Answers to the Most Common Bankruptcy Questions
One of the primary reasons to file a bankruptcy case is to obtain relief from burdensome debt. You obtain relief through whats known as bankruptcy discharge, the purpose of which is to provide a fresh financial start to the honest debtor. To follow are answers to certain basic questions commonly asked about bankruptcy:
What is a Discharge
In a bankruptcy case, discharge is a release of the debtor from personal liability for certain specified debts. In other words, you are no longer legally required to pay any discharged debts. A discharge amounts to a permanent order directing your creditors to refrain from any further attempt to collect the discharged debt, including legal action and any and all forms of communications.
Even though you are relieved of personal liability for a discharged debt, a valid lien that has not been avoided in a bankruptcy case will remain. A secured creditor may enforce the lien to recover the property secured by the lien in order to obtain monies owed.
When do I Receive Discharge?
In a Chapter 7 Bankruptcy, the court usually grants the discharge quickly after the time for objecting to discharge and the time for filing a motion to dismiss the case for substantial abuse expires. In short, most people receive their Chapter 7 discharge around four months following their filing.
In a Chapter 13 Bankruptcy, you should receive a discharge from the court very quickly after you complete all payments under your plan.
Are All Debts Discharged?
Most, but not all debts are discharged. Further, this list of debts which can be discharged is larger in a Chapter 13 Bankruptcy than in a Chapter 7 Bankruptcy. If a debt is not discharged, it must still be paid. The federal government has created a list of debts that are not dischargeable for public policy reasons. The most common debts you cannot discharge in bankruptcy are: child support or spousal support obligations (marital property settlement debt is dischargeable in Ch. 13), debt to persons or property caused by drunken operation of a motor vehicle, most taxes, most student loans, and restitution and fines resulting from your commission of a crime.
If I File Bankruptcy, Do I Automatically Obtain Discharge?
Chapter 7 Bankruptcy: You are not automatically entitled to a discharge. A creditor or trustee can file a timely objection. However, an objection is not necessarily sustained and you r attorney will help you to prepare your paper to: a) reduce the likelihood of an objection; and b) increase your chances of success if forced to defend against an objection.
Chapter 13 Bankruptcy: You are entitled to a discharge upon completion of all payments under the plan.
Can I Repay a Discharged Debt?
You may voluntarily repay any discharged debt even though it can no longer be legally enforced. Sometimes people agree to repay a debt because it is owed to a family member or because it represents an obligation to an individual for whom the debtors reputation is important, such as a family doctor.
Will I Lose My Job?
It is illegal for a governmental unit or private employer to discriminate against you solely because you file bankruptcy. The law prohibits the following forms of governmental discrimination: termination; discrimination w/ respect to hiring; denying, revoking, suspending, or declining to renew a license, franchise, or similar privilege. A private employer may not discriminate with respect to employment if the discrimination is based solely upon the bankruptcy filing.
What Does It Cost to File a Bankruptcy?
At this time, the filing fees are $306.00 for Chapter 7 and $281.00 for Chapter 13. Additionally, attorneys typically require all Chapter 7 fees up front and will allow payment from the Bankruptcy Trustee in a Chapter 13 case.
Can I File For Chapter 7 Bankruptcy?
People who qualify will not have received a Chapter seven discharge in the previous eight years. Further, such persons who also filed Chapter 13 bankruptcy in the prior six years will have paid back at least 70% of their unsecured debt provided for in that plan.
People who qualify will not have had a prior bankruptcy petition dismissed during the prior 180 days as a result of their knowing failure to appear in court, to comply with orders of the court, or their voluntarily dismissal of the previous case after creditors sought relief from the bankruptcy court to recover property it held a lien on.
Finally, to qualify, you must also pass what is known as the means test which basically requires that people making more than the middle income household in their state not be able to pay back substantially more unsecured debt in a Chapter 13 bankruptcy after accounting for living expenses and repayments on secured loans. If you can, you must instead file Chapter 13.
Can I File Chapter 13 Bankruptcy?
Any individual, even self-employed or operating an unincorporated business, is eligible for Chapter 13 relief so long as they have a steady income and the person does not have more than the maximum allowable debt (large amount not relevant for most)
What is the Automatic Stay?
The filing of a petition under Chapter 7 or Chapter 13 automatically stays most creditor actions against you or your property. As long as the automatic stay is in effect, creditors generally cannot initiate or continue any sort of collection activity. Creditors you list will receive notice of the filing of the petition from the clerk.
Will Filing Bankruptcy Protect My Property
The automatic stay stops and prevents foreclosure and repossession. Upon notice of the Chapter 7 or Chapter 13 case, creditors must cease attempting to collect from the debtor or the debtors property until further order from the bankruptcy court, at least until your affairs are sorted out. Click onAvoid Foreclosure or Avoid Repossessions for more information.
What is a Chapter 7 Trustee?
When you file your Chapter 7 petition, an impartial trustee is appointed to administer the case and liquidate the debtors nonexempt assets. The Chapter 7 trustee will preside over the meeting of creditors and determine whether there are any nonexempt assets available to liquidate for the benefit of creditors.
What is a Chapter 13 Trustee?
When you file your Chapter 13 petition, an impartial case trustee is appointed to monitor the case and administer payments under the plan.
What is the Meeting of Creditors?
Also known as a Section 341 meeting, it is a required administrative hearing which allows the trustee to ask you questions regarding your financial situation.
What is the Confirmation Hearing?
This is where, in a Chapter 13 case, the judge approves the proposed repayment plan. After the plan is confirmed, the trustee begins making payments to the creditors who have filed claims in the case. The confirmation hearing usually takes place about a month after the meeting of creditors.
How Do I Get Started?
For your convenience, we have provided our initial intake form. You can print and complete this form at your convenience. Please fill in the information as completely as possible. Be sure to list all people or organizations you may owe money to or who may file a claim against you. When youve completed all you can, call our office at (915) 562-PLAN to make an appointment for a FREE CONSULTATION. Of course, if you have any questions in the meantime, please do not hesitate to call.