Bankruptcy FAQs

[simnor_accordion][simnor_toggle accordion=”1″ icon=”” heading=”1. What happens when a bankruptcy petition is filed?” onload=”closed” text=”The commencement of a bankruptcy case creates an “estate.” The estate technically becomes the temporary legal owner of all of the Debtor’s property. The estate consists of all legal or equitable interests of the Debtor in property as of the date the case is filed, including property owned or held by another person if the Debtor has an interest in the property. Section 362 of the Bankruptcy Code governs the applicability of the “automatic stay” to the facts and circumstances of your bankruptcy case. If it applies, it prohibits creditors from taking collection action against the Debtor or the Debtor’s property without Bankruptcy Court approval. The Court issues a notice of commencement advising all interested parties of the filing of the bankruptcy case. This notice provides the case number, trustee, date of the meeting of creditors, deadline to file a proof of claim (if applicable), and deadline to file an objection to the discharge (if applicable)”][simnor_toggle accordion=”1″ icon=”” heading=”2. Do I need an attorney to represent me in my bankruptcy case?” onload=”closed” text=”Each Debtor filing an individual bankruptcy has a right to represent him or herself (Pro Se Debtor); however, the use of an attorney is recommended. Ignorance of the law may cost an individual far more than an attorney’s fee. By law, a Corporation is required to have an attorney. Note: Individuals who choose to represent themselves will not be able to obtain legal advice from court personnel or from the trustee appointed to their case.”][simnor_toggle accordion=”1″ icon=”” heading=”3. What will happen to my case if I filed bankruptcy in the past and failed to pay the entire filing fee? ” onload=”closed” text=”A Bankruptcy Judge may take any of the following steps when the entire filing fee has not been paid in a prior case: (1) dismiss the case being filed, (2) refuse to allow the Debtor to pay the filing fee in installments for the current case, (3) order the Debtor to pay the filing fee from the previous case, or (4) take any other action that is appropriate. “][simnor_toggle accordion=”1″ icon=”” heading=”4. What chapter is right for me?” onload=”closed” text=”Your decision whether to file bankruptcy and under which chapter to file depends on your particular circumstances. In general, Chapter 7 is appropriate when the Debtor has insufficient income to pay a portion of his/her debts, and the Debtor is not seeking to keep non-exempt property. Otherwise, if the Debtor has an income or property and can afford to repay at least some of his/her debts, Chapter 11, 12 or 13 may be appropriate, depending on whether the Debtor is an individual, partnership, corporation, or family farmer. The decision whether to file a bankruptcy case and under which chapter is an extremely important decision and has tremendous financial impact. Consequently, this decision may require expert advice from a bankruptcy attorney.”][simnor_toggle accordion=”1″ icon=”” heading=”5. What must I do before I file my case?” onload=”closed” text=”Pursuant to section 109(h)(1) you must complete and obtain a certificate from an approved non-profit credit counseling agency during the 180-day period preceding the date of filing. A list of approved Credit Counseling Agencies can be discussed with your bankruptcy attorney.”][simnor_toggle accordion=”1″ icon=”” heading=”6.What is the difference between a chapter 7, 13 and 11?” onload=”closed” text=”Chapter 7 – In a Chapter 7, Debtors are permitted to retain certain “exempt” property, while the remaining assets are liquidated by the trustee. The trustee will distribute the funds from the liquidation to holders of claims (creditors) in accordance with the provisions of the Bankruptcy Code. Accordingly, potential Debtors should realize that the filing of a petition under chapter 7 might result in the loss of non-exempt property. Chapter 13 – Chapter 13 is designed for individuals with regular income to repay a portion or all of their debt over an extended period of time. Chapter 13 may be appropriate for Debtors who seek to retain certain assets through a repayment plan. Chapter 11 – Chapter 11 allows corporations, partnerships, and certain individuals who do not qualify under Chapter 13, to reorganize without having to liquidate all assets. As in a Chapter 13, the Debtor (called the “debtor-in-possession” because a trustee is not normally assigned) is required to present a repayment plan. If the plan is accepted by the creditors and subsequently approved (“confirmed”) by the Court, this allows the Debtor to reorganize his/her/or its personal, financial, or business affairs. “][simnor_toggle accordion=”1″ icon=”” heading=”7. How is a debt classified as secured, unsecured, priority, or administrative?” onload=”closed” text=”A secured debt is a debt that is collateralized by property. A creditor whose debt is “secured” has a right to foreclose or take property to satisfy a “secured debt.” For example, a mortgage loan is likely “secured” by a Debtor’s home. This means that the lender has the right to foreclose upon and take the home if the Debtor fails to make the loan payments. An unsecured debt arises when you promise to repay someone a sum of money at a particular time, but you have not pledged any property as collateral for the debt. A priority debt is a debt entitled to priority in payment, ahead of other debts. Please refer to 11 U.S.C. §507 of the Bankruptcy Code for a listing of such priority claims. An administrative debt is a category of priority debt. Generally, it is created when someone provides goods or services to your bankruptcy estate after you file your petition. An example of an administrative debt is the fee charged by an attorney or other authorized professional for services rendered after the bankruptcy case has been filed. “][simnor_toggle accordion=”1″ icon=”” heading=”8. When do I receive a discharge of my debts?” onload=”closed” text=”The Notice of the Section §341 Meeting of Creditors reflects a date by which all complaints objecting to discharge of debts must be filed. If the debtor has complied with all of the filing requirements, paid the filing fee in full and pursuant to section 727(a) (10) completed an instructional course concerning personal financial management, and has filed the proper certification reflecting completion, your discharge will be entered in due course after the expiration of the date stated earlier.”][simnor_toggle accordion=”1″ icon=”” heading=”9. What debts are dischargeable?” onload=”closed” text=”Generally, all debts listed on the petition are dischargeable. However, certain types of debt listed in 11 U.S.C. §523 are not dischargeable. The non-dischargeable debts listed in §523 include, but are not limited to: a. Certain taxes and fines; b. Debts arising from certain fraudulent conduct; c. Debts not listed in your bankruptcy petition; d. Alimony, child maintenance or support, and certain other related debts arising out of a divorce decree or separation agreement; e. Debts caused by the Debtor’s willful and malicious injury to another; f. Government guaranteed student loans; g. Debts caused by a death or personal injury related to your operation of a motor vehicle while intoxicated; and h. Post-bankruptcy condominium or cooperative owner’s association fees. This list includes only examples of non-dischargeable debts; see 11 U.S.C. § 523 for a complete list. Under § 523, a creditor or party in interest may also file a complaint to have their debt declared nondischargeable. In a chapter 13 case, the discharge is broader under 11 U.S.C. § 1328(a).”][simnor_toggle accordion=”1″ icon=”” heading=”10. What is a bankruptcy discharge?” onload=”closed” text=”It releases the Debtor from personal liability for discharged debts. Thus, it prevents the creditors owed those debts from taking any action against the Debtor to collect the debts. Most, but not all, types of debts are discharged if they existed on the date the bankruptcy case was filed and were listed on the schedules. Some of the debts that are not discharged are discussed in question 15. Bankruptcy law regarding the scope of a discharge is complex, and Debtors should consult competent legal counsel prior to filing.”][simnor_toggle accordion=”1″ icon=”” heading=”11. Can a discharge be denied?” onload=”closed” text=”Under certain circumstances, 11 U.S.C. § 727 provides the Debtor’s discharge may be denied in a chapter 7 case. Grounds for denial exist when the Debtor: (1) failed to keep or produce adequate books or financial records, (2) failed to satisfactorily explain any loss of assets, (3) committed a bankruptcy crime such as perjury, (4) failed to obey a lawful order of the bankruptcy court, or (5) fraudulently transferred, concealed, or destroyed property that would have become property of the estate. Refer to § 727 for a complete list.”][simnor_toggle accordion=”1″ icon=”” heading=”12. What is the role of a Trustee assigned in a chapter 7 or 13 case?” onload=”closed” text=”Under Chapter 7, an impartial trustee is appointed to administer the case by collecting and liquidating the Debtor’s non-exempt assets in a manner that maximizes the return to the Debtor’s unsecured creditors.
Under Chapter 13, an impartial trustee is also appointed to administer the case. The primary roles of the chapter 13 trustee are to determine the feasibility of a Debtor’s repayment plan for the court and to serve as a disbursing agent, collecting payments from Debtors and making distributions to creditors.”][simnor_toggle accordion=”1″ icon=”” heading=”13. What is the function of the U. S. Trustee?” onload=”closed” text=”The office of the U. S. Trustee is an agency of the Department of Justice, with responsibilities that include monitoring the administration of bankruptcy cases and detecting bankruptcy fraud. It is also responsible for appointing and supervising interim trustees to administer Chapter 7 cases, overseeing the Debtor-in-Possession, and appointing a standing Trustee in Chapter 13 cases.”][simnor_toggle accordion=”1″ icon=”” heading=”14. What is a 341 meeting?” onload=”closed” text=”This meeting is referred to as the “meeting of creditors.” All creditors are notified so that they may attend, but their attendance is not required. Debtors have a duty to appear and testify under oath and answer questions by creditors. This meeting is presided over by the trustee assigned to the case and is held approximately 40 days after the petition is filed. Debtors are required to provide photo identification and proof of social security number to the assigned trustee. A Debtor’s failure to appear may result in dismissal of the case. If a continuance or change in the hearing date is sought, the trustee assigned to the case must be contacted.”][simnor_toggle accordion=”1″ icon=”” heading=”15. If I file for bankruptcy, will it stop an eviction?” onload=”closed” text=”The Clerk’s Office is prohibited from providing legal advice. Questions pertaining to how a bankruptcy filing affects enforcement of an eviction proceeding should be directed to a bankruptcy attorney.”][simnor_toggle accordion=”1″ icon=”” heading=”16. How long does a bankruptcy filing remain on my credit report?” onload=”closed” text=”A maximum of ten years under provisions of the Fair Credit Reporting Act.”][simnor_toggle accordion=”1″ icon=”” heading=”17. What can I do if a creditor keeps trying to collect money after I have filed bankruptcy?” onload=”closed” text=”You should immediately notify the creditor in writing that you have filed bankruptcy, and provide them with the case name, case number, and filing date, or a copy of the petition that shows it was filed. If a creditor continues to attempt to collect, the Debtor may be entitled to take legal action against the creditor to obtain a specific order from the court prohibiting the creditor from taking further collection action. However, a formal motion must be filed, in accordance with the Bankruptcy Code and applicable Rules. If the creditor is willfully violating the automatic stay, the Court can hold the creditor in contempt of court and fine the creditor. Any such legal action brought against the creditor will be complex and will normally dictate representation by a qualified bankruptcy attorney.”][simnor_toggle accordion=”1″ icon=”” heading=”18. What should I do if I cannot make my Chapter 13 payment?” onload=”closed” text=”If the Debtor cannot make a chapter 13 payment on time pursuant to the terms of the confirmed plan, the Debtor should contact the chapter 13 Trustee by phone and by letter advising the Trustee of the problem and whether it is temporary or permanent. If it is temporary, the Debtor should advise the Trustee of the time and manner in which the Debtor will make up the payments. So long as the Trustee agrees, the payments can be made up over time. If the problem is permanent and the Debtor is no longer able to make payments under the plan, the Trustee will request that the case be dismissed or converted to another chapter, or the Debtor may seek to modify his or her plan. The determination of whether to modify the plan or dismiss or convert a case requires legal analysis. The Debtor should seek counsel from a qualified bankruptcy attorney before attempting to make a decision how to proceed in their case.”][simnor_toggle accordion=”1″ icon=”” heading=”19. My ex-spouse has filed bankruptcy. He/she has listed me as a co-signer on a scheduled debt. What can I do? Does my divorce decree protect me?” onload=”closed” text=”If you are a co-debtor with your ex-spouse on a debt, the creditor can require the entire payment of that debt from your share of the marital property, even though the divorce decree assigns the debt to your ex-spouse. Depending on the terms of your divorce decree, you may be able to have certain support obligations determined to be nondischargeable by the bankruptcy court or in state court. You should seek legal advice for a thorough explanation of your rights and obligations in this area as soon as you find out that your ex-spouse has filed bankruptcy.”][simnor_toggle accordion=”1″ icon=”” heading=”20. What is a reaffirmation agreement?” onload=”closed” text=”A reaffirmation agreement is an agreement between the Debtor and a creditor that the Debtor will pay all or a portion of the money owed, even though the Debtor has filed bankruptcy. In return, the creditor promises that, as long as payments are made, the creditor will not repossess or take back its collateral. This means that the Debtor will remain personally liable on that debt.”][/simnor_accordion]