Many clients are surprised and amazed at how in-depth the bankruptcy process is and how much financial documentation and information they have to provide the trustee. Even on a straightforward Chapter 7 bankruptcy filing with no assets (meaning any assets the debtor has are exempt from being taken by the trustee or creditors), a debtor must provide significant financial documentation and information to the trustee (such as pay stubs, bank statements, pension statements, tax returns, etc.). You also have to provide a complete and accurate accounting of your expenses to the trustee as well.
Any irregularities or omissions can delay your case or in some situations prevent a discharge from being granted. It is vital to be completely honest with your attorney so that your questions are answered and your case is successfully completed.
Once successfully completed, bankruptcy can provide a debtor a fresh start and relief from creditors that they would otherwise not have.
This section is designed to give an overview of some of the more Frequently Asked Questions asked by our clients and is not designed to be all encompassing.As always we encourage you to contact our office to schedule a consultation to answer any questions that you have about Bankruptcy.
We are a debt relief agency operating to help people file for bankruptcy relief under the Bankruptcy Code
What is Bankruptcy?
Most people have heard of bankruptcy, even more people know a little bit about bankruptcy, but simply put bankruptcy is the federal law that allows a person or business to either totally or partially discharge their debts that the owe to creditors and get a fresh start.
What kinds of Bankruptcy are there?
Bankruptcy is solely a federal court action (as authorized by the United States Constitution), and as such only federal courts can handle bankruptcies.Pursuant to the Bankruptcy Code, there are four “chapters” of bankruptcy.Chapter 7 allows a person or business to totally discharge all their debts (with some exceptions) they owe to creditors and get a fresh start.Chapter 13 is a restructuring of debts that usually lowers the total debt amount and stretches payments out over a three to five year period.Chapter 11 is usually for business bankruptcies where bigger businesses usually file to discharge their debts.Chapter 12 is for farms and farmers.
How do I know if I qualify for Chapter 7 bankruptcy?
In 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) was passed which instituted among other things the “Means Test” to make it more difficult for certain people to file Chapter 7 bankruptcy.The “Means Test” (as contained in 11 U.S.C. § 707) focuses on the income of a person (and their spouse if a joint petition) and any dependants in the household.Most people still will qualify for a Chapter 7 bankruptcy even with this “Means Test”.Even if your income is high, depending on the nature of your debt (i.e. primarily consumer debt and the nature and amount of the unsecured debt) you may still be able to proceed with a Chapter 7 bankruptcy.If you are not able to proceed with a Chapter 7 bankruptcy, you would still have the option to proceed forward on a Chapter 13 bankruptcy.Contact our office to determine if you still qualify for a Chapter 7 bankruptcy.
What happens when I file for Bankruptcy?
When you file for Chapter 7 or 13 bankruptcy, an automatic stay (as contained in 11 U.S.C. § 362) is issued which prohibits your creditors from contacting you, seeking a judgment against you, enforcing any current judgments against you, stopping all wage garnishments or preventing any creditor with a judgment from instituting a wage garnishment.We will also contact any creditors with judgments to inform them of the stay and if wage garnishment is in effect we will also contact the constable and other appropriate entities to ensure that the garnishment stops.Within a reasonable time after the filing of your petition (normally about thirty (30) days) there will be the meeting of the creditors (the “341” hearing) as required by 11 U.S.C. § 341.You are required to be present at this hearing as the bankruptcy trustee will conduct a fairly informal questioning of you under oath regarding your petition.These hearings do not usually last very long and we will ensure that you are prepared for this hearing and that it goes smoothly.If a creditor wants to do a more specific questioning of you, then that creditor must make a specific motion with the Court (Federal Rules of Bankruptcy Procedure Rule 2004), but that is usually very rare.Once the 341 hearing is completed and there are no problems then the Court will allow your case to proceed forward to completion and a discharge.
Will I lose all my property and assets in a Chapter 7 bankruptcy?
A trustee in a Chapter 7 bankruptcy does have the power to take some non-exempt assets and property to satisfy certain debts (hence why a Chapter 7 is a liquidation) but certain real property (primary residence) and in most cases an automobile can be kept even in a Chapter 7 bankruptcy.Additionally there is other certain exempt property that the trustee can not touch.Contact our office to determine whether specific property or assets can be taken by the trustee.
When will I get my discharge and my case be completed?
Once the 341 hearing is successfully completed, the Court will grant a discharge to a debtor in a Chapter 7 bankruptcy sixty (60) days after the 341 hearing if there are no objections from any creditors.As a practical matter it takes about five business days after the 60 days has run to receive the discharge from the Clerk of the Bankruptcy Court. Normally if there no objections and no assets to liquidate, your Chapter 7 bankruptcy case will be closed ninety (90) days after the date of the filing.
What debts are not entitled to a discharge?
Several different kinds of debts are not dischargeable in a Chapter 7 bankruptcy (as contained in 11 U.S.C. §523) such as student loans, taxes, domestic support obligations, and other debts.Contact our office to see if your debts are entitled to be discharged.
How long is my Bankruptcy on my record?
A Chapter 7 bankruptcy can remain on your credit record for up to a maximum of ten (10) years from the date of the filing of the bankruptcy case.(See 6 U.S.C. §605 known commonly as the Fair Credit Reporting Act) but in many cases it may be removed after about seven years.As always it is important to closely monitor your credit and credit reports to ensure they are accurate and that the bankruptcy does not remain on your record longer than allowed.