Consumer Bankruptcy Frequently Asked Questions
What is the difference between Chapter 7 and Chapter 13 bankruptcy?
ANSWER: A Chapter 7 is commonly referred to as a liquidation bankruptcy. You are able to keep much of your personal property, and possibly your real estate, through the use of exemptions. You get to keep any exempt property, and the bankruptcy trustee takes possession of the nonexempt property, sells it and uses the money from the sales to pay off your creditors. Upon the successful filing of your bankruptcy petition and completion of all required items, the usual result is that your allowable debts are discharged.
A Chapter 13 is commonly referred to as a repayment plan. This chapter of bankruptcy is for individuals who have a regular income and would like to pay their debts, or a portion of them, over time. The usual repayment plan is for three to five years and must be approved by the court. In a Chapter 13, you may keep all of your property, even property that is not exempt, as long as you continue to make your payments. After you complete the repayment plan, creditors write off any remaining balances on dischargeable debts.
What is the bankruptcy process? How long does it take?
ANSWER: The first step would be to schedule a consultation to discuss your current financial situation and to see if bankruptcy is the right option for you. Alternatives are available to some debtors, and bankruptcy should be your last resort. After you meet with me, attorney Renee Roman, I will provide you with paperwork and a questionnaire that you must complete so I can prepare your bankruptcy petition. I also will give you information about credit counseling, which I will need before filing your petition.
After returning the paperwork, providing us with the required documents and completing the required course, I will then prepare your bankruptcy petition for you. Once I have completed the petition, I will contact you to set up an appointment for you to come to my office and meet with me to go over your petition, make sure everything is accurate and have you sign the petition.
Once everything is verified and signed, an attorney will then file your bankruptcy for you. Once filed, a Chapter 7 bankruptcy will typically take four to six months before it is discharged. Once it is filed, I will receive the date and time of your meeting of creditors, which typically is about 30 days after filing your bankruptcy. This is a short meeting with you, the attorney and the bankruptcy trustee. Generally, no creditors will attend the meeting. During this meeting, the trustee will go over your bankruptcy petition to ensure its accuracy and will ask you questions about your petition. After this meeting, you will need to complete the personal financial management course, and in most cases you will obtain your discharge approximately 90 days after the meeting of creditors.
What financial information is disclosed in a bankruptcy petition?
ANSWER: The petition lists the location and value of all real estate and personal property and all debts owed, including bank loans, loans from family or friends, outstanding contracts (for example, sales contracts for furniture), co-signers on debts are listed, as are monthly income and expenses.
- I've previously filed for bankruptcy, when am I eligible to file again?
ANSWER: It depends upon which type of bankruptcy you previously filed under and what chapter you are currently seeking to file under. Below are the timelines for filing for bankruptcy:
From 7 to 7: Eight years
From 7 to 13: Four years
From 13 to 7: Six years
From 13 to 13: Two years
Can I file bankruptcy and keep my home?
ANSWER: Every case is different, so there's no easy answer here. Some debtors might be able to keep their home in a Chapter 7 bankruptcy, but others might have to surrender their home. Meet with an attorney to discuss your situation and find the best solution for you.
If I file for bankruptcy protection, can creditors still try to make me pay?
ANSWER: No. Once you have filed for bankruptcy, a court-ordered "automatic stay" goes into effect, barring creditors from taking further action to collect debts during your bankruptcy. One notable exception: Bankruptcy will not stop an eviction proceeding if you do not pay rent after the bankruptcy is filed. Child support and taxes also have to be paid, and collectors may contact you about those.
How long will it stay on my credit report? How can I rebuild my credit after bankruptcy?
ANSWER: Your Chapter 7 bankruptcy can remain on your credit report for up to 10 years, but may be removed after seven years. Once you have obtained your bankruptcy discharge, you can begin to rebuild your credit. After the discharge, make your best effort to pay your rent (or mortgage) and utilities on time. This will help to establish your credit to the point to where you are able to obtain credit cards and automobile loans. Some debtors find that after bankruptcy they are able to obtain a credit card shortly thereafter. The key piece in rebuilding your credit is to not overextend yourself and not to try to get too much credit too quickly.
Some employers check credit reports on prospective employees, so how will filing bankruptcy affect my ability to get a job?
ANSWER: It is illegal for an employer to discriminate against you solely because of your bankruptcy.
Are bankruptcy notices published? Will everyone know I've filed?
ANSWER: While bankruptcy petitions are public record, it is rare for anyone but your creditors and co-debtors to know that you have filed for bankruptcy. Bankruptcy petitions are public record, and some notices are published in a few newspapers. People could find your petition if they looked, but it is rare for anyone other than your creditors and co-debtors will find out.
What debts are excluded from a Chapter 7 filing?
ANSWER: Bankruptcy laws require exclusion of some so-called "nondischargeable" debts. This means that after your bankruptcy has been discharged, you must still pay these debts. They include:
- Federal, state and local income taxes that became due in the last three years;
- Any student loan that became due within the last seven years;
- Court-ordered child support and alimony payments along with other divorce-related debts;
- Any court-ordered fines and criminal restitution;
- Any debt for death or personal injury cases caused while driving while intoxicated;
- Debt that you failed to list on your bankruptcy petition;
- Debts based on fraud, theft or dishonesty;
- Certain condominium fees and charges;
- Any debts that arose after you filed for bankruptcy.
I've heard that I'm required to take certain classes in a bankruptcy, what are these?
ANSWER: Within 180 days before filing for bankruptcy, debtors are required to receive credit counseling from an approved agency. The typical cost for this class is $50. After filing for bankruptcy, but before discharge, debtors must complete a mandatory Personal Financial Management Education course. The typical cost for this class is between $50 and $100. I can provide you with a list of such agencies, and may be able to obtain a waiver for the fees for these classes for you.
What does it cost to file for bankruptcy?
ANSWER: The Chapter 7 bankruptcy filing is $299 and the Chapter 13 filing fee is $274. If you meet certain eligibility requirements, I can petition the court and request a waiver of this fee on your behalf. The decision of whether or not to grant the waiver is completely up to the court. I can also request that you are allowed to make the filing fee payment in installments instead of one lump sum, if needed.
Contact Marine View Law & Escrow, P.L.L.C.
I provide a confidential consultation to all new clients. To arrange a
meeting with an experienced consumer bankruptcy attorney, contact me by
email or call my office at 206-701-6564 or 877-449-4819.