Will I have to go to court?
In most cases, those who file bankruptcy do not have to go to court. About 4 weeks after filing the bankruptcy petition, you will have to attend "Meeting of Creditors", where the trustee will ask you questions under oath regarding the content of your bankruptcy papers, your assets, debts and other matters. Despite being called a "Meeting of Creditors", in the majority of cases there are no creditors at this meeting, only the attorney, the trustee, and the client. After the initial meeting you normally will not return to court. However, if a creditor or the trustee files a motion or an adversary action you may have to appear in court with your attorney.
Can filing for bankruptcy affect my job?
Bankruptcy petitions are public records; however, under normal circumstances, most employers will not know you filed a bankruptcy petition. The Bankruptcy Code prohibits employers from discriminating against you because you filed a bankruptcy petition or because you failed to pay a dischargeable debt.
What happens to my personal property, real property and other assets?
In most cases, the majority of your property is either excluded from the bankruptcy or exempt, and you will be able to keep that property. Usually, all of your assets can be protected. If you have property that is not exempt, either the property or its value is sold for the benefit of the creditors.
Many people are under the mistaken impression that bankruptcy will strip them of their assets. In the vast majority of cases, however, those who file bankruptcy keep all of their assets. In fact, assets like your home, car, pension fund and IRA are protected from your creditors if you file bankruptcy. Therefore, it is vital that you consult with a bankruptcy attorney before selling, transferring or cashing in any assets.
What about my credit?
The bankruptcy will appear on your credit report for up to ten (10) years after you file. Other accurate negative reports on your credit must be removed after seven (7) years (like late payments on credit cards, foreclosures, etc). However, according to my former clients, this is usually not as big a problem as most people think. Credit lending agencies know you won't be able to file another bankruptcy for at least 6 years, and therefore, they don't have that risk to bear. You will not get as high a credit limit as you once had, or be able to borrow a large sum of money, but getting some credit (such as a secured credit card) shouldn't be that difficult and you can rebuild your credit over time. What you will likely face is higher interest rates, required higher down payments, more points, etc. Some people do have difficulty rebuilding their credit, but it is usually due to other factors besides bankruptcy, such as their employment record, other credit problems, etc.
Can I discharge student loans?
Student loans that are insured or guaranteed by the government or nonprofit institution are generally not discharged in bankruptcy. Since most student loans are governmentally backed, they generally are not discharged.
What about cash advances on credit cards?
Any debt more than $1,150.00 from any single creditor for non-essential, "luxury" goods, or cash advances totaling over $1,150.00 on a credit card, incurred or taken within 60 days prior to filing the bankruptcy, are presumed to not be dischargeable. The obvious reason for this is to discourage would-be debtors from "running up" their credit charges, then filing bankruptcy. To be safe, do not use your credit cards for anything other than food, clothing and other essentials during this two month period (it's actually best not to use them at all). It may also be considered grounds for objecting to your discharge if you have taken cash advances on one credit card to pay the minimum balances on the others, or if you transfer balances from one card to another shortly before filing bankruptcy. You should consult with your attorney about your personal situation. This particular provision is just a presumption of non-discharge ability. It does not mean that if you wait more than 60 days you are magically free from non-discharge ability issues; nor does it mean that if you file the bankruptcy within the 60 days that you won't be able to discharge that debt. What it basically does is shift the burden of proving that the debt should or shouldn't be discharged onto the debtor during that 60 day period (rather than on the creditor where it would otherwise be).
Is it too late to file bankruptcy if I'm being sued or already have a judgment against me?
No. It's almost never too late to file bankruptcy. Assuming that it is a dischargeable debt (meaning one that isn't incurred through fraud, or a domestic support obligation, or one of the others Congress has excluded from discharge), you can still get rid of the debt even if a creditor has filed a lawsuit against you and gotten a judgment. You can even get rid of the debt if they have a lien against your property (although the lien will remain against the property unless you are able to remove it during the bankruptcy proceeding.
What are "Exemptions"?
Exemptions are protected allowances for the value in certain assets. For example, a homestead exemption protects the equity you have in your home, up to a certain value. All States have different exemption laws which protect the value in certain assets. You need to check with a qualified bankruptcy attorney regarding what exemptions you are entitled to when you file your case. Which State's laws you use depends on where your domicile was located for the 2 years prior to commencing your bankruptcy case (see below).
Which State's exemption laws apply to my assets?
The exemption laws of whatever State you were domiciled in for the last 2 years. If you lived in more than one State in the past 2 years, then it will be the exemption laws of whatever State you lived in for the 180 day period prior to the start of the last 2 years and if you lived in more than one State during that 180 day period, then it will be the State where you lived for the greater part of that 180 days.
Can I pick and choose who to list in my bankruptcy case?
Absolutely not. You must list all your assets and all your debts in ANY chapter of bankruptcy. You may voluntarily repay anybody you want after your case is concluded, but you are still required to list all your creditors.
Are any and all debts dischargeable in a bankruptcy case?
No. There are many debts which Congress has excluded from discharge. Some of these are:
- Debts incurred by fraud or false pretenses
- Debts incurred by a false statement in writing (such as false credit application)
- Debts incurred by embezzlement or larceny
- Spousal support or child support obligations
- Debts incurred by willful and malicious injury
- Debts resulting from death or personal injury by debtor operating a motor vehicle while intoxicated
- Criminal fines and restitution
- Income taxes for tax years less than 3 years ago
- Fines and penalties owed to a governmental unit
- Student Loans (sometimes, these loans are dischargeable)
These are the main types excepted from discharge, although there are others.
Call Julian, Crowder & Shuster, PC to set up a free consultation regarding the likelihood of your successfully obtaining a modification.
