Q. What is bankruptcy?
Q. What are the types of bankruptcy?
A. Bankruptcies are either
liquidating or restructuring. A liquidating bankruptcy is one in which
all debts are discharged and all non-exempt assets are sold and
divided among the creditors; in a restructuring bankruptcy, a plan must
be filed showing how you will repay your creditors over a period of
time. Some debts must be repaid in full; others are paid in part; some
are not paid at all.
Q. What is Chapter 7 bankruptcy?
Q. What is exempt property?
A. Exempt property is property
you can retain under State or Federal law even though all debts have
been discharged or cancelled. Some of the common exemptions are: 1.
Primary residence - you can exempt all or a portion of
your home from the claims of creditors, other than the holder of the
mortgage; 2. Insurance/retirement plans- certain types of retirement
plans and cash values of life insurance policies are let off from the
claims of creditors; 3. Personal Property- depending on state law, the
debtor can exempt household goods, furniture and furnishings, and
clothing. There may be a limit on the value of personal property that
the debtor can exempt. Under certain circumstances, cars, tools used
on your job and a portion of earned but unpaid wages can also be
Q. What is a Chapter 13 bankruptcy?
Q. Why would you decide to reorganize your debt under Chapter 13 instead of discharging it under Chapter 7?
A. Chapter 7 bankruptcy is not
to be had if a debtor has previously filed for bankruptcy protection
within the last 6 years. Additionally, you may have valuable
nonexempt assets that would be gone in a Chapter 7 liquidating
bankruptcy. You may also have debts that cannot be removed or debt
that is secured by property that is more valuable than the debt.
Q. What types of debts are not dischargeable?
A. Some of the types of debts
that will not be discharged in a Chapter 7 bankruptcy and must be the
full amount in a Chapter 13 restructuring include: 1. Child support and
alimony; 2. Most student loans, except under certain cases; 3.
Tax debts; 4. Debts which are the product of fraud or criminal
acts; 5. Certain loans and credit purchases made within 60 days of
filing for bankruptcy.
Q. How does a debtor file for bankruptcy?
A. A petition is filed with the
bankruptcy court listing what debts are owed and what assets you have.
Income, expenses and transfers of assets are also listed. Currently,
if you file for bankruptcy you must pay a filing fee of about $175 for a
Chapter 7 bankruptcy and $160 for a Chapter 13 bankruptcy.
Q. What happens after bankruptcy process is started?
A. A court-appointed trustee
will be assigned to look over the bankruptcy case. A meeting of
creditors, which the debtor must attend, will take place several weeks
after filing. At this meeting the trustee will conduct an examination to
determine whether the information in the petition is correct. The
trustee may also ask you for additional records. Creditors rarely
attend this meeting, however, if they do, they can also ask questions.
The meeting usually is very short. In approximately 3-6 months you
will receive a notice that your debt has been discharged.
Q. When will all the creditors stop calling me?
A. After filing
no creditor can take any action to collect or implement any debt except
through the bankruptcy court. If a creditor calls after filing, they
should be told that a bankruptcy has been filed and be given the
case number. If a creditor continues to harass the
debtor after the filing, the creditor can be sued under various state
and federal collection laws.
Q. Do I need a attorney to file for bankruptcy?
A. If you are filing a Chapter
13 or Chapter 11 , you will need a attorney. The plan that
must be filed is very complicated and must meet certain technical legal
requirements. If you are very inventive, you can file your own
Chapter 7 bankruptcy. Bankruptcy forms and petitions usually are available
from the clerk of the bankruptcy court. nonetheless, since even
Chapter 7 bankruptcies can be complicated and you want to take
advantage of all available exemptions, it is strongly recommended that
you seek out an experienced attorney.
Q. What will my lawyer charge to represent me?
A. Chapter 7 bankruptcies are usually handled for a flat rate. While there is variation in charges from state to state, you can probably find a qualified attorney to represent you for no more than $750. Often, the attorney will accept payments over a period of time; however, you will have to pay your fee in full before the bankruptcy is filed. Chapter 11 and Chapter 13 reorganizations are far more complicated, and you will be expect fees in excess of $1000.