1. What are some of the things a properly filed bankruptcy can accomplish?
A properly filed bankruptcy can often accomplish some or all of the following:
STOP garnishments and tax liens STOP foreclosure
STOP repossessions STOP lawsuits
Eliminate or reduce tax debt Eliminate credit card debt Eliminate medical bills
2. What is bankruptcy and what are the more common types of bankruptcy? The forgiveness of debts even exists in the Old Testament. Bankruptcy law today in the U.S. are federal laws which allows one to reduce or cancel most debts and to obtain a fresh start without fear of being harassed by creditors.
Chapter 7 Bankruptcy: Chapter 7 is designed for individuals in financial difficulty who do NOT have the means to pay their existing debts. Generally, excessive credit card and/or medical services debt.
The purpose of filing a Chapter 7 case is to obtain a discharge of your existing, primarily unsecured, debts.
Even if you receive a general discharge, some particular debts are NOT discharged under the law. Therefore, you may still be responsible for some I.R.S. taxes and most student loans; domestic support and property settlement obligations; most fines, penalties, forfeitures, and criminal restitution obligations; and debts for death or personal injury caused by operating a motor vehicle while intoxicated.
Chapter 13 Bankruptcy: Chapter 13 is designed for individuals with regular income who would like to pay all or part of their debts in installments over a period of time. Generally, to save a house from foreclosure, a vehicle from repossession, domestic support and property settlement obligations, and/or I.R.S. tax issues. Under Chapter 13, you must file with the court a plan to repay your creditors all or part of the money that you owe them, using your future earnings. You must have enough income to pay for your regular expenses and to keep up with the required monthly payments, plus your bankruptcy plan payments, as they come due. This is called your “disposable income.” The period allowed by the court to repay your debts may be three years and/or up to five years, depending upon your income and other factors.
Chapter 12 Bankruptcy: Chapter 12 is designed to permit family farmers and fishermen to repay their debts over a period of time from future earnings and is similar to a Chapter 13. Any decision for a family owned farm or commercial fishing operation to file a Chapter 12 should be reviewed by an attorney.
Chapter 11 Bankruptcy: Chapter 11 is designed for the reorganization of a business, but it is also available to consumer debtors. Any decision for an individual to file a Chapter 11 should be reviewed by an attorney.
3. Is bankruptcy expensive? We believe that our attorney’s fees are at or near the lowest in the Bankruptcy Courts we practice. We realize that fees and court costs are difficult to pay when one is experiencing financial problems. We have payment plans available. Because of pre-bankruptcy planning, our clients are usually able to save several times our fee by their bankruptcy filing.
4. How much does it cost to file? We are unable to quote fees because every situation is different. However, when or if you come in, the attorneys will give you a price once they have evaluated your situation. We do promise our fee is fair and affordable. We never let a client leave because they could not pay us. That’s not what we are about.
5. If in an emergency, how fast can you file a bankruptcy for me? Usually within 24-48 hours.
6. What about garnishments, repossessions and foreclosures (including foreclosure on our home)? Upon the filing of a bankruptcy petition with the court, an “automatic stay” is created. This automatic stay provides that creditors are not to take any further legal action against you without special permission of the court. For example, if a creditor is garnishing your wages, the automatic stay created by filing a bankruptcy petition prevents further wage garnishments. Also, if a foreclosure sale on your house has been scheduled, the automatic stay will stop the foreclosure sale and give you more time to the sell the home and recover your equity or provide for paying the past due payments through a Chapter 13 plan. We can often file within 24-48 hours, in emergency situations.
7. How do I stop creditors from harassing me? Once you hire us, I will give you a letter of representation to provide all your creditors as reference. Once a creditor knows that you are represented by an attorney, they can no longer contact you. They are required, by law, to go through our office. Once you file for bankruptcy, your creditors can no longer call you, email you, send you letters, or contact you in any way. This includes you, your friends and your family members. All collection attempts will stop immediately. As your bankruptcy attorney, creditors will be required by law to go through us from this point forward. If creditors continue this harassment, you will have a legal claim against them. This will give us the opportunity to sue any creditor who does this to you in federal bankruptcy court.
8. Can I transfer property to a friend or relative to protect it from bankruptcy? If you transfer any of your property to a relative, even by selling it, within 1 years of filing for bankruptcy, the bankruptcy trustee can reverse that transfer if it was transferred for less than the fair market value of the property. If you have already made the transfer, it is suggested that you first obtain expert legal advice before attempting to transfer it back.
9. Can I lose my license because of filing bankruptcy? You cannot lose your license because you filed for bankruptcy. In fact, bankruptcy may be able to help you have your operator’s license reinstated.
10. Can I lose my job because of filing bankruptcy? You cannot lose your job because of a bankruptcy filing. In the case of garnishments (that are stopped by bankruptcy) in some circumstances, employers may terminate you because of garnishments.
11. What about keeping my assets and stopping repossessions? The common result of bankruptcy filing is that most debtors can keep their assets. Certificated vehicles (cars) or purchase money security interests (retail installment contracts) usually must be paid in full in order to keep. There are State and/or Federal exemptions that allow most of your unsecured assets or undersecured assets to be retained.
12. What about judgments? If judgments create liens against exempt property, you can commence an action to have the amount of the judgment set aside for the full amount of your exemption.
13. Can I reduce my monthly payments to creditors? You will not have to make monthly payments on discharged debts in a Chapter 7. In a Chapter 13, on most debts, your monthly payments are reduced.
14. How does debt consolidation compare to a Chapter 7 or Chapter 13 filing? “Debt consolidation” programs are conducted outside of the bankruptcy context. Some issues with these plans are: (1) often require large monthly payments which are very difficult to maintain, (2) the success rate for debt consolidation programs is low, (3) the debt consolidation programs are entirely voluntary on the part of the creditors, and (4) fees and interest are not waived.
15. Should I take out a debt consolidation loan to pay my creditors? Generally, a Chapter 13 or Chapter 7 has advantages over borrowing for a debt consolidation loan. Some disadvantages are (1) the lender requires security so one’s exempt property, i.e. equity in a house becomes security, (2) education about indebtedness is part of a bankruptcy process, (3) one often uses the same creditors and increases debt. You should talk to an attorney before you enter a debt consolidation loan.
16. Can I keep my credit cards? Filing for bankruptcy does not disqualify one from keeping a credit card or applying for a new credit card. There are several factors that must be considered when deciding to keep a particular credit card including the balance owing on the card, what the credit card issuer is willing to accept and one’s ability to repay the debt.
17. What is means testing? One of the biggest changes to bankruptcy law in 2005 was Form B-22, otherwise known as the Means Test. This test helps determine “disposable income.” Disposable income is an important concept in filing bankruptcy. It simply determines whether an individual has any money remaining in their budget after paying all necessary living expenses. If there is money left over (disposable income), then the individual must file a reorganization (probably Chapter 13) to pay back creditors. If there is no disposable income, then they are qualified to file a Chapter 7 and receive a discharge without paying creditors back.
To fully explain the working and effects of the Means Test would take a book. A simple overview follows:
Step One. Determine the last six months average gross income from all sources, including bonuses and overtime. The unfair aspect of this step occurs when someone, through job disruption or illness, is no longer earning that average. Whether or not the income average will be earned in the future is not taken into account at this stage.
Compare the average income to the median income for a family of your size in your county.
If the average is at or below the median income, the Debtor passes the Means Test and may file either a Chapter 7 or Chapter 13. If the income is more than the median, proceed to Step Two.
Step Two. Subtract from this average income not the Debtor’s ACTUAL monthly expenses but the Internal Revenue Service guidelines for what they think the expenses OUGHT to be. This is what catches most people. The IRS guidelines discount many of what are typically considered necessary living expenses.
The Debtor does receive a deduction for house payments and cars, but even then not always the full deduction. For instance, if a Debtor has a monthly car payment of $600 on a balance of $12,000, they only receive a Means Test deduction for $200. The deduction is figured on the 60 months of a Chapter 13 Plan rather than the 20 months remaining on the loan.
Another issue is the repayment of 401k loans. Although repayment is allowed in bankruptcy, they are not allowed as a deduction on the Chapter 7 Means Test unless they are “mandatory” (this means they are only allowed if you will be fired for not paying them). There are many other quirks to the test. Eventually, a disposable income is determined.
Step Three. If the disposable income exceeds $110, the Debtor must file a Chapter 7; absent very compelling extenuating circumstances. If a Chapter 13 is filed, the disposable income figure is used to determine not how much is paid to the Chapter 13 Trustee, but rather how much is paid to unsecured creditors without priority (credit cards and other bills without collateral). For instance, let’s take a case that needs $1000 per month to pay the mortgage, cars, and Chapter 13 Trustee fees. A disposable income of $300 means that over and above any money needed to pay car loans, mortgage payments and taxes, unsecured creditors must be paid $300 x 60 months=$18,000. In other words, the Trustee payment must be at least $1300 rather than $1000.
The Means Test is complex and fact-intensive. To prepare it correctly requires provable income and expense numbers; and the knowledge and experience of a qualified attorney.
18. What mandatory education must one take to file a bankruptcy and to qualify for a discharge? The new bankruptcy law requires a debtor to complete a Credit Counseling Course prior to filing the bankruptcy and a Debtor Education/Financial Management Course prior to discharge of the bankruptcy. These are two short internet generated classes that you can do at home or in our office with our assistance.
II. HOW DO I GET STARTED
19. Call for a complimentary appointment at 360.435.5707 We will provide you with a Preliminary Questionnaire prior to the first office call with us and hope you can complete most of the questionnaire. However, the questionnaire’s partial or total completion is not a requirement to come to our complimentary office call.
a. Copies of as many of the last seven (7) months of paycheck stubs from all the employers or past employers of the debtor and spouse. If anyone is self-employed, please submit a detailed Profit & Loss statement for each of the six (6) months. If you are unemployed, retired, disabled and/or draw a pension, please submit available documments stating your monthly income.
b. Copies of income tax returns for the last two (2) years. If you are not required to file a tax return, please
advise us. We will prepare an affidavit to be filed with your bankruptcy to reflect this.
c. If your home is up for foreclosure, please provide a copy of the foreclosure letter from either the mortgage
company or the mortgage company’s attorney and other foreclosure documentation.
d. If your vehicle is being repossessed, please provide a copy of the acceleration letter from the auto loan
e. If you have any type of IRS debt and/or levy, please provide a copy of the IRS letters.
f. Copies of your Driver’s license/I.D. card and social security card as is available.
g. Copies of any judgements that have been filed against you or pending law suits.
20. Hire My Office After consulting with my office, I will give you a written fee quote which you may take home and review before deciding to file, or hire me as your attorney. We will provide you with payment options to have your case filed. Your undertaking representation and the agreed your following the payment plan, I will do the following: (1) prepare and file your bankruptcy petition and schedules; (2) attend your section 341 Meeting of Creditors; (3) attend your Confirmation hearing; (4) prepare, review, and file all other necessary pleadings and documents required in the case; and (5) anything else your fee agreement sets out.
III. COMPLETING THE PAPERWORK
21. If I am married, can I file by myself? You and your spouse can file alone, separately or together. Just one of you can file as well. You do NOT both have to file. Once you come in, I will advise you on which way would be best for you considering your situation. Many times it is not necessary for both you and your spouse to file and, in addition, there are many reasons why you may want to file together.
22. Do I have to list all my debts? The creditors have to be listed because you cannot give preference to which creditors are included in you bankruptcy
23. If my spouse is not filing with me, do I have to provide her/his asset information? You must provide all the income information for the household. We live in a community property state which means that your spouse’s income is also your income. Although your spouse is not filing you must still provide their income because they contribute to the household. As regards providing a spouse’s assets, this is something that should be discussed with the attorney.
24. Will anyone else find out I have filed for bankruptcy? A bankruptcy filing is a public record. However, actual notice is only given to creditors and co-signers.
25. I am in the process of filing Chapter 7 and know my car is in danger of being repossessed. What can I do? We are not able to protect your vehicle until your bankruptcy case is filed. If your Chapter 7 case forms, bankruptcy requirements, and fee agreements have been made, we could file your case immediately to protect the vehicle. Also, we can change your bankruptcy case to a Chapter 13 if you are eligible and file.
26. I qualify for a Chapter 7 Bankruptcy and am behind on my mortgage payments. Every effort should be made to resume your regular mortgage payments if your bankruptcy case includes mortgage arrears (payments that are delinquent). If you cannot make these payments, please contact your mortgage company and let them know of the situation. If your mortgage company needs a consent letter from our office to speak with you regarding this matter, please send us a request in writing and we will fax a letter to them. It is best to keep your mortgage company informed during the bankruptcy process. They will be more likely to work with you.
27. What is the purpose of the automatic stay and how long does it last? The purpose of the automatic stay is to protect debtors and their property from creditors and to give the debtors some breathing room to work out a repayment plan. In essence, the automatic stay freezes the debtor’s assets so that individual creditors cannot pick away at them and, in the process, destroy the debtor’s attempt at a fresh start. In a Chapter 7 case, the automatic stay protects the debtor’s property and any equity he may have in that property so that debtor can claim it as exempt and, thus, get the fresh start bankruptcy was meant to provide. Moreover, the automatic stay also ensures that non-exempt property is distributed fairly among unsecured creditors. As it relates to a Chapter 13 case, the automatic stay ensures protection of the debtor’s property which may be necessary for a fresh start and which may be critical to the success of the debtor’s Chapter 13 plan. The automatic stay also prevents creditors from making collection efforts against a co-borrower of any debtor. Sometimes referred to as the “co-debtor stay,” it protects non-filing co-borrowers in the same way it protects the debtor.
As to property the automatic stay remains in effect until it is lifted or terminated by the court or until such time as the property is no longer property of the bankruptcy estate. As to the debtor, the automatic stay remains in effect until the case is dismissed, the case is closed, or the debtor receives or is denied a discharge.
28. How will bankruptcy affect my creditors? At the conclusion of your bankruptcy case you will receive an “Order of Discharge” which is a court order that officially relieves you of the legal responsibility to pay those debts which have been discharged. The bankruptcy laws prohibit your creditors from taking any form of collection action on discharged debts. Discharged creditors can no longer bring a lawsuit against you or otherwise communicate with you about the former debts. To keep a secured terms, payments or a full payment of the fair market value of the asset must be made to keep the asset.
29. Can I reinstate a suspended driver’s license due to failure to provide financial obligation? Normally, you can. This requires that you also obtain a required automobile insurance policy.
IV. EFFECT OF FILING BANKRUPTCY
30. Will the Court take my property away? In almost all cases in Washington, you will be able to keep your possessions. This includes your house, cars, retirement accounts, furniture, electronics, jewelry, tools, pets, etc…We will do everything that we can to make sure you keep all of your belongings. One of my main goals as your attorney is to come up with a plan to keep all of your possessions!
31. Can I keep my car and home if I file Bankruptcy? You likely can if payments are current and exemptions are more than your equity in the property, but our office should be contacted for an analysis.
32. What property can I keep, including a car or house, with secured debt? In a Chapter 7 case, you are allowed to keep that property of yours which is “exempt” under state law and federal law. In the State of Washington, prior to filing your bankruptcy petition, you must choose whether you want to use the state exemptions or the federal exemptions. In some circumstances it is more advantageous to utilize the federal exemptions. In other circumstances, it is better to utilize state exemptions. The exemption statutes are complicated and you should talk with a bankruptcy attorney to determine which exemptions are most appropriate for your particular case. In general, and within specific dollar limits, you will be allowed to keep the equity in your home, your car, your household goods and furnishings, your personal effects, the items you need for your job (computer, books, tools, etc.), and your right to receive certain benefits such as social security, unemployment compensation, veteran’s benefits, public assistance, and your pension.
While the exemptions available to you will allow you to keep property even in a Chapter 7 case, your exemptions do not allow you to keep property in a Chapter 7 if you are too far behind on the payments on a loan for the property unless arrangements are made with the creditor. If your secured payments are relatively current, you need to continue making payments. If you want to keep property like a home or a car and are behind on the payments you should consider filing a Chapter 13 bankruptcy which may allow you to keep the property and pay the amounts you are behind over a 3 to 5 year period. You should also consider filing a Chapter 13 bankruptcy if you have a driver’s occupational license which is suspended for failure to pay some financial obligation such as traffic fines, damage done in a traffic accident, or child support (Financial obligations for an accident can often be worked out in a Chapter 7). You may also want to consider filing for Chapter 13 if you own property with equity that exceeds the value of the available exemptions.
33. Can I discharge every debt? Your credit card debt, medical bills, payday loans, old repossessions, signature loans, most household, unsecured and other debts will go away and be discharged once you complete your bankruptcy.
34. What are the exemptions? There are two types of exemptions, one federal and one state.
Current Amounts for Federal Bankruptcy Exemptions
If you care married and filing jointly, you may double all of the federal bankruptcy exemptions. For example, you may claim a homestead exemption of $43,250 (which is double the listed homestead exemption amount of $21, 625). If a dollar amount does not accompany a listed piece of property, the entire value of the property is exempt.
The most commonly used federal exemptions are:
• Real property, including mobile homes and co-ops, or burial plots up to $21,625. Unused portion of
homestead, up to $10,825, may be used for other property
• Motor vehicle up to $3,450.
• Clothing, appliances and furnishings, books, household goods, and musical instruments up to $550 per
item, and up to $11,525 total.
• Jewelry up to $1,450.
• Health aids.
• Wrongful death recovery for person you depended upon.
• Personal injury recovery up to $21,625 except for pain and suffering or for pecuniary loss.
• Loss earnings payments.
• Tax exempt retirement accounts (including 401(k)s, 403(b)s, profit-sharing and money purchase plans,
SEP and SIMPLE IRAS, and defined benefit plans).
• IRAS and Roth IRAS to $1,171,650
• Public assistance, Social Security, Veteran’s benefits, Unemployment Compensation.
• Crime victim’s compensation.
Tools of Trade:
• Implements, books and tools of trade, up to $2,175.
Alimony and Child Support:
• Alimony and child support needed for support.
• Unmatured life insurance policy except credit insurance.
• Life insurance policy with loan value up to $11,525.
• Disability, unemployment or illness benefits.
• Life insurance payment for a person you depended on, which you need for support.
• $1,150 of any property, and unused portion of homestead up to $10,825
Like all states, Washington has its own set of exemptions that you may use when filing for Chapter 7 or Chapter 13 bankruptcy. Exemptions determine what property (such as a home, car, instrument, retirement account, etc.) you may keep in a Chapter 7 bankruptcy, and how much you must pay to certain creditors in Chapter 13 bankruptcy. In Washington, you may use either the Washington state exemptions (listed below), or the federal bankruptcy exemptions. You cannot mix and match from each list. If you choose to use the Washington state exemptions, you may also use any applicable amounts in the federal nonbankruptcy exemptions.
Unless noted otherwise, if a couple is married and filing jointly in Washington, each spouse may claim the full amount of each exemption. This is informally called “doubling.”
Washington Bankruptcy Exemptions
• Real property or mobile home up to $125,000. If property is unimproved but intended to be
occupied at time of filing bankruptcy up to $15,000. Spouses may not double.
• Motor vehicle up to $3,250 if single or 2 vehicles up to $6,500 if community; clothing, but furs,
jewelry & ornaments limited to $3,500; household goods, furniture, appliances, home and yard
equipment up to $6,500 ($13,000 for husband and wife); food and fuel for comfortable
maintenance; prepaid tuition; prescribed health aids; and personal injury awards up to $16,150.
• The greater of the following: 30 times the federal hourly minimum wage or minimum of 75% of
• Tax exempt retirement accounts (including 401(k)s, 403(b)s, profit-sharing and money purchase
plans, SEP, and SIMPLE IRAS, and defined benefit plans).
• IRAS and Roth IRAs to $1,171,150.
• ERISA-qualified benefits, including IRAs and Keoghs.
• Public employees retirements and public benefits
Tools of Trade:
• Tools and materials used in any trade up to $10,000.
Alimony and Child Support
• Various types
• $3,000 of any personal property, but not more than $1,500 of it in cash, bank deposits, stocks,
bonds, or other securities. 35. Can co-signers be protected? Filing a bankruptcy petition discharges the debt only as to the person filing. Creditors sometimes require cosigners to add some additional safeguards and to protect them from bankruptcy filings. If your debt is discharged, the creditor will most likely go after the cosigner. The only way to protect against that situation is to continue to pay the debt after the bankruptcy is finished or to file a Chapter 13 bankruptcy and pay the debt through the bankruptcy.
36. Can student loans be discharged? Any bankruptcy attorney must have a sophisticated understanding of bankruptcy law to deal with student loans. In October 1998, a new law was signed into effect that disqualified most student loans from discharge. To obtain a student loan discharge, you must commence adversary proceeding in Bankruptcy Court and prove that (1) repayment of the loan would prevent you from maintaining a minimal standard of living; (2) your financial circumstances are not likely to change in the foreseeable future; and (3) you made a good faith effort to repay the loan before you became unable to pay. We can still help you obtain relief from your student loan debts through the use of Chapter 13 bankruptcy. Under Chapter 13 bankruptcy, our attorneys can consolidate your student loan debt and arrange an interest-free repayment plan.
37. Can I discharge/how to deal with past due taxes (IRS debt)? For tax debts, you must have filed timely, truthful tax returns for the past three years. Of course, these are general rules and you should speak with one of our associates who will perform a detailed analysis of these issues.
38. Will bankruptcy help me with my IRS debt? Yes, in Chapter 13 you can pay the IRS back through your bankruptcy as 0% interest and penalties that would be incurred perspectively and come up with a very beneficial payment plan. Also the bankruptcy will stop the threat of liens and levies being put on your property and/or your bank accounts during the Chapter 13 or during the administration of your Chapter 7.
39. How will the bankruptcy affect my credit? If you had perfect credit, which very few people do prior to filing, it would affect your credit for a short time. Since most people have substantially damaged their credit prior to filing, in many cases, it actually helps to raise your Credit Score and helps you start rebuilding your credit.
V. FILING THE BANKRUPTCY, FIRST MEETING OF CREDITORS (§ 341) AND CONFIRMATION HEARING
40. When will my case be filed? When the appropriate forms are ready for filing and other required processes are completed. The forms are filed electronically from our office.
41. Will anyone else find out I have filed for bankruptcy? Bankruptcy filings are public records. However, only creditors and co-debtors receive actual notice.
42. Will I have to go to Court to attend the § 341/First Creditors’ Meeting?
Part of the process of a bankruptcy includes a meeting, called “The First Meeting of Creditors.” This is also called the 341 meeting. It is held approximately 5-6 weeks after the filing of the petition. At the meeting, a bankruptcy trustee will put you under oath and ask you questions about the information in the petition to make sure it is accurate. The trustee will also review some of your financial documents, including bank statements, tax returns and property tax valuation statements. It will take about 7-10 minutes. Also, it is an opportunity for creditors to attend and ask you questions. However, creditors very seldom attend the meeting. This meeting is mandatory. If you do not attend, the trustee will file papers with the court to have your bankruptcy dismissed. Part of the attorney fee you pay for bankruptcy includes an attorney from our office being at the First Meeting of creditors with you to assist you. The first meeting is not a Court hearing. Very seldom do debtors have to attend a Court hearing with a judge present.
43.What is needed for the First Creditor's Meeting?
a. Client to take Driver's License Washington I.D. or passport and Social Security Card- originals only or receipt from the government entity that a new document has been ordered. (or old W-2 or full Social Security number on paid check stub)
b.To be provided to your attorney so he can provide to the Trustee atleast seven (7) days prior to the first meeting:
• 90 days proof of income prior to date of filing plus one post filing pay stub or other proof of income. Other proofs of income could include self-employed Profit & Loss statements, Social Security award/ benefit letter, disability benefits, unemployment benefits, letter of retirement, or family contribution affidavits.
• Last year’s tax return (and if you did not file prior year’s tax return a letter with explanation of why return was not filed).
• Copies of one each financial institutions (savings, checking, investments) account statements that include date of filing.
• Recent statements RE: 401k or other retirement plan.
• Declaration that all information is true and correct to best to your knowledge (This will be prepared by the attorney)
After filing items and I.D./Social Security evidence are mandatory items and the trustee may not begin the meeting without them.
44. What to take to First Creditors’ Meeting
10 days before the First Creditors' Meeting, you must supply our office with the following financial documents, which will be reviewed by the Trustee prior to the meeting:
a. 2 months of paystubs
b. A copy of last year's income tax return
c. Copies of bank (checking, savings)/investment accounts statements
1. Driver’s License or Passport and Social Security Card – originals only or receipt from the government entity that a
new document has been ordered.
2. Your 3 most recent pay stubs or other proof of income – other proofs of income could include self-employed
profit and loss statements, social security award/benefit letter, disability benefits, unemployment benefits, letter of
retirement, or family contribution affidavits.
3. Last two years of complete, filed tax returns.
These are mandatory items and the hearing officer may not begin the meeting without them.
45. Do I need to attend my confirmation hearing? Our office will inform you if you need to attend. In most cases, you are not required to be there.
46. What if your office has all my documents for my confirmation hearing? If anything has changed (your income or expenses) please give us that information. We will still need your last 2 months of paystubs. You need to verify that the office actually has those documents.
VI. BETWEEN FILING AND DISCHARGE
47. When will I be discharged under Ch. 7? In most cases, 3 to 6 months.
48. What can I do if my case is dismissed? You can re-file bankruptcy (if eligible), possibly have your bankruptcy case reinstated (depending on the circumstance of the dismissal) or convert to a Chapter 7 (if eligible). Whatever you decide, time is very limited, and you need to act quickly. Please call our office immediately to set up your attorney appointment.
49. Why did I receive a Motion to Lift Stay and Hearing Notice from my mortgage company? The mortgage company is claiming that you are behind in making your mortgage payments to them and they are requesting that the bankruptcy protection be removed from you home. You will need to provide proof of those missed payments to our office so that we may respond to them in a timely manner. You will need to make a payment for each month that you have been in bankruptcy. If you have been in bankruptcy for eight months, you will need to send proof of eight payments. You often are not required to attend this hearing. Our office will be in contact with you before the hearing to verify the information you have provided to us.
50. How long does a bankruptcy case take? A Chapter 7 case takes about 4 months unless the bankruptcy trustee discovers something unusual in the information. If this happens, the trustee can extend the time it takes to complete the case.
A Chapter 13 case lasts 3-5 years depending on the plan that is approved by the court. However, after the plan is approved, the only involvement you will have with the court is the making of the monthly payments unless financial circumstances change requiring an amendment to the plan.
About 5-6 weeks after filing of the petition, you are required to attend a meeting in bankruptcy court with your attorney where the bankruptcy trustee will ask questions to you about information contained in the bankruptcy petition.
51. Can I buy a house or a car while I am in bankruptcy? It is possible to purchase a house or a car while you are in bankruptcy. If you plan on financing the property, you will need to get court permission. Permission can be obtained several ways depending on the type of bankruptcy you are in and where you stand in the bankruptcy process.
In a Chapter 7 If you are a chapter 7 Debtor, you have two options. You can either wait until your case is discharged, or you can make the purchase once the 341 meeting has been held and concluded.
In a Chapter 13 If you are a chapter 13 Debtor, in order to incur new debt your case must be confirmed. If your confirmation hearing has been concluded, our office will need to file a motion with the Courts for approval. You will need to consult with your attorney to determine if there are any additional attorney fees involved. In order to have the motion filed, you must provide all finance documents, along with updated income and expenses. We will need to show the Courts that you will be able to afford this purchase. Once all items requested have been received, your motion will be filed with the Courts.
Getting a car loan after filing for bankruptcy is not as impossible as it may seem. Although there are additional challenges that come with loan applications after bankruptcy, it actually has very little to do with the bankruptcy itself and more to do with how debts were handled prior and a few other considerations.
VII. DISCHARGE AND POST-BANKRUPTCY
52. Will I be able to rent an apartment, buy a house or buy a car after my bankruptcy? Yes. However, you may have to pay higher interest rates immediately after a bankruptcy filing for a while. Also, when it comes to purchasing a home, you may have to wait 2 years after a Chapter 7 filing. During that time, you should begin to reestablish your credit, which will enhance your ability to qualify for a home at that 2 year mark. You may even get a good interest rate at that time.
53. Can I get credit after filing personal bankruptcy? Bankruptcy can be reported to your credit report for up to 10 years; however, you can begin to reestablish your credit right away. Bankruptcy eliminates most, if not all of your debts. Once your debts are eliminated, your debt-to-income ratio is reduced; therefore, potentially improving your ability to borrow money in the future. Some financial institutions actively solicit business from people who have filed. Many lenders have programs that provide for post-bankruptcy borrowers to obtain home financing within a year or two after a discharge. Many of our clients even receive solicitations for unsecured credit cards almost immediately upon receiving their discharge. Our attorneys can help you sort through your post-bankruptcy credit options to prevent you from getting back into the credit card “trap.”
54. Can I add an overlooked creditor? You can add a debt to your bankruptcy as long as the debt occurred prior to your filing date. To add a new creditor to your bankruptcy case, our office must have the company name, mailing address, account number, date the debt was incurred, and amount of debt owed. After paying an amendment fee of $41.00, we will be able to include the new creditor to your bankruptcy.
55. A Notice of Chapter 13 Bankruptcy Case, Meeting of Creditors, and Deadlines? This is the first document you should receive in the mail. It is the same notice that all of your creditors will receive. There is no action that will need to be taken on your part when your receive this document. It is informational only.
56. A Notice of Appearance? Creditors sometimes file a Notice of Appearance to make sure they get on the email list for documents filed with the Court. This requires no action on your part as well. This is informational only.
57. A Motion to Lift Stay/Motion for Relief from Stay? This is a motion filed by your creditor. The motion is asking the court to remove the protection provided by the Bankruptcy so the creditor may foreclose or repossess your property. If this motion is filed in your case and your intention is to keep the property listed in the motion, you will need to contact our office immediately.
58. An Objection to Confirmation? This is a common event that occurs in many Chapter 13 bankruptcies. You most likely will not have to attend Court for this event but our office will be contacting you regarding this type of occurrence. Objections are most commonly by the IRS and mortgage holders.
59. A Notice of Hearing? This is a fairly common event. We attend all hearings for you. We will notify you by mail, telephone, or email if you actually need to attend a hearing. You will always need to attend a hearing for a Motion to Extend Stay. You will probably not need to attend a hearing for Confirmation or a Motion to Lift Stay/Motion for Relief from Stay.