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- 1. What Is Bankruptcy?
- Bankruptcy is a set of federal laws and rules that can help individuals and businesses who owe more debt than they can pay. In bankruptcy, the person, corporation, or partnership that owes money is called the debtor. Bankruptcy permits the debtor to work out a plan to repay some or all of the debt, to liquidate assets, or to have some of the debt forgiven (discharged) in an effort to obtain a
"fresh start". The bankruptcy laws give the debtor protection and benefits not available outside of bankruptcy, such as requiring that creditors stop all collection efforts while the debtor is in bankruptcy, unless otherwise ordered by the Bankruptcy Court. This protection from collection efforts is referred to as the automatic stay. In bankruptcy, a debtor must make full disclosure of all assets, liabilities, and other financial information, and must either (1) surrender non-exempt (protected) property for liquidation and distribution to creditors, or (2) formulate a plan providing creditors at least as much as they would receive if the assets were liquidated. The Bankruptcy Code and Federal Rules of Bankruptcy Procedure determine which chapter one is eligible to file, which debts can be eliminated, how long repayment must continue, which possessions can be kept, etc. A Debtor must abide by these federal laws and rules.
- 2. I Am Getting Conflicting Information On The Internet About Bankruptcy, What Should I Do?
- Ask The Brown Law Firm for a free initial consultation, and do not believe the myths on the Internet.
- 3. Do I Need An Attorney To File Bankruptcy?
- While it is possible for an individual to file a bankruptcy case "Pro Se", that is, without representation by an attorney, it is extremely difficult to do so successfully. Corporations and partnerships must have an attorney represent them in a bankruptcy case.
Bankruptcy has long term financial and legal consequences, and hiring a competent attorney is strongly recommended. Only an attorney is authorized to give you legal advice regarding a bankruptcy case or proceeding.
Neither the Judge nor the Bankruptcy are allowed to give you legal advice or help fill out forms. For example, they cannot:
Explain the meaning of a particular statutory provision or rule
Give an interpretation of case law, rule, or statute
Explain the result of taking or not taking action in a case
Help you complete the forms, or advise you regarding what is legally require when a form elicits information from you
Tell you whether jurisdiction is proper in a case
Tell you whether a complaint properly presents a claim
Provide advice on the best procedure to accomplish a particular goal
Explain who should receive proper notice or service
The judge's responsibility is to supervise and administer the entire case and to resolve disputes between the parties. The judge must remain impartial.
You cannot engage in ex parte communications with the Judge. This means you cannot contact the Judge to have a conversation about your case.
The individual who represents himself or herself is expected to follow all of the rules, and to know all of the applicable bankruptcy laws. This includes rules requiring written papers which must be filed, deadlines for filing pleadings, and requirements to serve the opposing side with your papers.
- 4. What Happens At My Free Initial Bankruptcy Consultation At The Brown Law Firm?
- At your free initial consultation, we will consult with you and inform you of your options regarding your specific situation. You will also be provided with information we are required to give you by law.
- 5. What Documents Do I Need For My Free Initial Consultation At The Brown Law Firm?
- If possible, complete the Initial Consultation Questionnaire which you will
be emailed to you once you submit your contact information
here or schedule a
Free Consultation. Please e-mail (preferably) or fax
the questionnaire to us before your consultation, so the attorney can review same before the consultation. You may also print such Initial Consultation Questionnaire, complete it by hand and bring it with you to your free initial consultation. This will allow the attorney to gain a fairly accurate picture of your financial situation. Complete the questionnaire as accurately as possible, however, if you do not have all of the information available to you at that time, do not be concerned because more accurate information can be gathered later. Also, bring in any other documents that the attorney has requested. Additionally, in order to obtain a more accurate picture of your financial situation, it is preferable for us to obtain your current credit report. So that we can obtain your credit report, you will need to bring your driver's license or some other form of picture ID, along with either proof of automobile insurance or a credit card or utility bill that has your current address on it.
- 6. Do I Have To Make A Decision At The Free Initial Consultation?
- No. This bankruptcy consultation is for your benefit and does not obligate you in any manner until you hire us. Many clients wish to take the information home and discuss it with a family member or spouse before they decide their course of action to be pursued.
- 7. How Do I Pay You To File Bankruptcy For Me If I Am Broke?
- Since we have practiced in this area for many years, The Brown Law Firm understands the difficulties in paying attorney's fees. We are happy to work with you. The attorney's fees in bankruptcy are usually low in comparison to other types of legal fees. We will discuss payment options with you at the free initial consultation. You will not be required to come up with a large sum of money all at once unless that is your desire and in your best interests. In addition, since you will no longer have to pay many of your debts, most people are able to pay us in a short period of time.
- 8. Does The Brown Law Firm Offer Payment Plans?
- Yes. The Brown Law Firm understands you are having financial difficulties. That is the reason we provide a free initial consultation. We will discuss payment options at the free initial consultation. In almost all cases, once you quit paying the creditors you want to discharge, you will have more than enough money to file your bankruptcy.
- 9. After My Consultation, Will I Be Able To Contact The Brown Law Firm If I Have More Questions?
- Yes! The Brown Law Firm wants you to help you make informed decisions regarding your case. If you have any questions regarding your bankruptcy case, you may call the firm and speak to one of our trained professionals.
- 10. Does The Brown Law Firm Inform Its Clients Of Court Dates Or Do I Have To Find That Information On My Own?
- At The Brown Law Firm, we make sure you are informed of proceedings in your bankruptcy case every step of the way. You will always be notified of any upcoming events in your bankruptcy case. If you provide an e-mail address, this information will be sent to you electronically.
11. What SHOULD I Do Before I File Bankruptcy?
Speak To A Bankruptcy Attorney At The Brown Law Firm About Your Options As Soon As Possible.
Take your situation seriously
- Ignoring your financial trouble will not make it go away.
Explain the result of taking or not taking action in a case.
Be honest about all your debts and assets
- To best serve you, our attorneys need all of your financial information, even if it is embarrassing to you. We can, in all likelihood, provide a feasible solution to handle your debt issues. Keeping us informed will create the best results.
Continue making payments on vehicles and homes you intend to keep
- If you are behind on your payments, your creditors can repossess your property.
- 12. What Should I NOT Do Before I File Bankruptcy?
Withdraw money from your retirement account
? Generally, this account is exempt in bankruptcy, absent fraud. Further, early withdrawal makes you liable for taxes and penalties that are not dischargeable in bankruptcy.
Make excessive purchases on or take out large cash advances from your credit cards before filing ? If the court sees exorbitant purchases or cash advances six months to one year prior to filing, it may consider your petition fraudulent and dismiss your claim.
Transfer property out of your name ? Hiding assets is risky and illegal. Our bankruptcy attorneys can advise you regarding about legal ways to protect your property.
Take cash advances from one credit card to make payments on another ? Once you start juggling credit cards, you are in trouble. Speak with our firm immediately.
Repay friends or relatives before filing ? You cannot treat friends and family preferentially over your creditors.
Speak with creditors without your bankruptcy attorney being present ? After you file bankruptcy, your lawyer will communicate with your creditors on your behalf.
Consider bankruptcy an easy way to get rid of all your debts ? Not all debt is discharged in bankruptcy, including certain tax debt, student loans and child support payments.
- 13. Should I Consider Using A Debt Consolidation/Credit Repair/Tax Relief Company?
Debt Consolidation Companies.
Most debt consolidation companies are SCAMS, ruin your credit and ultimately FAIL. There is very minimal regulation on these companies and there are new debt consolidation companies "popping up" seemingly overnight. Many are being sued by governmental agencies or their former clients for fraud. Most of the time, the debt settlement companies will keep most of the money for themselves, leaving little for the actual settlement. Normally, we see that by the time our clients figure out that the company is not doing what was promised, several thousand dollars are lost to these debt consolidation companies and they are in worse financial condition than ever. There is nothing special about the relationships between debt settlement companies and credit cards/debt collectors that guarantee settlements. In many cases, debt consolidation services have no leverage and no means of providing lenders with incentives to agree to a debt consolidation. Even assuming they do settle, what the creditors and debt settlement companies don't tell you is this: the amount forgiven will be considered income to you and you may be taxed on the amount forgiven.
Credit Repair Companies.
The promises of Credit Repair Companies to "fix" your bad credit rating or to erase your bad credit usually are nothing more than ways to take your money. Business is brisk among these so-called
"credit-repair" companies that charge $50 to more than $1,000 to fix your credit report. In many cases, these companies take your money, do little or nothing to improve your credit report and then vanish.
There are no quick or easy fixes for a poor credit history. If a company promises to clean up your credit report, remember:
Your credit history is maintained by private companies called credit bureaus that collect information reported to them by banks, mortgage companies, department stores and other creditors.
Although bankruptcy can help, only time and a history of timely debt payments will heal a poor credit history - even if your problems were due to illness or unemployment.
Credit reporting agencies are permitted by law to report bankruptcies for 10 years and other negative information for seven years.
Tax Relief Companies.
BEWARE OF "TAX RELIEF COMPANIES". You may have seen so-called "tax relief companies" that advertise on TV claiming that they can settle your tax debts for pennies on the dollar?. DON'T YOU BELIEVE THEM!!!! Many of these companies are in bankruptcy and/or are being sued by their customers and governmental agencies for consumer fraud and theft. Those companies and others have thousands of complaints filed against them with the Better Business Bureau because they took their client's money and didn't provide any or provided only a few of the services they promised. In fact, we've had a number of customers of these
"tax relief companies" come to us for assistance after they were duped by these companies.
Don't waste your time or money with them.
On the other hand, bankruptcy proceedings are backed by the power of the federal bankruptcy code. When you file for bankruptcy, you do not have to get your creditors to agree. Your rights are enforced by the bankruptcy court. Bankruptcy is much more certain and there is no "scam" involved.
- 14. Who Can File A Bankruptcy?
- Any person, partnership, corporation or business trust may file a bankruptcy. If the debtor ( person or entity who owes the money) files a petition to start the bankruptcy, it is a voluntary bankruptcy. If the creditors (people or entities to whom the money is owed) file a petition against a debtor to start the bankruptcy, it is an involuntary bankruptcy. If an involuntary case is filed, the debtor has a specific number of days in which to contest the petition and contend it should not be in bankruptcy.
- 15. If I Have Filed A Bankruptcy Before, Can I File Again?
- 16. How Do I Qualify For Bankruptcy? Can I Not Be Approved?
- You qualify for bankruptcy if either your outgo exceeds your income or your liabilities exceed your assets. Very basically, you have to reside in the state you file in, and not have filed within certain time periods (you can't file two Chapter 7s within 8 years of each other).
- 17. If I File A Bankruptcy Case, Will I Keep Paying All My Creditors?
- No, you will usually pay only those whose debts are secured by property you want to keep. Also, once you quit paying the creditors you want to discharge, in most cases you will have more than enough money to file your bankruptcy.
- 18. Do You Have To Have A Certain Amount Of Debt To File?
- No. However, some situations may not warrant filing for bankruptcy. If your financial situation is temporary, you may consider making arrangements with individual creditors for a change in payment amounts or a reduction in the total amount due. If you have little property or money, filing bankruptcy may not be necessary, as the creditor may not be able to collect the debt.
- 19. Is My Bankruptcy Case Public Information?
- Unless you're a prominent person or a major corporation and the filing is picked up by the media, the chances are very good that the only people who will know about a filing are your creditors and the people who you tell. While it's true that your bankruptcy is a matter of public record, so many people have filed and unless someone is specifically trying to track down information on you, there is almost no likelihood that anyone will even know you filed. As for newspapers, our experience is that very few papers include information about who filed bankruptcy.
- 20. If I File Bankruptcy, When Will The Telephone Calls Stop?
- Immediately after the filing of the bankruptcy, the bankruptcy clerk notifies all of the creditors that you have listed. Upon the receipt of that notice, those creditors are bound by the Bankruptcy Code to cease all communication with you. They cannot sue you, call you, foreclose on your house, repossess any items from you, garnish any wages or take any other legal action.
- In addition, if there are specific creditors that are harassing you in an extraordinary way, we will contact them for you immediately upon the filing of the bankruptcy, notify them of your case number and advise them that they are to cease and desist all activities.
- 21. Will I Lose All Of My Assets In Bankruptcy?
- Both the Bankruptcy Code and the Texas Property Code have exemption statutes that are designed to help people protect their home, their car, their furniture, furnishing, clothing and personal effects. In addition, most clients qualify for a
"wild card" exemption under the federal list of exemptions, which allows them to retain assets that would otherwise be non-exempt under the Texas Property Code. Normally, most debtors do not lose any property that they do not otherwise wish to voluntarily abandon.
- 22. Can Bankruptcy Stop Foreclosures, Wage Assignments, Help Me Get My License Back From An Uninsured Accident, Stop Evictions, A Judgment, Or Remove A Lien?
- 23. My House Is Set For Foreclosure. How Long Can I Wait To Decide To File Bankruptcy?
- Do not wait. Since there is absolutely no charge for your first consultation with us, it is pointless to wait. Come see us immediately so that we can explain your alternatives and you can choose the option that is best for you. If you wait too long, it may be too late to stop the foreclosure and you may lose your house.
- 24. If They Have Already Repossessed My Vehicle, Is It Too Late To Save It?
- No. One of the great advantages of a Chapter 13 bankruptcy is that if you act immediately after your vehicle is repossessed, the Bankruptcy Code normally will require the creditor to return the vehicle to you. In a Chapter 13 bankruptcy, you can then make arrangements to keep the vehicle and pay for it, (sometimes at a discounted amount) under the bankruptcy plan. However, if you wait and the vehicle is sold by the creditor after they have repossessed the vehicle, then it will then be too late to regain possession of your vehicle.
- We are often able to allow you to pay the value of the vehicle rather than the full amount of the debt. This normally results in a substantial reduction in your monthly payment on your vehicle.
- 25. I Have Been Served With A Lawsuit, What Should I Do?
- Contact The Brown Law Firm for an appointment immediately. A bankruptcy case will normally stop all litigation.
- 26. Will A Bankruptcy Filing Stop A Foreclosure? Can My House Still Be Taken From Me?
- When you file your bankruptcy your creditors are stayed from taking action against you, including foreclosure. However, in a Chapter 7 bankruptcy, if you do not bring your mortgage current the lender could request from the bankruptcy court a "relief from the stay" which would allow them to foreclose. In a Chapter 13 you generally can put the arrearages you owe in your Chapter 13 plan, but would have to make regular monthly payments each month going forward from the filing date of your Chapter 13 plus make payment toward the arrearage. In today's market, a Chapter 13 bankruptcy may help you save your homestead by offering a structured loan modification process, and may afford you the opportunity to discharge second mortgages, home equity lines, and other liens secured to your home.
- 27. Will I Lose My Cars In Bankruptcy?
- Like your home, the bankruptcy process is designed to help you keep the vehicles necessary for your family. Again, either Chapter 7 or Chapter 13 can provide the necessary protection so that you can retain the cars required to maintain your family needs.
- 28. Can You Reduce My Monthly Payments On My Car?
- Normally, yes, in a Chapter 13. In a Chapter 7, usually you continue to make the regular payments on your car.
- 29. Will I Ever Be Able To Buy A House Or A Car Again If I File A Bankruptcy?
- In all likelihood, yes.
- 30. Will I Lose My Retirement Accounts Or Payments From Social Security In Bankruptcy?
- Generally, no. Retirement accounts that are ERISA-qualified aren't considered property of an estate and aren't taken into consideration as assets. Social Security benefits are protected from assignment, or garnishment for debts in bankruptcy. Once paid, the benefits continue to be protected only as long as they can be identified as Social Security benefits. For example, money in a bank account where the "only" deposits into the account are direct deposits of Social Security benefits are identifiable and generally protected.
- 31. Should I Cash In My IRA/401k Account In An Attempt To Avoid Having To Avoid Filing Bankruptcy?
- No. If you do, it will most probably cause a very large tax liability on your part and it may detrimentally affect your bankruptcy case.
- In a bankruptcy case, you can save all of your retirement money that qualifies under the IRS's requirements for you. Please call us before spending your life savings.
- 32. Will Filing Bankruptcy Stop My Wages From Being Garnished?
- Yes, once you file bankruptcy, you are under protection of the Bankruptcy Court from most creditors. We will immediately notify the garnishing creditor that you have filed a bankruptcy petition.
- 33. When Should I Stop Using My Credit Cards If I'm Planning On Filing For Bankruptcy?
- As soon as you anticipate filing bankruptcy, stop using your credit cards. Bankruptcy law allows the review of questionable purchases for potential fraud. If purchases are made 40 days prior to filing or cash advances taken within 20 days of filing, the debt may possibly be excluded from the bankruptcy and it can be dismissed.
- 34. The IRS Is Charging Me A Lot Of Interest And Penalties, Will A Bankruptcy Help?
- Absolutely. Normally all interest stops immediately upon the filing of a bankruptcy. We can oftentimes remove the penalty that has previously been assessed through a Chapter 13 case.
- 35. When Should I File Tax Returns If I Am Going To File Bankruptcy?
- If you are considering filing a bankruptcy, you must file your tax returns that are due, preferably before you file bankruptcy. No file returns. no file bankruptcy. If you can, get your refund before you file. If you do and spend it, you will keep your refund no matter how much it is. If you get your refund after you file bankruptcy, and the refund is over the exemption, you may lose part of your refund. If you are considering filing in the later part of the year, file before December. If you file in January, you may have to wait for some time after you get your refund back. You will be asked when you got your refund and how you spent it if you got a large refund. In particular, if you will be receiving a tax refund, you should obtain the refund before you file bankruptcy. In some districts, tax refunds received while you are in a Chapter 13 case have to be paid to the trustee for distribution to your creditors.
- 36. How Does A Bankruptcy Filing Affect My Credit?
- Bankruptcy has an initial adverse effect on your credit score. However, the type of bankruptcy, whether Chapter 7, 11 or 13, will affect an individual's credit differently. As a general response, if you are in need of a bankruptcy, the initial affect to your credit score should not necessarily guide you in your decision on whether or not to file, particularly if your credit score is already poor. Oftentimes, those in need of a fresh start who choose not to file for bankruptcy will have a harder time rehabilitating their credit in the future. However, those who opt for bankruptcy, are ultimately afforded the opportunity in the future to obtain credit cards, purchase vehicles, and qualify for mortgage loans. While these things may not happen overnight, you may be surprised as to the actual positive effect your bankruptcy will have on your life.
- 37. Will I Be Able To Own Anything After Filing Bankruptcy?
- Yes! You can keep your exempt property and, with a few exceptions, anything you obtain after the bankruptcy is filed.
- 38. How Difficult Is It To File Chapter 7 Under The New Bankruptcy Laws?
- There has been much doom and gloom written about the bankruptcy means test under the new laws and how much more difficult it is to file Chapter 7. It's true that there are more hoops to jump through under the new laws and it's true that the bankruptcy means test results in some people having to file Chapter 13 instead of Chapter 7. However, for the vast majority of filers Chapter 7 is still available with very little extra effort!
- 39. What About Using A Bankruptcy Preparer To File My Bankruptcy Case?
- Do not use a Bankruptcy Preparer to file your case! They are not attorneys
and cannot give you legal advice.
- 40. When Am I Under Bankruptcy Protection?
- You are under bankruptcy protection as soon as your petition is filed.
- 41. How Long Does It Take For Creditors To Be Notified That A Bankruptcy Has Been Filed?
- As long as the creditor was listed in the original mailing matrix that accompanied the filing of the petition, notification will typically be received within seven days.
- 42. May I Speak Directly To The Judge?
- No. The Bankruptcy Rules prohibit any "ex parte" contact (communication between just you and the judge) with the Court in order to preserve the integrity of the Court and to prevent the appearance of any impropriety or allegations of preferential treatment for any party. The only time you may speak to the judge is when you are in the courtroom for a hearing in your case.
- 43. Will The Judge Advise Me Of My Options During The Bankruptcy Case?
- No. The Judge cannot act as your counsel or advise you with respect your bankruptcy case.
- 44. Can The Bankruptcy Clerk's Office Give Legal Advice?
- No. The Clerk's Office staff is prohibited from giving legal advice.
- 45. What Is The Difference Between A Chapter 7, 13 And 11?
Chapter 7 - In a Chapter 7, Debtors are permitted to retain certain
"exempt" property, while the remaining assets are liquidated by the trustee. The trustee will distribute the funds from the liquidation to holders of claims (creditors) in accordance with the provisions of the Bankruptcy Code. Accordingly, potential Debtors should realize that the filing of a petition under chapter 7 might result in the loss of non-exempt property.
Chapter 13 - Chapter 13 is designed for individuals with regular income to repay a portion or all of their debt over an extended period of time. Chapter 13 may be appropriate for Debtors who seek to retain certain assets through a repayment plan.
Chapter 11 - Chapter 11 allows corporations, partnerships, and certain individuals who do not qualify under Chapter 13, to reorganize without having to liquidate all assets. As in a Chapter 13, the Debtor (called the
"debtor-in-possession" because a trustee is not normally assigned) is required to present a repayment plan. If the plan is accepted by the creditors and subsequently approved ("confirmed") by the Court, this allows the Debtor to reorganize his/her/or its personal, financial, or business affairs.
- 46. Which Bankruptcy Chapter Is Right For Me?
- You have a choice in deciding which chapter of the Bankruptcy Code will best suit your needs. The decision whether to file a bankruptcy, and under which chapter to file depends on the particular circumstances of the debtor. Also, considering your personal facts, comparing them to each chapter's requirements, and deciding which chapter to select, is considered legal advice. Bankruptcy Clerk's office staff, Bankruptcy Petition Preparers, typing services and paralegals are prohibited by law from giving legal advice. Only a lawyer can give legal advice.
- 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 the relevant facts of the debtor's case.
- 47. If I Cannot Make Any Payments On My Debt, Do I File Chapter 7 Or 13?
- If you financially are unable to pay most of your debts, then you should probably file a Chapter 7 bankruptcy. Whether you can file a Chapter 7 bankruptcy case, of course, will depend up certain bankruptcy requirements such as the Means Test.
- 48. Is It True That If I Do File A Chapter 13, Then I Pay Back Most (If Not All) Of My Credit Card Debt?
- WRONG. Another misconception is that if you do file a Chapter 13 bankruptcy, you are required to pay back all your credit card or other similar unsecured non-priority debt. To the contrary, that is rarely the case.
- 49. Can I Choose Which Assets And Debts Go Into My Bankruptcy?
- You must include all your assets and debts in your schedules filed with the bankruptcy court. Most debtors are able to keep all their assets in bankruptcy by exempting their property. You may opt to keep paying some debts by "reaffirming" the specific debt.
- 50. Will Someone Come To My House And Look At My Property If I File A Bankruptcy Case?
- While this is possible, it almost never occurs.
- If the officers or shareholders are personally liable for the debts of the business, the automatic stay in the corporation's case doesn't prevent creditors from trying to collect from such parties who may be liable.
- 51. What Are Exemptions?
The Bankruptcy Code allows an individual debtor to hold back (exempt) certain property from the bankruptcy process. Such property is called an exempt asset. Exempt assets are protected by state law from distribution to creditors. Examples of exempt assets include vehicles up to a certain value, equity in a home up to a certain value, and tools of your trade. Exemptions must be claimed or lost and they are claimed on Schedule C. If no one objects to the claimed exemptions within a specified time, the assets may not be part of your bankruptcy estate.
Deciding which assets are exempt can be one of the more important and complex parts of your bankruptcy case often requiring legal judgment as to your particular circumstances. It is extremely important to consult a competent bankruptcy attorney if you have any questions. The failure to list all property in which an exemption may be claimed and to properly claim an exemption may result in the loss of the right to claim the exemption.
- 52. What is Credit Counseling?
- Credit counseling generally refers to counseling from a nonprofit agency that individual debtors must attend (either by telephone, online or personally) prior to filing under any chapter of the Bankruptcy Code. There are exceptions to the requirements for certain categories of debtors, exigent circumstances, or if the U.S. trustee or bankruptcy administrator have determined that there are insufficient approved credit counseling agencies available to provide the necessary counseling.
- 53. What Is The Means Test?
- The means test is used in cases where the Chapter 7 individual debtor's(s') current monthly income exceeds the state's median family income. It is used to determine if a debtor has the ability to repay a minimum level of general unsecured debt after the payment of allowable monthly expenses. If the means test shows a debtor has such an ability to repay, there is a "presumption of abuse." In other words, if the debtor(s) receive(s) a Chapter 7 discharge, this would be an abuse of the bankruptcy process, because the debtor(s) may have the ability to repay debts outside of bankruptcy or through a Chapter 13 repayment plan over time. The analysis involves application of certain IRS guidelines for expenses in determining the ability to repay as well as a review of income from the previous six months to determine if the debtor(s) is/are above the median income for the state where they reside.
- 54. Is The Bankruptcy Court State, Or Federal?
- The U.S. Bankruptcy Court is part of the federal judiciary. Each of the 94 federal judicial districts handles bankruptcy matters, and in almost all districts, bankruptcy cases are filed in the bankruptcy court. Bankruptcy cases cannot be filed in state court.
- 55. What Happens After I File My Bankruptcy Case?
- When you file your petition, the "automatic stay" may take effect depending upon whether you have had more than one bankruptcy case pending and dismissed in the year before filing the current case. The automatic stay prohibits creditors from taking collection action against you or your property. The Court issues a notice to all creditors advising them of the filing, the case number, the automatic stay, and the name of the trustee assigned to the case (in Chapters 7, 12, and 13). The notice also tells creditors the date of the meeting of creditors (the "341 meeting") the deadline for filing objections to the debtor's discharge or to the dischargeability of certain debts, and whether and where to file claims. The information in the notice varies with the Chapter of the case. All debtors must appear at the meeting of creditors or the case may be dismissed.
- In an individual's Chapter 7 case, creditors generally have 60 days from the first date set for the meeting of creditors to object to the debtor's discharge or the dischargeability of certain debts. If the deadline passes without any objections to the debtor's discharge being filed, the Court may issue the discharge order. Other matters that may prevent or delay the discharge are: certain pending reaffirmation agreements, if a hearing is required and has not been held, the failure to file the verification of completion of an Instructional Course in Personal Financial Management and other circumstances as listed under Section 522(q) of the Bankruptcy Code. If any objections to the dischargeability of debts are filed, they will be heard by the Court, but will not stop the entry of the discharge as to other debts. Only an individual debtor receives a discharge. Corporations and partnerships do not receive discharges. If there are no non-exempt assets with equity above the liens against the assets from which creditors can be paid, the Chapter 7 trustee will prepare a report of no distribution, and the case will be closed. If non-exempt assets exist, the Court will set claims deadlines and notify all creditors to file their claims. The Chapter 7 trustee will collect the assets, liquidate (sell) them, and distribute the proceeds to creditors. When the assets have been completely administered, the trustee files a final distribution report and the Court will close the case.
- In a Chapter 13 individual reorganization case, a plan is filed, and creditors are given the opportunity to object to the plan. If no objection is filed by the creditors or the Chapter 13 trustee, the Court may confirm the plan. The debtor(s) then make payments to the Chapter 13 trustee under the plan for three to five years. The Chapter 13 trustee will distribute the proceeds of the plan payments to creditors until the debtor completes the plan or the Court dismisses or converts the case to another Chapter. Upon completion of the Chapter 13 plan, the Court issues a discharge order, the Chapter 13 trustee will prepare a final report, and the case will be closed. A discharge will not issue if the debtor(s) fails to verify that they have made all post-confirmation Domestic Support Obligation payments and filed the verification of completion of an Instructional Course in Personal Financial Management. The Chapter 13 process is very complicated and plans of reorganization are almost never successfully prosecuted without the assistance of counsel.
- A Chapter 12 , "family farmer" case proceeds much like a Chapter 13 case. However, in a Chapter 12 case, the confirmation hearing must be concluded within 45 days of the filing of the plan. If a plan is not confirmed, the Court may consider dismissal of the case.
The Chapter 12 process is very complicated and plans of reorganization are almost never successfully prosecuted without the assistance of counsel.
- In a Chapter 11 business reorganization case, a debtor's conference with the United States Trustee's staff is held before the meeting of creditors. At the conference, the United States Trustee will go over the responsibilities of the debtor, called the debtor-in-possession, explain the quarterly fees and monthly operating reports, and discuss the debtor's financial situation and proposed reorganization. The Court may also hold an initial status conference at which such issues are discussed. A disclosure statement and plan of reorganization must be filed. A disclosure statement must be approved by the Court before it can be used to solicit votes from creditors in support of the plan. Once a plan has been confirmed, and the estate has been fully administered, the Court will enter a final decree closing the case. A Chapter 11 estate may be considered fully administered and closed before the payments required by the plan have been completed.
The Chapter 11 process is very complicated and plans of reorganization are almost never successfully prosecuted without the assistance of counsel.
- 56. Will I Have To Go To Bankruptcy Court?
- Court appearances vary for each individual. Typically, in a Chapter 7 bankruptcy you will have one informal hearing in front of a Trustee. The Trustee is not a judge. While the hearing before the Trustee is informal, it is
"on the record." As such, an attorney will be there to represent you.
- An individual in a Chapter 13 bankruptcy will also have to go to a First Meeting of Creditors. It is also informal and will be in front of a Chapter 13 Trustee.
- An individual who files under either Chapter 7 or Chapter 13 may be required to have additional Court hearings. Those are not always possible to predict in advance. But, if you need to go, we will typically give you plenty of notice and we will be there to represent you.
- 57. What Is A Bankruptcy Trustee? Who Is The U.S. Trustee? What Is The Difference?
- In all Chapter 7, 12, and 13 cases, and in some Chapter 11 cases, a trustee is assigned. In Chapter 7 cases they are called a "panel trustee," and a group of some two dozen trustees are assigned by rotation. In Chapter 12 and Chapter 13, the trustee is always the same, and is called the "standing trustee." That means that your Chapter 12 trustee will likely always be the same person, and your Chapter 13 trustee will always be the same person. The trustee's job is to administer the bankruptcy case, or the bankruptcy estate, to make sure creditors are treated as contemplated by the Bankruptcy Code, and to preside over the meeting of creditors. The trustee either collects and sells non-exempt property, as in the case of a Chapter 7, or collects and pays out money from a repayment plan, as in the case of a Chapter 12 or Chapter 13. The trustee can require that you provide, under penalty of perjury, information and documents, either before, during, or after the meeting of creditors. Failure to cooperate with the trustee could be grounds to have your discharge denied. Trustees are generally, but not always, lawyers. They are appointed by the United States Trustee. Their fees come out of the bankruptcy filing fees or of the money collected in a bankruptcy case.
- Trustees are not your attorney, they do not represent you, they work on behalf of the bankruptcy estate and all of its creditors.
- The United States Trustee's Office is part of the U.S. Department of Justice, and is separate from the court. The United States Trustee's Office is a "watchdog" agency, charged with monitoring bankruptcy cases, appointing and supervising all trustees, and identifying fraud in bankruptcy cases. The United States Trustee's Office cannot give you legal advice, but they can give you information about the status of a case. If you are having problems with a trustee, or have evidence of fraud in a case, you can contact them. The United States Trustee's Office reviews all bankruptcy petitions and pleadings filed in cases, and participates in many proceedings, but they do not administer specific cases. The trustees whom they appoint administer the cases. They can file motions in the bankruptcy case, such as a motion to dismiss the case or convert it to another Chapter.
- 58. Can A Debtor Give Special Treatment To Certain Creditors?
- As a general rule, no. In any bankruptcy, the fair treatment of all creditors is a main goal. Practically any transfer of business property or assets during the
90 days before bankruptcy is filed may be avoided or set aside by the bankruptcy trustee. That includes making payments to creditors.
- Also, transfers to insiders (relatives, general partners and directors or officers of the business, for instance) made up to
one year before filing can be avoided. And, the laws in your state may give the trustee even more time to avoid some transfers.
- It's important to talk to your attorney about all transfers, payments, etc. made by the business to make sure it's the right time to file for bankruptcy.
- 59. What Is The Creditors' Meeting? What Can I Expect To Happen At The Meeting?
- A "meeting of creditors" is the single hearing all debtors must attend in any Bankruptcy proceeding. It is held outside the presence of the judge and usually occurs between twenty one (21) and sixty (60) days from the date the original petition is filed with the court. In Chapter 7, Chapter 12 and Chapter 13 cases, the trustee assigned by the court on behalf of the United States Trustee conducts the meeting. In Chapter 11 cases where the debtor is in possession and no trustee is assigned, a representative of the United States Trustee's office conducts the meeting.
AN INDIVIDUAL DEBTOR MUST BRING A GOVERNMENT ISSUED PHOTO I.D. (I.E. A DRIVER'S LICENSE) AND THEIR SOCIAL SECURITY CARD WITH THEM TO THE MEETING OF CREDITORS.
- The meeting permits the trustee or a representative of the United States Trustee's Office to review the debtor's petition and schedules with the debtor face-to-face. The debtor is required to answer questions under penalty of perjury concerning the debtor's acts, conduct, property, liabilities, financial condition and any matter that may affect administration of the estate or the debtor's right to a discharge. This information enables the trustee or representative of the United States Trustee's Office to understand the debtor's circumstances and facilitates efficient administration of the case. Additionally, the trustee or a representative of the United States Trustee's Office will ask questions to ensure that the debtor understands the positive and negative aspects of filing for bankruptcy.
- The meeting is referred to as the "meeting of creditors" because creditors are notified that they may attend and question the debtor about the location and disposition of assets and any other matter relevant to the administration of the case. However, creditors rarely attend these meetings and, in general, are not considered to have waived any of their rights by failing to appear. The meeting usually lasts only a few minutes and may be continued if the trustee or a representative of the United States Trustee's Office is not satisfied with the information provided by the debtor. If the debtor fails to appear at the meeting and/or fails to provide the information requested at the meeting or by an Order to Produce Documents, the trustee or a representative of the United States Trustee's Office may request that the bankruptcy case be dismissed or that the debtor be ordered by the court to cooperate or be held in contempt of court for willful failure to cooperate.
- 60. What Identification Do I Need For Entering The Court's Buildings?
- All adult visitors and unaccompanied minors will need to present valid government-issued picture identification (drivers license, state identification card, passport, or immigration card) for entry into the Court's buildings. A valid government-issued picture identification is also required for entry into the Meeting of Creditors.
- 61. What Are Claims And Claims Objections? How Are Claims Filed?
- A. Claims
- In the broadest sense, a claim is any right to payment held by a person or company against you and your bankruptcy estate. A claim does not have to be a past due amount but can include an anticipated sum of money which will come due in the future. In filling out your Schedules, you should include any past, present or future debts as potential claims.
- B. Claims
You may be entitled to object to any claim filed in your bankruptcy case if you believe that the debt is not owed or if you believe the claim misrepresents the amount or kind of debt (e.g. secured or priority) which you owe. In some circumstances, an objection to claim can be initiated by filing a motion in the bankruptcy court; in other circumstances, it must be initiated by filing an adversary proceeding (like a lawsuit in your bankruptcy case). If you anticipate objection to claims, you should seek the advice of an attorney as soon as possible since the objection process can be complicated and time sensitive.
- C. Filing of Claims
- The written statement filed in a bankruptcy case setting forth a creditor's claim is called a proof of claim. The proof of claim should include a copy of the obligation giving rise to the claim as well as evidence of the secured status of the debt if the debt is secured. Under the Federal Rules of Bankruptcy Procedure, with limited exceptions, claims filed by creditors, except governmental units, in Chapter 7, 12 and 13 cases must be filed within ninety (90) days after the first date set for the meeting of creditors. If a creditor files a claim after the specified deadline, you may object to the claim as being untimely filed.
- For purposes of obtaining your discharge, it may be important for you to file a claim on behalf of a creditor if that creditor should fail to do so. Under the Federal Rules of Bankruptcy Procedure, you (or in Chapter 7 and some 11 cases, the trustee) may file a proof of claim on behalf of a creditor within thirty (30) days after the last day for filing claims.
- 62. What Is An Adversary Proceeding?
- An adversary proceeding is a lawsuit related to a particular bankruptcy case. An adversary proceeding begins when a complaint is filed with the court and the appropriate fee is paid. This complaint is given a separate case number, and advances according to the court's rules. More information on adversary proceedings may be found in the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, and the court's local rules.
- Adversary proceedings are extremely complex; parties not represented by an attorney are strongly urged to consult a bankruptcy attorney when considering filing an adversary proceeding.
- 63. What Is A Reaffirmation Agreement?
- A reaffirmation agreement is an agreement between the Debtor and a creditor that the Debtor will pay all or a portion of the money owed, even though the Debtor has filed bankruptcy. In return, the creditor promises that, as long as payments are made, the creditor will not repossess or take back its collateral. This means that the Debtor will remain personally liable on that debt.
- 64. What Is The Effect Of A Reaffirmation Agreement?
- The debtor is effectively waiving the discharge on a particular debt, which means that the debtor will have to pay it, even if there is a negative change in the debtor's financial circumstances after your bankruptcy case.
- 65. Do I Have To Enter Into A Reaffirmation Agreement?
- No. They are strictly voluntary. Debtors need not reaffirm a debt in order to repay it. The law does not prohibit a debtor from voluntarily paying a discharged debt; it only prohibits the creditor from attempting to collect it.
- 66. What Does It Mean To "Redeem" Collateral?
- The Bankruptcy Code allows a debtor to "redeem" collateral. An individual chapter 7 debtor can keep certain kinds of collateral
- tangible, personal property intended primarily for personal, family, or household use by paying the holder of a lien on the property the amount of its "allowed secured claim." This amount is typically the lesser of the amount still owed to the creditor or the value of the property. The option to redeem applies only to property that a debtor has claimed as exempt or that the trustee has abandoned. With redemption, a debtor can often get liens released on personal household possessions for less than the outstanding debt. Unless the creditor consents to payments over time, a debtor must generally pay the redemption amount in one lump-sum payment to the creditor.
- 67. What is a Motion for Relief From Stay?
- Under certain circumstances, a creditor or a party seeking to continue an action outside of the bankruptcy will file a motion for relief from stay. Typically, the creditor is seeking to foreclose on property, sell it and apply the proceeds to the debt. The motions are most common in cases where there is no value in the property for the bankruptcy trustee to administer in excess of valid liens and claims of exemption.
- 68. What Is The Financial Management Course?
- The "instructional course in personal financial management" in chapters 7 and 13 is the course that an individual debtor must complete (after the filing of the bankruptcy case) before a discharge is entered. There are exceptions to the requirements for certain categories of debtors, exigent circumstances, or if the U.S. trustee or bankruptcy administrator have determined that there are insufficient approved credit counseling agencies available to provide the necessary counseling.
- 69. What Is A Bankruptcy Discharge?
- It releases the Debtor from personal liability for discharged debts. Thus, it prevents the creditors owed those debts from taking any action against the Debtor to collect the debts. Most, but not all, types of debts are discharged if they existed on the date the bankruptcy case was filed and were listed on the schedules. Bankruptcy law regarding the scope of a discharge is complex, and Debtors should consult competent legal counsel prior to filing.
- 70. What Debts Are Dischargeable?
- Generally, all debts listed on your bankruptcy schedules are dischargeable. However, certain types of debt are not dischargeable. The non-dischargeable debts, include, but are not limited to:
a. Certain taxes and fines;
b. Debts arising from certain fraudulent conduct;
c. Debts not listed in your bankruptcy petition;
d. Alimony, child maintenance or support, and certain other related debts arising out of a divorce decree or separation agreement;
e. Debts caused by the Debtor's willful and malicious injury to another;
f. Government guaranteed student loans;
g. Debts caused by a death or personal injury related to your operation of a motor vehicle while intoxicated; and
h. Post-bankruptcy condominium or cooperative owner's association fees.
This list includes only examples of non-dischargeable debts. Under the Bankruptcy Code, a creditor or party in interest may also file a complaint to have their debt declared non-dischargeable.
In a chapter 13 case, the discharge is broader.
- 71. If A Creditor Has A Judgment Against Me, Will A Bankruptcy Discharge Eliminate That Judgment?
- Yes, most judgments are dischargeable through bankruptcy, including judgments for debts.
- 72. Can I Discharge My Student Loan Debt In Bankruptcy?
Generally, no; student loans are not dischargeable in bankruptcy. However, under 11 U.S.C. ? 523(a)(8) of the Bankruptcy Code, two exceptions exist to the general rule. First, if a student loan is neither insured or guaranteed by a governmental unit, nor made under any program funded in whole or in part by a governmental unit or nonprofit institution, it may be discharged. Second, if paying the loan will impose an undue hardship on the debtor and the debtor's dependents, the loan may be discharged.
Be Warned: it is unusually difficult to show undue hardship sufficient to allow a discharge of student loans in bankruptcy. Such cases are heavily fact significant and Bankruptcy Courts rely on local precedent. It will furthermore be necessary for a debtor seeking to discharge a student loan debt to file a separate adversary proceeding in order to obtain a final court order declaring the debt discharged. If you have questions about the dischargeability of your student loans, please contact us at Roberts & Robold, P.A. for assistance and advice.
- 73. Can I Discharge My IRS Debt In Bankruptcy?
- Generally, no; IRS debt is not dischargeable in bankruptcy. However, there are some exceptions to this rule. If your tax debt arose at least three (3) years prior to your bankruptcy filing, the tax return was filed at least two (2) years prior to your bankruptcy filing, and your taxes were assessed within two hundred and forty (240) days prior to the bankruptcy filing, then your IRS debt is likely to be discharged. However, this exception applies only to Income tax liability. Other tax obligations such as payroll tax, sales tax, fraud penalties, or the willful attempts to evade paying taxes, are not dischargeable in bankruptcy.
- 74. How Long Does It Take To Obtain A Discharge?
- Each case is different, but a general rule of thumb in a Chapter 7 case is that a debtor's discharge will be entered about 120 to 150 days after the case was filed. The entry of a discharge may take longer if a debtor's entitlement to the discharge is contested. In Chapter 11 cases, a discharge is obtained when the plan is confirmed and other Bankruptcy Code requirements have been satisfied. In Chapter 12 and 13 cases, a discharge is not entered until the plan has been completed. Chapter 12 and 13 plans generally last from 36 to 60 months (3 to 5 years).
- 75. Can A Discharge Be Denied?
- Under certain circumstances, the Bankruptcy Code provides the Debtor's discharge may be denied in a chapter 7 case. Grounds for denial exist when the Debtor: (1) failed to keep or produce adequate books or financial records, (2) failed to satisfactorily explain any loss of assets, (3) committed a bankruptcy crime such as perjury, (4) failed to obey a lawful order of the bankruptcy court, or (5) fraudulently transferred, concealed, or destroyed property that would have become property of the estate
- 76. What Is The Difference Between A Discharge Being Denied And A Debt Being Declared Non-Dischargeable?
- The court can deny the Debtor's discharge of all debts, or determine that a particular debt or debts are non-dischargeable. If the court denies the discharge of all debts, then the Debtor will still be legally responsible for all the debts as if no bankruptcy petition had ever been filed. If only certain debts are ruled non-dischargeable, the Debtor will still receive a discharge order. However, the Debtor will remain legally responsible for those non-dischargeable debts. For a discharge to be denied, either as to a particular debt or as to all debts, someone must file an adversary proceeding (lawsuit) with the court. That party must then prove one of the grounds for denial of the discharge or for a debt to be declared non-dischargeable. If your discharge is not withheld or none of your debts is declared to be non-dischargeable, then all the debts listed in your petition will be discharged upon the entry of the order granting your discharge (meaning your personal liability for the debts will be eliminated).
- 77. Will All My Creditors Be Notified Of My Discharge?
- All creditors who were listed in your schedules and on your creditors' matrix or added to your schedules and creditors' matrix by amendment will receive notice of your discharge.
- 78. How Soon After I Get My Discharge Can I File For Bankruptcy Again?
- The Court cannot grant a discharge to an individual Chapter 7 or 11 debtor if he or she has been granted a discharge within eight years of the date of filing the previous Chapter 7 petition.
The Court cannot grant a Chapter 13 debtor a discharge if the debtor received a prior discharge in a prior Chapter 7, 11 or 12 case filed four years before the current case or in a prior Chapter 13 case filed two years before the current case.
It is strongly suggested that you seek legal advice from a competent bankruptcy attorney on this matter.
- 79. After I File My Bankruptcy Can I Change From Chapter 7 to 13 Or Vice Versa?
- Yes, depending on the facts of your case, you can file a "motion to convert" where appropriate. For example, if it is determined, after filing a Chapter 7, that you make too much money per Chapter 7 requirements, you may have to convert your case to one under Chapter 13.
- 80. What Happens If I Forget To List A Creditor In My Bankruptcy?
- In order to discharge a debt you must find it in your bankruptcy paperwork. If you forget to list a creditor, you should contact your attorney as soon as you realize the creditor has been omitted. At that time you can provide your attorney with the name and address of the creditor and the type and amount of the debt. Omitted creditors can often be added to the bankruptcy, however, your attorney will advise you on how things will proceed.
- 81. What If The Court Does Not Approve My Chapter 13 Or Chapter 7?
- If there is anything wrong with your Chapter 13 or Chapter 7 bankruptcy it will usually be changed and amended. Of course, it is less costly and time-consuming to do it right the first time. If you earn so much money that you can afford a Chapter 13, you will be forced to change it from a Chapter 7 to a Chapter 13. Repayment plans often are amended.
- 82. How's An Inheritance Treated In A Bankruptcy Case?
- How an inheritance is treated in bankruptcy depends on when you become entitled to receive it and what type of bankruptcy relief you're seeking.
Chapter 7 - if you become entitled to an inheritance within 180 days of your filing date, the inheritance will be a part of your bankruptcy estate, and can be used to pay your debts. The important date is when your right to the inheritance is fixed, which is typically on the date of a person's death. You might not receive property or money from someone's estate for many months.
Chapter 13 - your inheritance can be used in determining how much you have available to pay creditors under your repayment plan, and the 180-day limit doesn't apply.
In either type of bankruptcy, you must inform the bankruptcy trustee about the inheritance. If you're thinking about filing for bankruptcy, ask a bankruptcy lawyer how an expected inheritance might factor into your plans.
- 83. When Can I Get Another Credit Card After I File Bankruptcy?
- As a general rule, you should start receiving credit card solicitations shortly after you file the bankruptcy.
- 84. How Long Does A Bankruptcy Filing Remain On My Credit Report?
- A maximum of ten years under provisions of the Fair Credit Reporting Act.
- 85. If I File Does It Mean My Old Bad Debts Are Erased From My Credit Report?
- No. What is reported is that you had a debt and that a bankruptcy was filed. Bankruptcy does not give you a good credit record or
"repair" your credit record automatically. You repair your credit by paying your debts incurred after bankruptcy on time.
- 86. How Do I Get A Bankruptcy Filing Removed From My Credit Report?
- The Bankruptcy Court has no jurisdiction over credit reporting agencies. The Fair Credit Reporting Act 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.
- 87. What Can I Do If A Creditor Keeps Trying To Collect Money After I Have Filed A Bankruptcy?
- You should immediately contact your bankruptcy attorney, and ask him or her to take appropriate action on your behalf
If the collection efforts continue, you may be entitled to take further legal action, which would normally require representation by a qualified bankruptcy attorney.
- 88. What Does It Mean If A Case Is Dismissed?
- A dismissal order ends the case. Upon dismissal the "automatic stay" ends and creditors may start to collect debts, unless a discharge is entered before the dismissal and is not revoked. An order of dismissal itself will not free the debtor from any debt. Often, a case is dismissed when the debtor fails to do something he/she must do (such as attend the creditors' meeting, answer the trustee's questions honestly, produce books and records that the trustee requests), or if it is in the best interest of the creditors. Unless the debtor appeals the order or seeks reconsideration of the order within fourteen (14) days after entry of the order of dismissal, the Clerk may close the case.
- 89. When Will My Case Be Closed?
- Since all cases bear unique circumstances, it is difficult to pinpoint an exact time that your case will be closed. Many Chapter 7 no asset cases are closed within 90-days from filing if no disputes have arisen. Chapter 7 asset cases require that the trustee liquidate the assets which sometimes can take up to a year or longer. Chapter 13 cases remain open as long as the plan payments are being made, generally for three to five years after the plan has been confirmed. Chapter 11 reorganization cases are more complicated and may remain open longer than three years even if a plan has been confirmed. Your bankruptcy case is complete when it is closed.
- 90. When Can I File Bankruptcy Again?
- The court will deny a discharge in a later chapter 7 case if the debtor received a discharge under chapter 7 or chapter 11 in a case filed within eight years before the second petition is filed. The court will also deny a chapter 7 discharge if the debtor previously received a discharge in a chapter 12 or chapter 13 case filed within six years before the date of the filing of the second case unless (1) the debtor paid all "allowed unsecured" claims in the earlier case in full, or (2) the debtor made payments under the plan in the earlier case totaling at least 70 percent of the allowed unsecured claims and the debtor's plan was proposed in good faith and the payments represented the debtor's best effort. A debtor is ineligible for discharge under chapter 13 if he or she received a prior discharge in a chapter 7, 11, or 12 case filed four years before the current case or in a chapter 13 case filed two years before the current case. Each case is different and it is strongly suggested that you seek legal advice from a competent bankruptcy attorney on this matter.
- 91. What is a Joint Bankruptcy Petition?
- A joint bankruptcy petition is the filing of a single petition by a husband and wife. Only a couple who is married (including common law marriage) on the date of filing may file a joint petition. Unmarried people, corporations, and partnerships must file separate petitions. If you are an individual and have a business corporation, limited liability company or partnership, you may not file a single petition for yourself and that business. You must file a separate case for yourself and a separate case for the corporation, limited liability company or partnership.
- 92. Will Bankruptcy Affect My Spouse's Credit? Is He/She Responsible For My Credit Cards If He/She Is An Authorized User?
- No, filing will not affect your spouse's individual credit, but if he or she is a co-signer on any debt that is not paid that will affect him or her. The fact that you filed bankruptcy does not appear on a spouse's credit report unless he or she also files bankruptcy. Unless your spouse has signed to be legally responsible, they are not responsible. However, many credit card companies will argue that she is responsible. They may even put a
"no pay" on her credit report if the amount is unpaid; however, she may ask any credit reporting service to correct that.
If she does so, the credit card company will have to show that she signed for it. If they can't, it will be removed from her credit report file. In other words, the credit card collectors may try to collect from her by claiming she is liable, but she really is not. If they damage her credit record, it may be grounds for a lawsuit. Credit is normally granted based on a score from your past payment history, the amount of debt that you owe, the length of time you have been repaying present credit, if you have opened credit recently, and the types of credit accounts you have.
- 93. Does My Spouse Have To File If I File?
- No. Married individuals can choose to file a joint petition, but one spouse can file alone. However, information about assets and wages of the non-filing spouse must appear in your statements and schedules, to give a complete picture of your financial situation. : If one spouse files and the other doesn't, the one who doesn't file could be responsible for paying the debts.
- 94. Does My Divorce Decree Protect Me From Creditors If My Ex Files For Bankruptcy?
- No. If you're a co-signor with your ex-spouse on a debt acquired while married, the creditor can require the entire payment of that debt from you even though the divorce decree assigns the full debt to your ex-spouse. Your divorce decree may address any recourse you may have against your ex-spouse should the filing ex-spouse default on the loan obligations. Depending on the terms of your divorce decree, you may be able to have certain support obligations determined to be non-dischargeable by the bankruptcy court or in state court.
You should seek legal advice for a thorough explanation of your rights and obligations in this area as soon as you find out that your ex-spouse has filed bankruptcy.
- 95. Is It Advantageous To File For Divorce And Bankruptcy At The Same Time?
- Money problems can lead to divorce. Filing for bankruptcy and divorce at the same time can seem to make a lot of sense, especially if you incurred a large amount of debt while you were married. However, bankruptcy and divorce are two separate legal processes that are sometimes at odds with each other. Consult a specialist in both of these areas, before you file bankruptcy and divorce at the same time.
- 96. Should I File Bankruptcy During Divorce?
- Filing for bankruptcy during your divorce can slow down the divorce process. Divorce courts can make rulings on custody, visitation, child support, and alimony when a bankruptcy is in progress. However, a divorce court cannot make final decisions about your property as long as the bankruptcy court has control over it.
- 97. Can I Discharge Debts I Have Been Ordered To Pay Under A Divorce Decree?
- If you have to pay certain debts as part of your divorce decree, you might think about filing for bankruptcy to discharge them. Your creditors can't come to you for payment if you file for bankruptcy after your divorce, but they can still look to your ex-spouse for payment of joint debts. An ex-spouse who has to pay these debts may then have a claim against you. However, there are strategies available that can help you.
- 98. Will Bankruptcy Discharge My Child Support Debt?
- No. Child support cannot be discharged through bankruptcy. However, Chapter 13 does provide options for getting current on your child support in a reasonable time.
- 99. Will Bankruptcy Ruin My Parents?/ Wife's/ Husband's/ Brother's/ Sister's/ Son's/ Daughter's/ Friend's/ Uncle's Credit If I File Bankruptcy?
- 100. Are My Creditors Going To Take My Parents/Children's Property Away From Them?
- 101. Can A Loan Co-Signor Be Responsible For A Debt If The Other Person Declares Bankruptcy?
- Yes. The lender can require the co-signor to make payments on a loan once the principal has declared bankruptcy on the credit. This makes it extremely important when considering co-signing a loan: Be ready and able to pay the loan in the event that the principal signor defaults. In some instances, a chapter 13 bankruptcy case will provide loan co-signers with certain protections. Co-signers are protected on consumer debts owed by the debtor only in a Chap ter 13 to the extent that the plan pays the full amount of the co-signed debt. If the plan pays the debt completely, the co-signer is protected, but it will be listed in his or her credit record as being paid late. The Creditor may ask the cosigner for any remaining portion of the debt if it not paid completely. In a Chapter 7, the co-signer will have some small protection regarding the collateral during the proceeding, but only because the Creditor can't go against the property of the estate. After a Chapter 7 is over, the Creditor will proceed against the co-signer personally.
102. When Should A Business File For Bankruptcy?
- Business organizations can file for bankruptcy under either Chapter 7 or Chapter 11. If your business is a sole proprietorship, you and your business may file a Chapter13 case. In determining of the business which bankruptcy chapter your business should file under, your goals concerning the future must be taken into consideration. As a practical matter, if you plan on closing your business or if your business is already closed, a Chapter 7 liquidation bankruptcy may be the most appropriate. Upon filing, assets which are owned by the business, will be subject to liquidation by a Trustee assigned by the Bankruptcy Court in order to distribute any proceeds to the creditors of your business. On the other hand, if your business is having trouble paying its debts, but it is earning monthly income, a Chapter 11 or 13 bankruptcy may be better. A Chapter 11 bankruptcy acts as a reorganization bankruptcy for the business. At the time of filing, the business does not have to cease operations, and may be able to successfully remain open and operating in the future. If your business is suffering financial hardship, it is a good idea to obtain the legal advice of a knowledgeable bankruptcy attorney as soon as possible in order to explore your options and to determine your best course of action.
- 103. I Personally Guaranteed My Business Debt; Should I File A Personal Bankruptcy?
- Oftentimes, business owners are required to personally guarantee business debt. If you have personally guaranteed a loan or other debt for you business, and that debt is about to or has become in default, you will be personally liable for the debt. Personally guaranteed business debt is dischargeable, but only in a personal bankruptcy filed by you. If your business organization files a business bankruptcy, although your business may no longer be liable for its debts, the creditor holding your personal guarantee will continue to retain a legal basis to sue you personally in your capacity as the personal guarantor. On the other hand, if you file a personal bankruptcy, your personal liability can be discharged, and the creditor will no longer have a legal right to attempt to collect against you. This is usually done when the business has closed and it has little or no assets.
- 104. What Happens To My Corporation If I File Personal Bankruptcy?
- Since a corporation is a legal entity different and apart from its shareholders, the bankruptcy of a stockholder may not affect the corporation. But the bankrupt shareholder's shares in the corporation are an asset of the debtor's bankruptcy estate. So, they may be used to pay the debtor's creditors.
- 105. Can A Business Be Forced Into Bankruptcy?
- Yes. If enough is at stake, creditors can start an involuntary bankruptcy action against a business. This doesn't happen too often, but it does happen when creditors are concerned that a business is squandering or misappropriating assets that should otherwise go to pay the debts owed to the creditors.
- 106. Can A Business Get A Discharge?
- A business operated as a sole proprietorship may be entitled to a discharge. But corporations and most other business entities are not.
As a sole proprietor, you should keep in mind, though, that a bankruptcy filing must include all of the business' debts, regardless of how or why they were incurred. So, it may be difficult, even impossible, to treat business debts separately from your personal finances. The assets of a sole proprietorship, like business equipment, are property of the bankruptcy estate. That means the assets may be sold to pay off your debts, unless they're claimed exempt or abandoned by the trustee in a Chapter 7 bankruptcy.
It may be possible to classify business debts separately and pay them in full in a Chapter 13 bankruptcy. This may be a good option for you if, for example, the business wants to continue using vendors during and after the bankruptcy.
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