- What is Bankruptcy?
- Are there any alternatives to filing bankruptcy?
- How will I live with the embarrassment of filing for bankruptcy?
- Once I decide to file bankruptcy, what should I do to prepare?
- Can I go to jail if I file bankruptcy?
- Do I lose any of my rights, such as the right to vote, if I file for bankruptcy?
- Who does all the paperwork?
- After I file, who notifies the creditors?
- Who deals with bill collectors?
- Will bill collectors stop calling once I file?
- Can I keep some assets out of the bankruptcy proceeding?
- Will my out-of-state debts be affected by my bankruptcy?
- Should I file separately from my spouse?
- Wouldn't it be cheaper to work with a debt counselor, paraprofessional, or consolidation service?
- What is the difference between Chapter 7 and Chapter 13?
- How do I know the attorney's fee is fair?
- What is a Board Certified attorney?
- Will my bankruptcy appear on my credit reports?
- How can I re-establish my credit rating after bankruptcy?
- After I file, can I obtain new credit?
- What assets do I have to include in the bankruptcy?
- What are exempt assets?
- Can I keep my home if I have a mortgage?
- Can I keep my home if I rent?
- Will bankruptcy stop a foreclosure proceeding or eviction?
- Will bankruptcy remove a lien?
- Will I lose my car if I file for bankruptcy?
- Are pension plans, 401(k) plans and IRA accounts protected?
- Do some debts have priority over others?
- Are income taxes dischargeable?
- Will bankruptcy stop a wage garnishment?
- Will bankruptcy stop a judgment?
- Will a bankruptcy remove a lien?
- Will I be able to keep any credit cards?
- When do card issuers challenge discharge of debts?
- What options are available if your credit card discharges are challenged?
- Will my creditors be allowed to collect finance charges as part of my Chapter 13 plan?
- Is alimony dischargeable?
- If I am divorced, will bankruptcy eliminate my obligation to pay debts my spouse and I owe together?
- Can I discharge student loans?
- If I am a co-signer for a debt, how does bankruptcy affect the obligation?
- What if I fail to list a creditor on the bankruptcy papers?
- Articles from SmartMoney.com that can help!
Bankruptcy is a federal court process designed to help consumers and businesses eliminate their debts or repay a portion of them under the protection of the bankruptcy court. Bankruptcy provides a "fresh start" that enables individuals or businesses to start over without the burden of debt. It also gives people who are owed money - the creditors - a fair share of the money that the debtors can afford to pay back.
Before making a decision to declare bankruptcy, you may want to consider other alternative options. But be careful though - if your financial problems are long term, or if all your creditors will not agree to a repayment plan, bankruptcy may be the best way for you to get out from under a big debt load and get a fresh start. No matter what course you take, you should see an attorney to figure out the best solution for your situation.
Bankruptcy has become a common and accepted way to take action to solve your problems. As your financial situation improves, you can reestablish credit, and get on with your life.
No one really looks forward to filing bankruptcy because most people really want to pay their debts if they can. But consider the alternative: the financial stress caused by insurmountable debt can take a huge toll on your life at work and at home; creditor calls at all hours, lawsuits, pressure from the IRS. It can ruin your health and family life.
Bankruptcy can provide a fresh start. If you don't file because you are worried about being embarrassed, you could be making a big mistake.
Once you decide to file, every step you take is watched closely. To make the process go smoothly, it is important that you obey the rules of the bankruptcy court. You should work closely with an attorney to make sure you stay within the guidelines established by the court and the law.
Filing bankruptcy is a civil remedy and not a criminal action. Honest people will never find themselves in danger of going to prison. The very rare instances of threats of prison are based on bankruptcy fraud. In other words, these individuals are trying to "scam" the system by lying. If you tell the truth and disclose all that is required there is absolutely no chance you will go to prison.
No. Bankruptcy is a civil, not a criminal proceeding. You do not forfeit any of your civil rights by filing. Also, you may not be discriminated against because you have filed for bankruptcy relief.
It is impossible to file without filling out forms. Before you file, you will need to document your financial situation. This is important to determine if it makes sense for you to file. Your attorney fills out all the forms related to the actual filing.
You can prepare the forms yourself or work with a debt counselor, but in order to get the best result, it makes sense to work with an attorney.
Once you become a client of the Ebert Law Offices, we provide you with a workbook to help you document your financial situation. You take the workbook home, fill it out and bring it back in to our offices to go over it with us. We make sure all the information is correct, and use the workbook to fill out all the bankruptcy forms.
Having an experienced attorney saves you time, money and the headaches of trying to manage bankruptcy by yourself.
As part of your bankruptcy petition, you provide a list of creditors. After the bankruptcy petition is filed, the court mails a notice to all the creditors listed in the schedules.
This is one of the functions that an attorney can provide for you once you file.
Once you file you are granted an “automatic stay.” This means creditors have to stop calling. The court or the bankruptcy trustee mails a notice to all the creditors you have listed notifying them of your bankruptcy petition. If creditors continue to call, you should refer them to your attorney. If you have any lawsuits or garnishments pending, you should notify your attorney, who will contact those creditors immediately.
"If creditor's persist in calling you once you have filed, keep a record of the time and substance of the call and contact your attorney immediately. Continuing collection efforts violates bankruptcy laws and can subject the bill collector to substantial sanctions."
You must disclose all your assets. If you knowingly conceal an asset the court could dismiss your bankruptcy, and you could face serious penalties, including fines and imprisonment.
Yes. The Supremacy Clause of the United States Constitution empowers federal law, therefore bankruptcy laws, with precedence over state laws. Bankruptcy is a federal proceeding. The Bankruptcy Court has the jurisdiction and power to discharge debts contracted anywhere in the country.
There is no reason for your employer or landlord to be notified of your bankruptcy unless they are creditors.
Bankruptcy petitions are public records, so it is impossible to keep them secret. That being said, there is no direct reason for your employer or landlord to be notified of your bankruptcy unless they are creditors. Employers are prohibited by federal law from discriminating against you because of your bankruptcy. If you have a repayment plan that requires you to have money deducted from your check, your employer would have to be notified.
Under the present law this is a tricky question which needs to be discussed with your attorney. Depending on your circumstances, it may be to your advantage for only one spouse to seek relief.
Working with a debt counselor can make sense in certain circumstances, but be sure you are not setting yourself up for failure. Make sure you understand the service's fee structure, and their ability to work effectively with your creditors. At Ebert Law Offices, we offer a free consultation in which we review the details of your case individually. We recommend a solution that makes sense for you, and in many cases we do not recommend bankruptcy.
Generally speaking, a Chapter 7 is shorter and less expensive and is intended to discharge general unsecured obligations. A Chapter 13 is longer and generally more expensive. A Chapter 13 requires payments over a period of time, not greater than 60 months. In most cases the decision between filing a Chapter 7 and a Chapter 13 becomes a factor of the results of four tests.
- What kind of net income do you have after you have paid your living expenses and before you address unsecured debt service?
- Do you own any non-exempt assets?
- Whether your financial problems are a result of secured and/or priority obligations or whether your problems are a result of unsecured debts?
- The results of the "means test" as implemented by the Bankruptcy Reform act in October 1995. This test is complicated to explain, but is intended to remove much of the discretion from bankruptcy judges in the determination of whether you can afford to pay "something" back to the creditors. As a practical matter, although complicated to implement and explain, the means test has little impact on the type of relief available to individuals.
You should consult with an attorney to discern what alternative best suits your financial predicament.
All fees paid in connection with or contemplation of filing a bankruptcy must be approved by the bankruptcy court. This ensures the fairness of the fee paid or to be paid in connection with the legal services provided.
Board Certification is one of many methods you should use to assess the capabilities and competency of your counsel. The certification means the attorney has met rigorous objective standards and has demonstrated knowledge in bankruptcy law. When you hire a Board Certified attorney you know he or she is experienced, ethical, and up to date in their understanding of the law.
Carey Ebert is Certified by the Texas Board of Legal Specialization.
Yes. Your bankruptcy can be listed in credit reports for a period of up to 10 years. Chapter 7 filings are normally reported for 10 years and Chapter 13 filings for 7 years.
The best way to rebuild your good credit over time is by making payments every month without fail. A bankruptcy followed by a good payment record is much more desirable than a continued history of unpaid bills. Creditors also may be willing to work with you because you are prohibited by law from filing Chapter 7 bankruptcy again for a significant period of time.
Your bankruptcy can stay on your credit report for 10 years. It becomes less significant the farther in the past the bankruptcy is. The truth is, you are probably a better credit risk to a lender after bankruptcy than before.
Other ways to renew credit you may want to consider are:
- You can reaffirm a debt owed to a creditor based on an agreement made during bankruptcy.
- You can get secured debt based upon providing collateral.
- You can obtain credit using a co-signer.
A number of banks now offer "secured" credit cards where a debtor puts up a certain amount of money (as little as $200) in an account at the bank to guarantee payment. Usually the credit limit is equal to the security given and is increased as the debtor proves his or her ability to pay the debt. Normally, two years after a bankruptcy discharge, debtors are eligible for mortgage loans on terms as good as those of others with the same financial profile, who have not filed bankruptcy. The size of your down payment and the stability of your income will be much more important than the fact you filed bankruptcy in the past.
Yes. The decision of whether to extend you credit belongs to each particular lender. While some potential creditors will reject your application for credit simply because you have a bankruptcy on your record, others will grant you credit because you have no other debts left and have the ability to pay a new loan.
You must disclose any and all assets you own, have possession of, or have a right to own/posses. Simply, this disclosure is one of fairness. For example, most would agree, it would not be "fair" for an individual to be water skiing and living at their second lake home, while obligations to Visa and MasterCard are discharged. Honest disclosure is extremely important.
However, keep in mind, simply because you must disclose the assets does NOT necessarily mean you will lose those that are reasonable and necessary. You are not required to surrender ANY assets when filing a Chapter 13. Retaining non-exempt assets may only add to the obligations you repay over time.
Generally speaking, exempt assets are those you retain when you file a Chapter 7. In a Chapter 7, non-exempt assets are surrendered to a trustee, in a Chapter 13 non-exempt assets may add to the total you must repay. Both the Federal Government and the State of Texas have defined exempt assets. In most cases, you may choose federal and Texas exemptions.
One of the biggest concerns you may have in considering bankruptcy is the possibility of losing your home. We have an excellent track record in helping our clients keep their homes, and will make this our highest priority.
If you are behind on your mortgage payments, you will almost certainly lose your house if you file a Chapter 7 bankruptcy. Your mortgage lender will ask the bankruptcy court to lift the automatic stay to begin or resume foreclosure proceedings. In a Chapter 13 bankruptcy, you will not lose your house if you immediately resume making the regular payments called for under your mortgage contract agreement and you repay your missed mortgage payments through your Chapter 13 plan.
If you are current on your mortgage payments, you will not lose your house if you file for Chapter 13 bankruptcy, as long as you continue to make your mortgage payments. "In a Chapter 7 bankruptcy in most cases whether or not you keep your home depends on whether you pay your mortgage, keep the house insured and pay property taxes."
If you are current on your rent payments and file for bankruptcy, you are able to assume your lease without difficulty. However, if you are delinquent
there are some complicated and financially demanding guidelines that must be met to remain on the rental property. It is
not impossible to remain in the property if delinquent, just difficult.
Filing a Chapter 7 will stop a foreclosure or eviction temporarily, but a creditor can usually get the court's permission to proceed fairly quickly. Filing a Chapter 13 will stop foreclosure and allow a mortgage arrearage to be cured through the Chapter 13 repayment plan. Keeping your home is one of the most critical procedures you will face in bankruptcy, and if you are a homeowner you should see an attorney, especially if you are in foreclosure.
Yes, under some circumstances. This is a complicated procedure, and requires the assistance of an attorney.
Whether you keep or lose your vehicle In Chapter 7, bankruptcy is a function of two factors. One, can you maintain required payments (loan payments and insurance)? Two, does the value of your interest in the car (a.k.a. equity) exceed allowed exemptions? In Texas, debtors rarely lose a vehicle due to excess equity.
In a Chapter 13, the issue is less difficult. You may keep the car, but you must keep it insured and pay for it directly to the creditor or through the plan of reorganization.
Pension and 401(k) plans are usually exempt, but there are some exceptions. If you have a retirement plan, you should consult with an attorney.
Different types of debts have priority over other debts. This priority determines the order in which debts have to be paid, and how much is paid.
The bankruptcy court defines three categories of debt:
- Debts held by collateral, such as mortgages and car loans, are known as secured debts. These must normally be paid first, and collateral can be repossessed if the debt is not paid.
- Priority debts are paid second, from the money left over after your secured debts are paid. Taxes normally fall into this category.
- Unsecured debts, which comprise the largest share of most consumer debts. are paid last after secured and priority debts are paid. In Chapter 13, unsecured debts may often be paid at a very small percentage of what is owed.
The following income taxes are priority claims and are not dischargeable:
- Taxes where the returns were due within three years of the bankruptcy, and
- Income taxes that were assessed within 240 days before the bankruptcy.
If you file Chapter 13, your plan must provide for payment in full of these taxes. Penalties assessed on the taxes are not priority claims however, and can be reduced substantially. Once you have filed, the tax debt does not continue to accrue interest.
You will usually need to prepare and file the returns for the years you did not file, either before the bankruptcy filing or shortly thereafter. You should consult with an attorney before you file any un-filed tax returns to determine the most advantageous time to file and who should file the returns.
When you have not filed a return or if a return was filed less than two years before you file bankruptcy, the taxes cannot be discharged in Chapter 7. However, they can be discharged in Chapter 13 if the tax return was due more than three years before you file bankruptcy and the tax was not assessed within 240 days of the filing.
It may be possible to negotiate other settlements with the IRS. Consult with an attorney before you decide how to deal with your taxes in bankruptcy.
Yes, unless it is a garnishment for ongoing alimony, maintenance or support.
Yes. Most civil judgments are stopped by bankruptcy.
Will a bankruptcy remove a lien? Yes, under some circumstances. This is a complicated procedure, and requires the assistance of an attorney.
This depends on your circumstances. It may be possible to keep one or more cards, depending on how much you owe and your ability to pay on the card in the future. If you want to keep the card in a Chapter 7 case you will need to reaffirm your debt, which means you will need to pay the amount discharged in bankruptcy. While this may seem like a good idea at first glance, you should consult with an attorney before doing so.
If you do not owe a balance on the card on the day your bankruptcy is filed, you need not list the credit card company as a creditor on your bankruptcy.
If you are filing a Chapter 7, you may be able to maintain a relationship with the excluded credit card company. However, you should keep in mind that credit relationships are voluntary; either party may cancel the creditor-borrower relationship at any time. Creditors who are not harmed by the bankruptcy are generally willing to maintain their relationship with you.
In a Chapter 13, you are prohibited from obtaining credit unless you have the Court's permission.
While credit cards are generally unsecured and therefore dischargeable in a Chapter 7 bankruptcy, there are exceptions. Credit card issuers can challenge the discharge of their debt in Chapter 7 by filing a non-dischargeability action claiming that the debt should not be discharged.
Credit card debts can be excluded from discharge for two reasons:
- The application submitted to get the card was fraudulent, or
- The card was used fraudulently. This issue arises only in Chapter 7 since, in Chapter 13, even debts tinged with fraud may be dischargeable.
If you plan to file bankruptcy, stop using your credit cards and consult an attorney to make sure you are within the guidelines established by the bankruptcy court.
While credit cards are generally unsecured and therefore dischargeable in a Chapter 7 bankruptcy, there are exceptions. Credit card issuers can challenge the discharge of their debt in Chapter 7 by filing a non-dischargeability action claiming that the debt should not be discharged.
Credit card debts can be excluded from discharge for the following reasons:
- Increase in credit card usage shortly before filing
- Newly issued card
- Large cash advances in months before filing
- Use of card for travel or vacations
- Pattern of borrowing on one card to make payments on others
- Exceeding credit limit without authorization
- Using card when unemployed or without reasonable belief that the debt can be repaid
- Large balance at the time you file.
Generally, the more time that elapses between any particular use and the bankruptcy filing, the less likely it is that the usage will trigger a challenge to the discharge. Consult your attorney to reduce the likelihood your credit card discharge will be challenged.
While credit cards are generally unsecured and therefore dischargeable in a Chapter 7 bankruptcy, there are exceptions. Credit card issuers can challenge the discharge of their debt in Chapter 7 by filing a non-dischargeability action claiming that the debt should not be discharged.
Credit card debts can be excluded from discharge for two reasons:
- Increase in credit card usage shortly before filing
- Newly issued card
- Large cash advances in months before filing
- Use of card for travel or vacations
- Pattern of borrowing on one card to make payments on others
- Exceeding credit limit without authorization
- Using card when unemployed or without reasonable belief that the debt can be repaid
- Large balance at the time you file Generally, the more time that elapses between any particular use and the bankruptcy filing, the less likely it is that the usage will trigger a challenge to the discharge. Consult your attorney to reduce the likelihood your credit card discharge will be challenged.
Generally, the more time that elapses between any particular use and the bankruptcy filing, the less likely it is that the usage will trigger a challenge to the discharge. Consult your attorney to reduce the likelihood your credit card discharge will be challenged.
Yes and No. Your general (unsecured) creditors will not be allowed to collect interest, penalties, or finance charges which accrue during the life of your plan. General Creditors may only collect the amount owed to them on the day your Chapter 13 is filed. Secured Creditors on the other hand, will be allowed to collect interest up to the value of the collateral pledged against the claim.
Alimony, maintenance, and child support payments generally are not dischargeable.
In general, you will be discharged from all dischargeable community debts. In
some circumstances you may still have to pay your spouse if she or he still owes the debt. See your attorney to understand how best to proceed in your case.
Student loans are generally not discharged in bankruptcy. There are two categories of exception to this rule:
- The student loan may be discharged if it is not insured or guaranteed by a governmental unit or made under any program funded in whole or in part by a governmental unit or nonprofit institution.
- The student loan may be discharged if paying the loan will impose an undue hardship on the debtor and the debtor's dependents.
These provisions are not automatic. You should consult an attorney to determine whether your student loans are dischargeable.
This depends on whether the debt itself is dischargeable. If the debt is dischargeable, you can usually discharge it in bankruptcy.
If you failed to list the creditor by mistake, you can amend your schedules to include the creditor. After your bankruptcy is complete, however, and the creditor does not have an opportunity to participate, the debt is not dischargeable if payments were made to other creditors in the bankruptcy.
If you omit the creditor intentionally to keep the creditor from participating in the bankruptcy proceeding, this may be regarded as perjury. If you discover you have omitted a creditor on your bankruptcy papers, see an attorney immediately.
Declaring Bankruptcy Can Improve Your Credit Score.
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