcy?
In most cases, the answer is yes. If you are current on your payments for your house and car, you will just continue to make those payments and reaffirm the debt. If you are behind on your house or car payments, we will put the arrearage in a Chapter 13 Bankruptcy payment plan, which will allow you to pay what you are behind over a period of years. It is very important that you make all future mortgage and car payments that are due after the bankruptcy is filed.
If your property consists of what most people have, there will be an exemption for most, if not all, or your property.
Can I choose which debts to list?
No. By law, you must list all debts, and you must list all property that you own. There are no exceptions.
Can I stop a foreclosure on my house?
Yes. All foreclosure sales are held on the first Tuesday of the month. If your bankruptcy is filed before the foreclosure sale, and the mortgage company is notified, the foreclosure sale will be stopped.
What is bankruptcy?
Bankruptcy is the legal method for a debtor to discharge or relieve debt. Bankruptcy is a way for people or a business that owe more money than they can pay to either work out a plan to repay the money over time or to have their debt wiped out. While no debtor is guaranteed a total discharge, most debtors who file for bankruptcy are given such relief. One of the primary purposes of the bankruptcy act is to relieve the honest debtor from the weight of oppressive indebtedness and to provide the debtor with a fresh start. Title 11 of the United States Code regulates the filing of a bankruptcy. If the debtor initiates the bankruptcy it is called a voluntary bankruptcy. If the creditor initiates the bankruptcy it is called an involuntary bankruptcy. In an involuntary bankruptcy the debtor has the opportunity to contest the petition. While the debtor is either working out a plan or the trustee is gathering the available assets to sell, the Bankruptcy Code provides that creditors must stop all collection efforts against the debtor. The Bankruptcy Code regulates what chapter you must file under, what bills can be eliminated, how long payments may be extended, what possessions you may keep, and all other details concerning the bankruptcy.
What is the Bankruptcy Code?
The Bankruptcy Code refers to Title 11 of the United States Code. (11 U.S.C. º 101-1330) Federal Law governs bankruptcy.
Where do I get a copy of my states local rules?
Copies can be obtained at the public service counters in the Clerk's office of the Bankruptcy Court. In addition, many Bankruptcy Courts now have their rules online.
Who can file for bankruptcy?
Any person, partnership, corporation or business trust may file bankruptcy. In addition, charitable or social organizations may also file for bankruptcy. United States citizenship is not a requirement for filing bankruptcy
Do I need an attorney to file bankruptcy?
Federal law does not require you to have an attorney. You are allowed to file pro se, that is, on your own without an attorney. However, without the assistance of an attorney, it is extremely difficult to do so successfully. Hiring a competent attorney is highly recommended.
What if I am married?
If you are married, you may file a joint petition. A joint petition is the filing of a single petition by an individual and the individual's spouse. In order to qualify for a joint petition, you must be married on the date that the joint petition is filed. Unmarried persons, corporations and partnerships must each file a separate case. If you are an individual and have a business, you may not file a single petition for yourself and your business; each must be a separate bankruptcy case.
Will I lose my house, car, and other personal property?
Not necessarily, each state has laws that determine which items or property are exempt from being taken away. For example, many states exempt personal items such as furniture and clothing. In addition, other kinds of property are exempt up to a limit. These exemption limits mean that any equity that you have in the property above the limit is not exempt. The Bankruptcy Court can take the property and sell it, pay off any creditors, give to you the exemption amount, and keep the rest for other creditors.
Does my divorce decree protect me if my ex-spouse has filed for bankruptcy and she has listed me as a co-signer on a Schedule D?
If you are contractually bound with your ex-spouse on a debt, the creditor can require the entire payment of that debt from your share of the community property even though the divorce decree assigns the debt to your ex-spouse. Depending on the terms of your divorce decree, you may be able to have certain support obligations under it determined to be non-dischargeable by the bankruptcy court or in state court. If you find out that your ex-spouse has filed for bankruptcy, you should seek legal advice to find out your possible obligations.
Will filing bankruptcy affect my credit rating?
Unfortunately it will. However, most individuals are able to rebuild their credit within a few years. If you are currently contemplating bankruptcy, then it is likely that your current credit rating has already been affected. A discharge of your current debt may provide the opportunity to rebuild your credit with steady, regular payments on a new account.
How long will a bankruptcy show on my credit reports?
The Bankruptcy Court has no jurisdiction over credit reporting agencies. The Fair Credit Reporting Act, 6 U.S.C. Section 605, is the law that controls credit reporting agencies. The law states that credit reporting agencies may not report a bankruptcy case on a person's credit report after ten years from the date the bankruptcy case is filed. Other bad credit information is removed after seven years. The larger credit reporting agencies belong to an organization called the Associated Credit Bureaus. The policy of the Associated Credit Bureaus is to remove chapter 11 and chapter 13 cases from the credit report after seven years to encourage debtors to file under these chapters.
Can I file for bankruptcy every few years?
No. Once a discharge is granted, a debtor who filed under chapter 7 or 11 is prohibited from filing for another 6 years.
What chapter should I file under?
Your particular circumstances will determine the best chapter for you to file under. Choosing the appropriate chapter is very important. The decision whether to file a bankruptcy and under what chapter is an extremely important decision and should be made only with competent legal advice from an experienced bankruptcy attorney after a review of all of the relevant facts concerning your case.
What is a chapter 13 bankruptcy?
Chapter 13 is the debt repayment chapter for individuals with regular income whose debts do not exceed $1,000,000 ($250,000 in unsecured debts and $750,000 in secured debts), including individuals who operate businesses as sole proprietorships. It is not available to corporations or partnerships. Chapter 13 generally permits individuals to keep their property by repaying creditors out of their future income. Each chapter 13 debtor proposes a repayment plan that must be approved by the court. The amounts set forth in the plan must be paid to the chapter 13 trustee who distributes the funds for a small fee. Many debts that cannot be discharged can still be paid over time in a chapter 13 plan. After completion of payments under the plan, chapter 13 debtors receive a discharge of most debts.
What should I do if I cannot make my chapter 13 payments?
If the debtor cannot make a chapter 13 payment on time according to the terms of the confirmed plan, the debtor should contact the trustee by phone and by letter advising the trustee of the problem and whether it is temporary or permanent. If it is a temporary problem and the payments can be made up, the debtor should advise the trustee of the time and manner in which the debtor will make up the payments. Significant changes in the debtor's circumstances may require that the plan be formally modified. If the problem is permanent and the debtor is no longer able to make payments to the plan, the trustee will request that the case be dismissed or converted to another chapter. The determination of whether to modify, dismiss or convert a case requires the same kind of analysis as is needed for the initial decision whether to file bankruptcy and under what chapter. Therefore, the debtor should seek counsel from a qualified bankruptcy attorney before attempting to make such a decision. If the debtor delays making a voluntary decision and cannot make the plan payments, the court may dismiss the case.
What is a chapter 7 bankruptcy?
Chapter 7 is the liquidation chapter of the Bankruptcy Code. Chapter 7 cases are commonly referred to as straight bankruptcy or liquidation cases, and may be filed by an individual, corporation, or a partnership. Under chapter 7, a trustee is appointed to collect and sell all property that is not exempt and to use any proceeds to pay creditors. In the case of an individual, the debtor is allowed to claim certain property exempt. In exchange for this, the debtor gets a discharge, which means that the debtor does not have to pay certain types of debts. Corporations and partnerships do not receive discharges. Consequently, any individuals legally liable for the partnership's or corporation's debts will remain liable. Therefore, individual bankruptcies may be required as well as the corporation or partnership bankruptcy.
What is a discharge?
The discharge order is issued by the court and permanently prohibits creditors from taking action to collect dischargeable debts against the debtor personally; this does not prevent secured creditors from seizing collateral if payments are not kept up, or other creditors from pursuing property of the estate. Some debts are not dischargeable, and others may be found to be non-dischargeable depending on particular circumstances.