Frequently Asked Questions About Bankruptcy (Chapter 7)

What documents do you need from me to file my case? We will need tax returns for the last two years, six months of paystubs or other evidence of gross income, 90 days of bank statements. If you own any real property, please bring us a property description. We may ask you to bring us additional documentation but this should get us started.

After filing, what can I expect? After filing your bankruptcy, you will begin receiving notifications directly from the bankruptcy court. Many of these papers look very confusing. PLEASE DON’T WORRY when you receive these. We are notified electronically from the court, so by the time you receive your notice, we have had it for a few days. If there is anything that needs to be addressed, WE WILL NOTIFY YOU.

Do I need to provide additional documentation? Typically, we gather all required documentation prior to filing your case. However, there are cases in which the trustee may request additional documentation, especially if there are expenses that need to be verified. If the trustee requests this, WE WILL CONTACT YOU.

When and where is my hearing? You will receive a notice of your “341 meeting” in the mail within about 2 weeks from the time your bankruptcy is filed. This notice will give you all of the information regarding your hearing. We do strive to contact our clients as a courtesy reminder, however, we DO NOT guarantee that we will be able to do this. Therefore, it is VERY important to make sure and keep and record this information.

When will my case be over and when will I get a discharge? Standard discharges are issued between 60-90 days from the date of your 341 meeting of creditors. PLEASE BE ADVISED: Discharges are issued by the courts and we have no way of looking up an exact date. Once your case has been discharged, you will receive this via U.S. Mail. You can help speed the process by completing the financial management course (the second course, immediately after your case is filed).

I have received a deficiency notice. What does this mean? Bankruptcy is not like having a lawyer represent you in any other type of case. You may think that since you are getting the notice, the court is concerned that your lawyer is not telling you something and you need to contact us immediately. NO. That is not correct. In a typically lawsuit, the lawyer receives all the correspondence and pleadings and writes you periodically to tell you what is going on. In bankruptcy, you get a copy of everything the lawyer gets. We get the notice you got in the mail days before you got it. If it is a deficiency notice, this has been cleared up before the court has even printed the letter they are sending you in most cases.

Do I have to go to court? Typically not, however, if you receive a notice to be in court for a hearing, please contact our office a day in advance to make certain the court date is still set. Many times, issues are resolved without going to court but there are occasions when you will need to come and give testimony.

Do I have to pay my debts until I receive a Discharge? In a Chapter 7, only pay the debts for securitized property you are keeping and non-dischargeable debt (i.e., student loans, child support, alimony, etc.).

How quickly can I file a bankruptcy case? If you need to file right away and you qualify, bring us your required documents, your payment and complete your credit counseling. We can prepare your case in a matter of days.

Am I allowed to file bankruptcy if I filed before? Yes. There are certain exceptions. It is imperative that you disclose to us the date that you filed, where, and under what chapter.

What can I expect if I have fallen behind on my mortgage before my case is filed?

In a Chapter 7, if you have fallen behind, then most of the time the mortgage company is going to file a motion to compel abandonment of the mortgage from the bankruptcy after the case is filed, if you provide you wish to keep the mortgage. Upon receiving an order from the court, they will more than likely begin the foreclosure process. It is imperative that you discuss mortgage issues with our office as you may have been a victim of mortgage fraud. We need to evaluate your situation. Go to the Foreclosure Tab and read more about this issue.

What can I expect if I have fallen behind on my mortgage after my case is filed?

In a Chapter 7, if you have fallen behind, then most of the time the mortgage company is going to file a motion to compel abandonment of the mortgage from the bankruptcy. Upon receiving an order from the court, they will more than likely begin the foreclosure process. It is imperative that you discuss mortgage issues with our office as you may have been a victim of mortgage fraud. We need to evaluate your situation. Go to the Foreclosure Tab and read more about this issue.

Wondering if Chapter 13 bankruptcy is right for you?

If you have credit card or other debts and are unable to make the payments!
If you are making minimum payments but your balance never seems to go down!
If creditors and debt collectors are calling demanding payments!
If debt collectors are demanding more money than you can afford!
If you have a pending foreclosure, wage garnishment or other lawsuit!

Chapter 13 bankruptcy and Chapter 7 bankruptcy offer different forms of protection.

If you're facing a financial crisis, I can help you determine which bankruptcy chapter is the right answer for you. Chapter 13 bankruptcy is often the solution of choice for people who have a lot of secured debt, such as car loans and mortgages, and want to keep the property that serves as security for the loans. In a Chapter 13 case, the debtor enters into a repayment plan that allows 3-5 years to catch up on past due payments.

Generally speaking, Chapter 7 bankruptcy is intended to wipe the slate clean by discharging unsecured debt-debts like credit card debt, medical bills, and unsecured loans.

Chapter 13 bankruptcy, on the other hand, is intended to give a debtor time to catch up past due payments over a period of 3-5 years, while keeping secured property like houses and cars.

What is Chapter 13 bankruptcy?
Chapter 13 bankruptcy is basically a repayment plan that you submit to the bankruptcy court that says you intend to pay off your debts, over a 3 - 5 year period, for as little as 10 cents on the dollar.

Chapter 13 Bankruptcy is designed to give people a fresh start! This chapter of the bankruptcy code was specifically written for individuals who desire to pay their debts but, due to a loss of job, disability, personal crisis and so forth, can no longer afford to make their regular monthly payments and need relief from the high interest rates, late fees and penalties piling up each month.

How does it work? What do I have to do?

Gather the required information: including creditor's names, addresses and amount of debt, source, amount, and frequency of your income, list of all your property; and detailed list of your monthly living expenses, your tax returns.
Complete the bankruptcy forms and schedules.
Prepare and file your bankruptcy repayment plan petition.
Once your chapter 13 bankruptcy paperwork is filed, the court will issue an "automatic stay" stopping all collections and creditors cannot initiate or continue any lawsuits, wage garnishment, and telephone calls demanding payments!
Attend the 341 meeting of creditors where any problems or concerns with your plan are discussed with the case trustee and any creditors who show up.
After the meeting a bankruptcy judge officially approves your plan.
Begin making payments within 30 days of your case being filed and continue until completed
After completing all payments, obtain a discharge (legal document releasing you your debts).

So, who do I have to pay and when do I start?
All your debts fall into these categories; secured creditors, unsecured creditors, priority creditors and post-petition creditors

Secured Creditors: are usually on big ticket items such as a mortgages (first and second), and large motor homes, boats, and so forth.

Unsecured Creditors: These are the unsecured debts that accrued before filing bankruptcy and that you agreed to pay in some amount your repayment plan, if you can afford to pay them an amount.

You write one check each month (money order, cashiers check) with the docket number clearly written on it and send it to the Case Trustee who then pays each of your creditors or an Order Withholding This Amount Is Entered and This Amount is Deducted From Your Wages. If you need to make special arrangements to split these payments up, please bring this to someone’s attention.

IMPORTANT TIP: It's a good idea demonstrate "good faith" by bringing your first check, made out in the amount you propose in your plan, to the 341 meeting, especially if it's been 1-2 months since you filed Chapter 13. This is because your first payment is due 30 days after your case is filed, not the date of the 341.

WARNING! If creditors try to contact you in an attempt to have you reaffirm an old debt or pay them money, DO NOT give them any money or sign any papers! Stick to your court-approved payment plan and notify your attorney and the case trustee of this.

Post-petition Creditors: These are debts (credit cards, phone bills, car payments, mortgage payments, etc.) incurred after you filed for bankruptcy and must be paid in a timely fashion since they are not protected under your payment plan.

How many months do I have pay off the debts?
This depends upon your plan which should be based on your income over the life of the plan, and the size of the debt. You'll get anywhere from 36 up to 60 months.

Can I pay it off early?
No, because if your income would allow for faster payback than 36 months, the Trustee will normally set the plan at 36 months and require a larger percentage of funds go to your unsecured creditors.

Can I pay the trustee extra money?
It's not recommended. If your income changes permanently you must inform the court so your payment plan can be adjusted. But, if you come into a few extra dollars, save it for emergencies.

What if I owe so much that I'll need more than 60 months to pay off my creditors?
Some creditors may be willing to work with you to come up with creative payment options but if not, then normally your case will be converted to a Chapter 7 Bankruptcy.

Can they still foreclose on my house after I have filed bankruptcy?
Not if you've made all mortgage payments on time. Otherwise the court may give them permission to foreclose.

What happens if I stop paying or can't pay the Trustee?
It depends! If the problem is temporary, usually not more than three months, then your attorney will need to file a motion with the court. The case trustee may also work out an alternate payment plan. If you're acting in good faith, the Trustee will normally work with you.

However, if you cannot work out a plan, or simply fail to make the payments then, the case trustee will have your case either converted to a Chapter 7 or completely dismissed in which case you'll lose all bankruptcy protection.

What happens to my federal tax debts?
It depends whether you file a Chapter 7 or a Chapter 13.
A Chapter 7 debtor can wipe out federal income taxes if all the following are met:
1. the IRS had not filed a prior tax lien on the assets you own (if they have, the lien survives bankruptcy, which means that the government may still seize property to collect the discharged tax debts);
2. you didn't file fraudulently or try to evade paying your taxes;
3. your liability is for a tax return filed at least two years prior to the bankruptcy;
4. the tax return was due more than three years ago; and
5. tax deficiencies that were assessed on prior returns were assessed at least 240 days prior to the filing of the bankruptcy.
In a Chapter 13 filing, you'll pay the IRS as part of your repayment plan.

My spouse is declaring bankruptcy; should he file alone or should we file together?
Whether married couples should file a joint petition or a single one depends on various factors: type of property, the amount of community debt involved, and how the property is held (e.g., joint tenancy, or an estate-by-the entirety).
Filing together eliminates the separate debts of you and your spouse and all the jointly-held marital debts. Filing alone leaves the non-bankrupt spouse still liable for his or her share of joint debts, but wipes out the spouse's separate debts and his/her share of the joint debts.
If you are legally separated, have divided your property, and taken care of all the financial considerations, your best option may be to have your spouse go it alone. If all the debts were incurred before you were married, there is no point in having you both file. But, make certain that you explain to us if you have received or are receiving money or other property as a result of a property settlement agreement

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