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Basic Questions About Bankruptcy
Resolving
Debts in Bankruptcy
Assets and
Exemptions
After
You File
Bankruptcy
and Credit Reports
Questions
for Creditors
What happens if
I file a chapter 7 bankruptcy?
Who can file a Chapter 7 bankruptcy
petition?
What are the most common reasons
for a Chapter 7 bankruptcy?
Who can file a chapter 13 bankruptcy
petition?
Can you file a Chapter 7 bankruptcy
petition if you are not employed?
Will the bankruptcy stop bill collectors
from calling?
How long after filing will the creditors
stop calling?
Who notifies the creditors and bill
collectors?
Who deals with my creditors and
bill collectors during the bankruptcy?
Will my employer and landlord find
out about my bankruptcy?
Can my employer fire me for filing
bankruptcy?
Can I go to jail if I file bankruptcy
or don't pay my debts?
Does the spouse of a married person
also have to file bankruptcy?
Can I keep any credit cards?
Will I have to fill out forms?
Will I have to go to court?
Are there alternatives to bankruptcy?
What should I do to prepare for
filing bankruptcy?
Can I file a bankruptcy for my debts,
but not include my assets?
Can I file bankruptcy to delay a
creditor?
Do I have to disclose all of my
assets?
What happens if I file a chapter 7 bankruptcy?
You commence a chapter 7 bankruptcy proceeding by filing
a "petition" with the bankruptcy court. The
person filing a Chapter 7 is referred to as the "debtor."
The debtor is required to disclose to the court all 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.
Who can file
a Chapter 7 bankruptcy petition?
Almost any individual, partnership or corporation may
file a chapter 7 bankruptcy petition if he or she resides,
has a domicile, a place of business, or property in the
United States. If you filed a prior bankruptcy petition
and the prior proceeding was dismissed within the last
180 days, you may not be able to file a second petition.
You can file a Chapter
7 bankruptcy petition regardless of whether or not you
are employed.
If you were granted or
denied a chapter 7 discharge in a prior case within the
last 6 years or completed a chapter 13 plan in a prior
case, you might not be entitled to receive a discharge
in bankruptcy and probably are not a candidate for a chapter
7 bankruptcy proceeding. This rule does have some exceptions.
What are the
most common reasons for a Chapter 7 bankruptcy?
The most common reasons for consumer bankruptcy are: unemployment;
large medical expenses; seriously over-extended credit;
marital problems and other large unexpected expenses.
Who can file
a chapter 13 bankruptcy petition?
Individuals may file chapter 13 bankruptcy petitions
if they:
(1) reside, have a domicile, a place of business, or property
in the United States, or a municipality;
(2) have a source of regular income; and
(3) on the date the petition is filed owe less than $290,525
in noncontingent, liquidated, unsecured debts and less
than $871,550 in noncontingent, liquidated, secured debts.
(as of 4/1/01)
Corporations and partnerships may not file a chapter 13
bankruptcy petition.
If you filed a prior bankruptcy petition and the prior
proceeding was dismissed within the last 180 days, you
may not be able to file a second petition.
Can
you file a Chapter 7 bankruptcy petition if you are not employed?
If you were granted or denied a chapter 7 discharge
in a prior case within the last 6 years or completed a
chapter 13 plan in a prior case, you might not be entitled
to receive a discharge in bankruptcy and probably are
not a candidate for a chapter 7 bankruptcy proceeding.
This rule does have some exceptions.
Will the bankruptcy
stop bill collectors from calling?
Yes. The automatic stay prevents bill collectors
from taking any action to collect debts
How long after
filing will the creditors stop calling?
Once a creditor or bill collector 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 couple of weeks. Creditors will also stop calling if
you inform them that you filed the bankruptcy petition,
and supply them with the "docket number" for
your case. In some cases, you or your attorney should
contact the creditor immediately upon filing the bankruptcy
petition, especially if a law suit is pending. If a creditor
continues to use collection tactics once informed of the
bankruptcy they may be liable for court sanctions and
attorney fees for this conduct.
Who notifies
the creditors and bill collectors?
After the bankruptcy petition is filed, the court mails
a notice to all the creditors listed in the schedules.
This usually takes a couple of weeks.
Who deals with my creditors and bill collectors
during the bankruptcy?
Usually, your attorney deals with all creditors.
Will my employer
and landlord find out about my bankruptcy?
Bankruptcy petitions are public records. However,
under normal circumstances, unless your employer or landlord
is a creditor, it will not know you filed a bankruptcy
petition. If your employer or landlord is a creditor it
must be listed as a creditor on the schedules and receive
notice of the bankruptcy proceeding.
Can my employer
fire me for filing bankruptcy?
No. The law prohibits government units and private employers
from discriminating against you because you filed a bankruptcy
petition or because you failed to pay a dischargeable
debt.
Can I go to jail
if I file bankruptcy or don't pay my debts?
No. There are no debtor's prisons in the United
States.
Does the spouse
of a married person also have to file bankruptcy?
No. In some cases where only one spouse has debts,
or one spouse has debts that are not dischargeable then
it might be advisable to have only one spouse file. If
the spouses have joint debts, the fact that one spouse
discharged the debt may show on the other spouses credit
report.
Can I keep any
credit cards?
Under some circumstances you may be able to keep
some credit cards if the creditor agrees. There are many
factors which must be considered. Some of those include
the credit card balance at the time of the bankruptcy,
what the credit card company is willing to do and your
ability to pay the present and future credit card debt.
Will I have to fill out forms?
Filing bankruptcy means filling out forms. Dewayne
Gooch, P.C. asks you to fill out forms to provide us with
the information needed to file the bankruptcy petition.
We will use the information you provide to complete the
official forms, usually using a specialized computer program.
Will I have to
go to court?
About 40 to 60 days after filing the bankruptcy
petition, you will have to attend a hearing presided over
by a bankruptcy trustee. This hearing is called the First
Meeting of Creditors. The trustee is not a judge, but
an individual appointed by the United States Trustee to
oversee bankruptcy cases. At the First Meeting of Creditors
the trustee will ask you questions under oath regarding
the content of your bankruptcy papers, your assets, debts
and other matters. Creditors will also be permitted to
ask you questions, although in the majority of cases creditors
do not ask questions at the First Meeting of Creditors.
After the initial meeting
you normally do not need to return to court. However,
if a creditor or the trustee files a motion or an adversary
action you may have to appear in court.
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 advise in dealing with most of
these alternatives.
What should I
do to prepare for filing bankruptcy?
First, you should consult with an attorney and
more than one, if possible. An attorney can help you plan
for the bankruptcy, decide when to file a bankruptcy petition,
or even avoid filing for bankruptcy. A few specific items
are worth mentioning.
1. If you intend to file bankruptcy you should stop using
your credit cards. If you borrow money with the specific
intent of discharging the debt in bankruptcy instead of
paying it back, the debt is not dischargeable. In addition,
three specific circumstances are worth mentioning: (a)
certain luxury purchases over $1000 within 60 days of
the bankruptcy filing are presumed nondischargeable; (b)
cash advances aggregating $1000 within 60 days of the
bankruptcy filing are presumed nondischargeable; and,
(c)debts involving materially false financial statements
are nondischargeable under certain circumstances. Additionally,
significant charges incurred more than 60 days prior to
filing the bankruptcy may be non-dischargeable.
2. Don't transfer your assets to friends, family and business
associates to protect the assets from your creditors.
The transfer may be considered a fraudulent conveyance.
If it is, you may lose both the property and your right
to a bankruptcy discharge.
3. Don't destroy any business or financial records. You
can lose your right to a bankruptcy discharge as a result.
4. Carefully choose the creditors you pay. Some creditors,
such as landlords, secured creditors, and some utilities
should be paid under most circumstances. If you pay a
credit card debt that eventually will be discharged, you
may be throwing money away. Your attorney should advise
you on what debts should and should not be paid while
you prepare to file a bankruptcy petition.
Can I file a
bankruptcy for my debts, but not include my assets?
No.
Can I file bankruptcy
to delay a creditor?
The Rules of Bankruptcy Procedure requires you
or your attorney to certify that your petition is not
filed "for any improper purpose, such as to harass
or to cause unnecessary delay.." Bankruptcy is intended
as a tool for dealing with debts that can not otherwise
be paid. You should not file a bankruptcy petition for
the sole reason of delaying a creditor's actions.
Do I have to
disclose all of my assets?
Yes. If you knowingly and fraudulently conceal
an asset from the court you have committed a felony and
can be fined up to $5,000, imprisoned for up to five years,
or both. In addition, the court can deny you your discharge,
or dismiss or convert your bankruptcy proceeding.
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