Frequently Asked Questions About Bankruptcy

1. What is bankruptcy? Bankruptcy is a federal court process designed to help consumers and businesses eliminate their debts or repay them under the protection of the bankruptcy court.

2. Why file for Bankruptcy? The simple answer is to have certain debts discharge completely or to enter into a payment plan to pay all or some of these debts. The debtor may be able to protect property from collection by unsecured creditors; may be able to eliminate liens on property secured by debt or may be able to simply get some breathing room to halt such actions as repossessions, garnishments, attachments, utility shutoffs, foreclosures or evictions.

3. What happens if I file a Chapter 7 Bankruptcy? Filing a petition with the bankruptcy court commences a Chapter 7 bankruptcy proceeding. The person filing a Chapter 7 is referred to as the “debtor.”" The debtor is required to disclose to the court all of his or her property and debts and turn over all nonexempt property to the bankruptcy trustee, who then converts it to cash for distribution to the creditors. The debtor then receives a discharge of all dischargeable debts.

4. What happens after I file Bankruptcy? When you file bankruptcy all of your creditors must stop their collection efforts against you. They can no longer call you at home or work, foreclose on your home or repossess your automobile during the pendency of the bankruptcy.

5. How often can I file Bankruptcy? The answer depends on the type or Chapter of bankruptcy a person chooses to file. For a Chapter 7 Bankruptcy, you must wait 8 years after the last filing of a Chapter 7 Bankruptcy in order to get a discharge. For a Chapter 13, a debtor cannot get a discharge if he or she received one in a Chapter 7 case within 4 years or 2 years in a Chapter 13 case. 

6. What is the general process in consumer bankruptcy cases? In a Chapter 7 bankruptcy case, Attormey Perez will file several forms with the bankruptcy court disclosing your personal and real property, your income and expenses, debts and property transactions. The Bankruptcy Court will appoint a person called a “Trustee”, who is assigned to oversee your case. 

About 30 days after your case is filed, she will accompany you to the “Meeting of Creditors” where the trustee reviews your case, verifies your identity, and may have a few basic questions. Despite the name, creditors rarely attend. The meeting lasts only a few minutes. A couple of months later, you should receive an order of discharge from the bankruptcy judge indicating that the debts that qualified for discharge were discharged.

7. Does every debt get discharged? Most debts are discharged (no longer owed), except for debts including 1) debts arising from fraud; 2) certain tax debts; 3) educational loans; 4) debts owed as a result of injury or death while drunk driving; and 5) spousal support and child support. A debtor may have all of the debts denied a discharge if the debtor is not honest and cooperative in the bankruptcy process. A creditor that has a secured lien on property may foreclose on that lien even after a discharge. But some liens may be removed in the bankruptcy process if the debtor makes a motion to the Court for that relief.

8. How do I know if I am eligible to file Bankruptcy? Almost everyone is eligible to file Bankruptcy. Each Chapter has its own eligibility standards. For Chapter 7, this is an income test based on the number of people in your household. This is called the means test. For a Chapter 13 bankruptcy, it depends on your level of debt -- both secured and unsecured. There are also time limits between certain chapters of the bankruptcy code in which you must wait until you can file again.

9. How long after filing will the creditors stop calling? Once a creditor becomes aware of a filing for bankruptcy protection, it must immediately stop all collection efforts. After you file the bankruptcy petition, the court mails a notice to all the creditors listed in your bankruptcy schedules. This usually takes a few days. Creditors will also stop calling if you inform them that you filed the bankruptcy petition, and supply them with your case number. In urgent cases, we will contact the creditor immediately upon filing the bankruptcy petition, especially if a lawsuit is pending. If a creditor continues to use collection tactics once informed of the bankruptcy, it may be liable for court sanctions and attorney’s fees for this conduct.

10. Will I lose all of my property when I file Bankruptcy? You can retain any property that can be exempt under the law. That usually includes your home, furniture, clothes, household goods, pensions, profit sharing, retirement plans, 401k's and other family keepsakes. You can usually file bankruptcy and keep all of this property.

11. Can I keep a credit card out of Bankruptcy? No. A debtor must list all of his debts in which he or she owes even a small amount to the creditor. 

12. Are there alternatives to bankruptcy? Yes. Sometimes payment plans can be negotiated with creditors. Obtaining loan extensions, compromises and workout agreements require negotiation skills and experience. These alternatives may alert your creditors to the existence of nonexempt property that the creditor could reach and can involve considerable expense. You also have the option of doing nothing. In any event, you should seek professional advice in dealing with most of these alternatives.

13. If I co-signed for a debt, does bankruptcy affect the obligation? If the debt is a dischargeable debt then you will not have to pay it. Your co-signer will become primarily responsible for the debt.

14. Can I lose my job by filing Bankruptcy? An employer is not allowed to fire someone or to take any disciplinary action against you solely because you file bankruptcy. In almost all cases, the employer will not even know you filed bankruptcy.

15. How does bankruptcy affect my credit? A bankruptcy filing will stay on your credit rating for ten years. However, if you are considering bankruptcy, your credit rating has probably already been negatively affected. Bankruptcy allows you to get a fresh start and rebuild your credit. Within the first year of a Chapter 7 bankruptcy, it will be difficult to get credit that is not secured. Even secured credit will probably be at a high rate of interest. Generally it will take about two years to substantially rebuild your credit. In 18-24 months after a bankruptcy, you should be able to qualify for a mortgage.

16. How Much Does it Cost To File Bankruptcy? The cost of filing bankruptcy depends on which chapter you file under. The Bankruptcy Court charges different filing fees depending on the chapter you file. Attorney Perez is pleased to provide you with a free consultation where she will quote you a price to represent you in your case. A filing under Chapter 7 or Chapter 13 will be a flat rate price.

17. What information is required at the time of my initial appointment with Attorney Perez?

• A List of Creditors setting forth a pretty good idea of who your creditors are and how much you owe. If bankruptcy is the right option for you, she will help you get a copy of your credit report.
• A copy of your most recent pay stub showing net and gross income and year-to-date earnings. Additionally, Attorney Perez will ask you for your gross earnings for the prior two (2) years. If you are self employed, then a month-to-month Profit and Loss statement will be required for the past six (6) months.
• The payoff amount on any automobiles that you are financing. Information as to mileage on the vehicles.
• Copies of all judgments and lawsuits and liens pending against you. If your wages are being garnished, a copy of the wage garnishment order and your employer’s fax number will expedite her office stopping this action.
• Any and all information you have regarding student loans, tax obligations or co-signed obligations, if applicable.
• A payoff amount on any real property that you are financing.
• A copy of any Trust instrument in which you have a beneficiary interest.
• If you are married and filing a separate case, a copy of your spouse’s paycheck stub showing net and gross income.
  

Free Consultation! Call Today 904-990-3066

Get answers to all of your bankruptcy questions. Do not hesitate to contact Attorney Leanne Pérez today at (904) 990-3066 for a free initial consultation.