1. What is the "automatic stay?"
If you file bankruptcy, you automatically get a Court order called the automatic stay. The automatic stay is a Court order directing your creditors to stop their collection efforts against you. When you and your lawyer prepare your bankruptcy petition, you must include the names, addresses, and account numbers for all of your creditors, so that the Court can mail the automatic stay order to all of your creditors.
2. What is the "order of discharge?"
At the conclusion of a successful bankruptcy filing, you get a Court order called the order of discharge. The order of discharge is a Court order that relieves you of your personal liability to pay back your debts.
3. What debts can I discharge if I file bankruptcy?
The general rule is that you can discharge all of your debts, except:
a. Most tax debts and debts that were incurred to pay non-dischargeable federal tax debts.
b. Debts for obtaining money, property, services, or credit by means of false pretenses, fraud, or a false financial statement, if the creditor files a complaint in the bankruptcy case.
c. Debts that you did not list in your bankruptcy petition, unless the creditor knew of the bankruptcy case in time to file a claim.
d. Debts for fraud, embezzlement, or larceny, if the creditor files a complaint in the bankruptcy case.
e. Debts for domestic support obligations, which include debts for alimony, maintenance, or support, and certain other divorce-related debts, including property settlement debts.
f. Debts for intentional or malicious injury to the person or property of another, if the creditor files a complaint in the bankruptcy case.
g. Debts for certain fines or penalties.
h. Debts for most educational benefits and student loans, unless a court finds that not discharging the debt would impose an undue hardship on the debtor and his or her dependents.
i. Debts for personal injury or death caused by the debtor's operation of a motor vehicle, vessel or aircraft while intoxicated.
j. Debts that were or could have been listed in a previous bankruptcy case of the debtor in which the debtor did not receive a discharge.
4. What is a "Chapter 7" bankruptcy?
A Chapter 7 is a type of bankruptcy case in which a Chapter 7 Trustee will want to liquidate your assets in order to pay your creditors. However, most people who file Chapter 7 do not lose any assets. That is because exemptions are available to protect your ownership interest in your assets. With the correct application of the proper exemption for each asset, most people who file Chapter 7 end up keeping their property while eliminating their debts.
5. What is a "Chapter 13" bankruptcy?
A Chapter 13 is a type of bankruptcy case in which you propose a payment plan to pay some portion of your debts. The Plan must be 3 years to 5 years long, depending on your circumstances. You pay your monthly payments to a Chapter 13 Trustee, who collects the payments and distributes the money among your creditors. The amount of debt which you will have to repay in a Chapter 13 plan depends on your assets and your income. You will need to consult with an attorney for a detailed explanation of how Chapter 13 works.
6. Why should I ever consider filing Chapter 13 instead of Chapter 7? Chapter 13 sounds too complicated, and Chapter 7 sounds easier.
You may need to consider a Chapter 13 filing if you have valuable assets which a Chapter 7 Trustee would want to liquidate if you filed Chapter 7. In Chapter 13, you can keep those assets. In exchange for getting to keep those assets, you pay monthly payments to a Chapter 13 Trustee.
You can also use Chapter 13 to deal with mortgage problems. For example, if you have fallen behind on your mortgage payments and you want to keep your house, a Chapter 7 filing will not discharge the mortgage arrears. You can, however, use a Chapter 13 plan to pay back the mortgage payments that you missed, and still keep your house.
You can also use Chapter 13 to deal with non-dischargeable debts, such as income tax debts, as explained in response to questions #7.
7. Can filing bankruptcy help me with tax debts?
Yes. Depending on your circumstances, you may be able to file Chapter 7 and discharge an income tax debt in the same way that you could discharge a credit card bill. In order to discharge an income tax debt, you have to satisfy the following conditions:
a. the most recent due date for filing the tax return for the tax year in question is over 3 years old
b. you filed the tax return for the specific year in question more than 2 years ago
c. the assessment of the tax in question is over 240 days old
d. your tax return was not fraudulent
e. you must not have been guilty of a willful attempt to defeat or evade the tax.
Even if your income tax debt is not dischargeable, you may be able to propose a Chapter 13 payment plan so that you can pay your taxes with monthly payments that you can afford.
8. Can filing bankruptcy lower my car payments?
The answer to that question depends on your circumstances. If the car loan is over 910 days old, and the market value of your car is less than what you still owe on the car loan, then with a Chapter 13 plan, you can pay for the value of the car instead of the balance of the car loan.
9. Can filing bankruptcy lower my mortgage payments?
That depends on your circumstances. If you have two loans against your house, and the value of your house is less than what you for the first mortgage, then in a Chapter 13 case, you can discharge the second mortgage is an unsecured debt. You end up reducing your mortgage payments by discharging the second mortgage while remaining responsible for the first mortgage.
10. How much do you charge?
I determine the price for each client on a case-by-case basis, instead of just applying a single "flat fee" for everyone.