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THINGS YOU SHOULD KNOW BEFORE YOU FILE FOR BANKRUPTCY

What types of bankruptcy can I choose?

Chapter 7

This is also known as a "fresh start" bankruptcy, or "liquidation". Your debts are discharged (canceled), but you must give up any nonexempt property to the trustee to pay to your creditors. You can keep secured property if you are current on the payments and continue making the payments regularly. Usually, your case will be completed within 3 to 4 months from filing it.

Chapter 13

This is also called "reorganization", or a "wage earner plan." Chapter 13 allows you to keep valuable property, such as your home or car, which you might otherwise lose due to past due payments. You can keep this type of property in Chapter 13 if you are able to make the necessary payments. Usually that will be the regular monthly payments plus a payment toward the arrearages. In Chapter 13, you can have between three and five years to pay back the arrears.

What about recent purchases or charges? 

There is a 90-day presumption period (look back) in which you may be held responsible for the charges and cash advances.  This is to prevent a person from purchasing a big screen TV on their credit card and then filing bankruptcy 20 days later.  They can keep the TV; they will just have to pay for it.

How much money can I make and still file for bankruptcy?

For a Chapter 7 you must make below the median income for your county.  If you make more then we will have to run a means test to see if you still qualify.  If you do not qualify, you must file for a Chapter 13 and make monthly plan payments to the trustee.

For a Chapter 13, your income will be taken into consideration for the length of time you are in bankruptcy.

Will I have to go to court?

In most cases, you will only have to go to one hearing called a "meeting of creditors" about 30 days after filing your case. Usually, this will be short and simple. Your attorney will ask you questions including your name, address, whether you have had a bankruptcy discharge before, if you have read your documents and if they are accurate. Creditors are permitted to attend and ask you questions but they generally do not. They cannot be abusive, however, so this is nothing to worry about. For a Chapter 7 this hearing will last about five minutes.  For a Chapter 13 it usually takes 20 minutes.

How Much Does it Cost?

The cost for a bankruptcy includes your court filing fee, pulling a credit report, pre-filing counseling, a financial management course and attorney fees.  Our attorneys know that if you had extra money lying around you wouldn't be considering bankruptcy.  That is why we have payment plans available for Chapter 7 and Chapter 13 bankruptcies.  You will be required to pay a retainer to have your case filed and then make monthly payments for the remainder of the expenses. 

How will bankruptcy affect my credit rating?

The fact that you filed bankruptcy will be on your credit report for ten years. However, if you have a lot of debt and are behind on it, then your credit probably isn't very good anyway. Late payments and unpaid debts will stay on your credit rating for seven years. Filing bankruptcy doesn't necessarily mean you won't be able to get credit during the ten years afterward. Many companies will lend to people who have filed bankruptcy, but they may charge you a higher interest rate than if you had not.

Exempt Property

Except for the Homestead exemption, each debtor is entitled to claim the exemption separately, either in the same property, or different property. For the Homestead exemption, $100,000 equity is the maximum exemption for single people or two spouses together.

     We are a debt relief agency.  We help people file for relief under the Bankruptcy Code.