Basic Bankruptcy Information
The information contained on this page is for information, only. It is not intended to be legal advice, nor should you make legal decisions based on this information. Please consult one of our attorneys to see how the law applies to your particular situation.
There are two kinds of bankruptcy cases which our firm handles. Click on the links for specific information about them.
Can I stop creditors from harassing me?
When you file any sort of bankruptcy case, the law requires your creditors to stop trying to collect on the debts that you owe. The creditor may not repossess or foreclose on any of your property. The creditor may not call you on the telephone or send you bills. The creditor may not garnish your wages or seize your checking account or other property. The creditor must work with you through the Bankruptcy Court.
If the creditor is already garnishing your pay, or is attempting to repossess your car or foreclose on your house, they must stop immediately.
Any attempt to collect on a debt after your case is filed may result in the creditor being in contempt of court.
Will it cost me anything to talk to an attorney?
No, we do not charge a consultation fee.
If we file the case for you, we generally charge a flat fee. You will not be paying a fee if you need to come back in to work on your case or even if you have questions anytime your case is pending. The cost for filing the case and representing you will be reviewed with you before you file.
Will I lose any of my possessions?
Most people in a bankruptcy case do not lose any property that they do not want to lose. This includes their house and their car. To determine if you would lose any property, make an appointment to come in and discuss your situation.
Will it stop a foreclosure or repossession?
Yes, often you can keep your house, even after foreclosure starts, and you can be given up to 5 years to catch up on back payments.
What about my house payments?
Most people continue to pay their house payment themselves. In some cases, the car payment can be reduced.
If you are behind on your house payments, the amount that you are behind can be caught up in a Chapter 13 plan, while you continue to make all of the payments which come due after the date of filing.
To determine what will happen in your case, call for a free appointment.
What about taxes?
All prior taxes can be paid through a Chapter 13 case.
Some taxes that are over three years old can be wiped out in either a Chapter 13 or Chapter 7 case.
Taxes that are less than 3 years old cannot be wiped out in any bankruptcy case, but you can be given more time to pay.
To determine if taxes can be wiped out or must be paid, you must make an appointment to come in.
If you have not filed tax returns for any year, it is important to do so as soon as possible to determine if you will have any tax liability.
Paying back taxes through a Chapter 13 plan stops all penalties and some kinds of interest.
What about my child support?
You must continue making regular child support payments as they come due after you file your case.
If you are behind on your child support, you can catch it up through a Chapter 13 case by stretching out the back payments by up to 5 years. If you are facing contempt charges for being behind, and you have been ordered to pay all the money at once, then filing a Chapter 13 will help you greatly.
You cannot wipe out past due child support payments in any kind of bankruptcy case.
What about credit in the future?
A Chapter 7 stays on a person's credit record for 10 years. This does not mean that a person cannot get credit. It means that if the creditor gets a credit report, the report will show that a Chapter 7 has been filed. After 10 years, the Chapter 7 comes off of the credit report.
Currently the major credit agencies have agreed to report Chapter 13 for 7 years. Although this could change, it would never be reported for more than 10 years.
A person can apply for credit any time after the case is closed. Whether they will be granted credit will depend upon each individual creditor. If you file bankruptcy, even though your credit report shows the bankruptcy, it would also show a zero balance on all the debts that were discharged. Whereas if you do not file a bankruptcy and could not pay your debts, those unpaid debts and judgments would still hurt your credit.
Do both husband and wife have to file?
Not necessarily. One person can file alone, but if both parties have considerable debt, they may choose to file jointly.
Do I have to owe a certain amount?
No. There is no minimum amount of debt which a person must have.
No matter how much or how little debt you have, if you cannot afford to make your monthly payments, then you may benefit from filing a bankruptcy case.
Do I have to do credit counseling before I file for bankruptcy?
Yes, individuals whose debts are primarily consumer debts have to go through credit counseling prior to filing at an approved agency. After you come in to see us, we will help you set this up.
In a Chapter 13 bankruptcy:
- In a Chapter 13 case, a person has to pay all of their disposable income to the Chapter 13 Trustee. Disposable income is the money left over after day-to-day living expenses, such as house payment, utilities, food, etc., are paid.
- Instead of using your disposable income to pay for your debts, you would pay the money to the Chapter 13 Trustee, and he would then pay the amount required.
- The Trustee pays the secured creditors first. Secured creditors are the ones who have collateral, such as a car. The secured creditors must be paid 100% of the value of their collateral or sometimes the total amount that they are owed.
- The unsecured creditors are ones who do not have collateral, such as credit cards, or medical bills. Unsecured creditors can be paid any amount between 100% and 1% of their debt.
- A Chapter 13 case can last as long as 5 years. By refinancing their debt over this five-year period, most people are able to significantly lower their monthly payments.
- To determine how much your payments can be reduced, please call our office and make an appointment to talk with us.
In a Chapter 7 bankruptcy:
- A person agrees to keep paying the debts which he wants to keep. The other debts get wiped out, for the most part.
- If a debt has any collateral, a person MUST agree to keep paying the debt or must give the collateral back.
- If a person gives back the collateral, the debt will be wiped out.
- There are some debts which cannot be wiped out, in most instances. These include taxes which are less than 3 years old, alimony and child support, criminal fines and restitution, student loans, and fraudulently incurred debts.
- Any debt not listed in one of the categories mentioned above can be completely wiped out in most instances.
- In order to determine whether your particular debt can be wiped out, please call our office and make an appointment.