1) What is Bankruptcy?

Bankruptcy is a federal court process designed to help consumers and businesses eliminate their debts or repay them under the protection of the bankruptcy court. Bankruptcies are generally described as liquidation (Chapter 7) or reorganization (Chapter 13).

Under a liquidation bankruptcy (Chapter 7), you ask the bankruptcy court to wipe out (discharge) the debts you owe. Under a reorganization bankruptcy (Chapter 13), you file a plan with the bankruptcy court proposing how you will repay your creditors. You must repay some debts in full; others may be repaid only partially or not at all. It all depends on what you can afford.

2) I heard the law changed and people can’t file Bankruptcy anymore. Is that true?

No. In October of 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”) went into effect. In short, it has increased the documentary burdens on individuals filing for bankruptcy and, in so doing, increased the complexity and cost of cases. However, you can do almost everything under the NEW law that you could do under the OLD law. In some ways, the new law actually increased the benefits of filing bankruptcy.

3) I am behind on my mortgage payments and the mortgage company has started foreclosure proceedings. Can anything be done to save my home?

Yes. If you are unable to work out a payment plan directly with your mortgage company, a Chapter 13 bankruptcy may allow you to save your home. Once a bankruptcy is filed, your creditors must stop all collection activity against you, including foreclosure proceedings. The past due amounts you owe the mortgage company will be paid through the Bankruptcy Trustee (the person assigned by the court to administer your bankruptcy).

While you are in a Chapter 13 bankruptcy, you must still make your regular monthly mortgage payments and keep current with your payments to the Trustee to prevent the mortgage company from being allowed to go forward with foreclosure.

4) I have a lot of credit card debt and my creditors keep calling me. How can a bankruptcy help me?

Under most circumstances credit card debt would be dischargeable in a bankruptcy. Once you file bankruptcy, your creditors must stop all collection activity against you, including telephone calls and letters. If collection activity persists notify your Attorney immediately.

5) Will Bankruptcy wipe out all my debt?

Yes, with some exceptions. When your bankruptcy is completed, many of your debts are "discharged." This means they are wiped out and you are no longer legally obligated to pay them. However, certain types of debts are NOT DISCHARGEABLE in bankruptcy. They include child support, student loans, most back taxes and debts incurred as the result of fraud.

6) Will I lose everything after Bankruptcy?

No! Many people believe that they cannot own anything for a period of time after filing for bankruptcy. This is not true. You can keep your exempt property and anything you obtain after the bankruptcy is filed. However, if you receive an inheritance, a property settlement, or life insurance benefits within 180 days after filing for bankruptcy, that money or property may have to be paid to your creditors if the property or money is not exempt.

7) If I am married, do I have to file Bankruptcy with my spouse?

No. Married persons can file together, or by themselves. However, only the liability of the person filing is discharged. So if your spouse is obligated on the debt, and your spouse decides not to file, your spouse will still be liable on that debt.

8) Can I file Bankruptcy without an Attorney?

Although it may be possible for some people to file a bankruptcy case without an attorney, it is not advisable. There is an old saying: “He who is his own attorney has a fool for a client.” The process is difficult and you may lose property or other rights if you do not know the law. Chapter 7 (liquidation) cases are not quite as complex as Chapter 13 (reorganization) cases, but are best done with an attorney. Very few people have been able to successfully file Chapter 13 cases on their own.

9) Can I afford to file for Bankruptcy?

The better question is: "Can you afford not to?" Filing for bankruptcy can be less expensive than drowning in debt and can give you a fresh financial start. Hands Law Office will quote you a flat fee for the entire case based on your individual situation. Our office can establish an affordable payment plan with interest-free payments to fit your budget, and will file your case as soon as the filing and legal fees are paid.

10) Do I have to list all my debts?

Yes, you must list all of your debts on your bankruptcy schedules. However, you can choose to reaffirm any debt you choose after the filing. Or, you can voluntarily pay a creditor after you receive a discharge, without becoming legally liable to continue paying. Thus listing a creditor does not prevent you from paying creditors you wish to pay after bankruptcy.

HANDS LAW OFFICE, PLLC is providing this guide for general informational purposes only. Nothing contained in the guide should be construed as legal advice, or as a recommendation to file bankruptcy as this is strictly a personal decision. Should you have any additional questions after reading this document, or should you desire to file for Chapter 7 or 13 bankruptcy protection, please call us at (704) 248-7976 for a free consultation. We are a debt relief agency that helps people file for bankruptcy relief under the bankruptcy code.