QUESTIONS & ANSWERS
Consumer Bankruptcy FAQs
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Does the new Bankruptcy Act prevent me from filing a bankruptcy case?
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What happens to my personal property, real property and other assets?
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Will the fact that I filed bankruptcy appear on credit reports?
Does the new Bankruptcy Act
prevent me from filing a bankruptcy case?
No. However, the recent Bankruptcy Act, enacted in
2005, makes it more difficult for an individual to file
bankruptcy by requiring certain prerequisites to filing
bankruptcy. The new provisions also remove some the benefits
of filing bankruptcy, particularly for individuals who
recently filed a bankruptcy case. In rare cases, the new act
will force an individual to file under Chapter 13 to avoid
dismissal of his or her case. We are prepared to assist you
in working through the various requirements of the new act
and in working toward a successful conclusion of your case.
What is a Chapter 7 case?
In a Chapter 7 case, a trustee is appointed to review
your assets. The trustee will determine the fair market
value of each of your assets, then subtract the amount of
any liens on the asset, and subtract the dollar value of any
exemptions you may claim on the property. If, after this
calculation, the trustee determines that there is value to
be realized for creditors, the trustee may sell the asset.
In most cases, exemptions and liens make a sale of any
assets prohibitive. A debtor will generally be discharged
within 120 days after filing his or her case.
What is a Chapter 13 case?
In a Chapter 13 case, the debtor proposes a plan to make
payments to a Chapter 13 trustee over a period of time,
normally five years. The trustee uses these payments to pay
claims. A Chapter 13 trustee does not have authority to sell
your property, but will require that you pay your creditors
more than they would receive in a Chapter 7. The debtor
becomes entitled to a discharge upon completion of the plan.
What should I do to prepare for filing bankruptcy?
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First, you should contact an attorney at Howard, Stallings, From & Hutson, P.A. We will help you plan for the bankruptcy, decide when to file a bankruptcy petition, or may even help you avoid filing for bankruptcy.
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Stop using your credit cards immediately
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Do not transfer your assets to friends, family and business associates to protect the assets from your creditors. The transfer may be considered a fraudulent conveyance. If it is, you may lose both the property and your right to a bankruptcy discharge.
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Do not destroy any business or financial records
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Carefully choose the creditors you pay. Some creditors, such as landlords, secured creditors, and some utilities should be paid under most circumstances. If you pay a credit card debt that eventually will be discharged, you may be throwing money away. Your attorney will advise you on what debts should and should not be paid while you prepare to file a bankruptcy petition.
Will I have to go to court?
About 30 to 40 days after filing the bankruptcy petition,
you will have to attend a hearing presided over by a
bankruptcy trustee. This hearing is called the First Meeting
of Creditors. The trustee is not a judge, but an individual
appointed by the United States Trustee to oversee bankruptcy
cases. At the First Meeting of Creditors, the trustee will
ask you questions under oath regarding the content of your
bankruptcy papers, your assets, debts and other matters.
Creditors will also be permitted to ask you questions,
although in the majority of cases creditors do not ask
questions at the First Meeting of Creditors. Although most
individual bankruptcies are administered without going to
court, you may be required to go to court if the trustee or
creditors file motions or lawsuits within your case to
protect your assets or your discharge.
What happens to my personal
property, real property and other assets?
Once the bankruptcy is filed, your property at the time
of the filing and some other property you may receive in the
future becomes the property of the bankruptcy estate. You
are required to file a schedule with the court describing
all of your assets. This means that the bankruptcy trustee
may take control of this property to satisfy your creditors.
Certain property is either "excluded" from the bankruptcy
estate or "exempt," and you will be able to keep that
property. Frequently, all of a debtor’s assets are
protected. An experienced Howard, Stallings, From & Hutson,
P.A. attorney will review your bankruptcy case along with
your property and assets to help predict what will happen
during the bankruptcy proceeding.
Do I need an attorney to file
bankruptcy?
Although individuals may file a bankruptcy petition
without an attorney, the Bankruptcy Code is complicated and
filing bankruptcy without an attorney can lead to serious
problems, including losing your discharge or assets.
Bankruptcy practice involves knowledge of the Bankruptcy
Code and other Federal and State laws. Experienced
bankruptcy attorneys will be familiar with the Bankruptcy
Courts, as well as local rules and practices, both written
and unwritten. Consult an
experienced bankruptcy attorney at Howard, Stallings, From &
Hutson, P.A.
Will the fact that I filed
bankruptcy appear on credit reports?
The bankruptcy is treated as a judgment and will be
listed in credit reports for a period of up to 10 years.
Generally, credit will be available to you on a limited
basis, but will be more expensive.
How can I re-establish my credit rating after bankruptcy? The best way is to obtain new credit and make the payments on time. Sometimes an existing creditor may continue to grant you credit based upon a reaffirmation agreement made during the bankruptcy. You may also be able to obtain a secured credit card, where the credit limit is based upon the amount of security given, or obtain credit using a co-signer.
Will the bankruptcy stop bill
collectors from calling?
Yes. Once a creditor or bill collector becomes aware of a
filing for bankruptcy protection, they must immediately stop
all collection efforts. After you file the bankruptcy
petition, the court mails a notice to all the creditors
listed in your bankruptcy schedules. This usually takes a
couple of weeks. Creditors must also stop calling if you
inform them that you filed the bankruptcy petition, and
supply them with the docket number for your case. In some
cases, you or your attorney should contact the creditor
immediately upon filing the bankruptcy petition, especially
if a lawsuit is pending. If a creditor continues to use
collection tactics once informed of the bankruptcy, they may
be liable for court sanctions and attorney fees for this
conduct.
What are some alternatives to
bankruptcy?
Sometimes payment plans can be negotiated with creditors.
Obtaining loan extensions, compromises and workout
agreements require negotiation skills and the experience of
an attorney. It is in your best interest to
contact an attorney Howard,
Stallings, From & Hutson, P.A. These alternatives to
bankruptcy may alert your creditors to the existence of
nonexempt property that the creditor could reach and can
involve considerable expense. You also have the option of
doing nothing. In any event, you should seek professional
advice in dealing with most of these alternatives.
