Once a creditor or bill collector becomes aware of a filing for bankruptcy protection, it 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 will also stop calling if you inform them that you filed the bankruptcy petition, and supply them with your case number. 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.
Your lawyer will prepare the forms that you must file in a chapter 7 case. To prepare those forms, your lawyer will need certain information from you. The information you should take with you to your lawyer is listed below.
Information to Take With You When Consulting a Bankruptcy Attorney
If you fail to file all information noted above within 45 days of filing the petition, the court will dismiss your case. If your case is dismissed, you will lose the benefit of the automatic stay and your creditors can resume their collection efforts.
You will also have to file the following documents with the court. Again, your lawyer will help you with these.
It now costs $306 to file for bankruptcy under chapter 7 and $281 to file for bankruptcy under chapter 13, whether for one person or a married couple. The court may allow you to pay this filing fee in installments if you cannot pay all at once. If you hire an attorney you will also have to pay the attorney’s fees you agree to.
Alimony, maintenance, and/or support are protected from discharge. Divorce decrees and separation agreements are covered by 11 U.S.C. Section 523(a)(15). This section states that these debts are not dischargeable unless:
Public utilities, such as the electric company, cannot refuse or cut off service because you have filed for bankruptcy. However, the utility can require a deposit for future service and you do have to pay bills which arise after your bankruptcy is filed.
In a chapter 13 case you file a “plan” showing how you will pay off some of your past-due and current debts over three to five years. The most important thing about a chapter 13 case is that it will allow you to keep valuable property–especially your home and car–which might otherwise be lost, if you can make the payments which the bankruptcy law requires to be made to your creditors. In most cases, these payments will be at least as much as your regular monthly payments on your mortgage or car loan, with some extra payment to get caught up on the amount you have fallen behind. You should consider filing a chapter 13 plan if you:
You will need to have enough income in chapter 13 to pay for your necessities and to keep up with the required payments as they come due.
In most cases you will not lose your home or car during your bankruptcy case as long as your equity in the property is fully exempt. Even if your property is not fully exempt, you will be able to keep it, if you pay its non-exempt value to creditors in chapter @However, some of your creditors may have a “security interest” in your home, automobile or other personal property. This me that you gave that creditor a mortgage on the home or put your other property up as collateral for the debt. Bankruptcy does not make these security interests go away.
If you don’t make your payments on that debt, the creditor may be able to take and sell the home or the property, during or after the bankruptcy case. There are several ways that you can keep collateral or mortgaged property after you file bankruptcy. You can agree to keep making your payments on the debt until it is paid in full. Or you can pay the creditor the amount that the property you want to keep is worth. In some cases involving fraud or other improper conduct by the creditor, you may be able to challenge the debt. If you put up your household goods as collateral for a loan (other than a loan to purchase the goods), you can usually keep your property without making any more payments on that debt.
No, not all debts will be discharged through the bankruptcy, even if you have followed all of the Bankruptcy Code’s rules during your case. First, a bankruptcy case only discharges debts that you owed and listed at the time you filed the case, not those you incurred after filing the case.
In addition, even after bankruptcy, you will have to pay debts that are not discharged. Non-dischargeable debts include:
Other debts that may not be discharged include debts you may have incurred through fraud or by willful or malicious actions. An example of a debt incurred by fraud is a loan you obtained when you knew you could not repay. Some credit card use immediately before bankruptcy may be considered fradulent, especially if you use the card to pay for "luxury" goods or services, such as a vacation. If the creditor does not ask the court to rule on these debts, they will be discharged.
Unfortunately, if you are behind on your bills, your credit may already be bad. Bankruptcy will probably not make things any worse. The fact that you’ve filed a bankruptcy can appear on your credit record for ten years. But since bankruptcy wipes out your old debts, you are likely to be in a better position to pay your current bills, and you may be able to get new credit.
Bankruptcy is a legal proceeding in which an individual who cannot pay his or her bills can get a fresh financial start. The right to file for bankruptcy is provided by federal law, and all bankruptcy cases are handled in federal court. Filing bankruptcy immediately stops all of your creditors from seeking to collect debts from you, at least until your debts are sorted out according to the law.
The current filing fee for a chapter 7 case is $306 and for a chapter 13 case is $28@Some courts also impose an additional administrative fee. You may pay the filing fee in installments. The court may waive the filing fee in a chapter 7 case if your income is below specified levels and the court finds that you cannot pay the filing fee in installments.
You should hire an attorney to assist you with filing bankruptcy. Attorneys usually charge a fixed fee for certain services in a bankruptcy case and the fees typically differ depending on the chapter under which you file. Your lawyer may request payment up front, especially if you are filing for chapter 7.
You should notify your attorney and provide him or her with all the information necessary to complete the schedule (the amount of the debt, the type and value of any collateral, and the name and address of the creditor). This is very important, because if you do not list a debt on your schedules, that debt might not be discharged. That me you will be required to pay the debt in full after bankruptcy.
If an omitted creditor demands payment of the debt, you should inform the creditor of the bankruptcy, as discussed below.
The moment you file for bankruptcy, you are protected from your creditors. The Automatic Stay stops all collection efforts against you and against your property. Creditors must stop calling you and sending letters to you. If a creditor has already sued you, that lawsuit must stop. The automatic stay also prevents creditors from repossessing your property and from foreclosing on your home.
There are four types of bankruptcy cases provided under the law:
Most people filing bankruptcy will want to file under either chapter 7 or chapter @Either type of case may be filed individually or by a married couple filing jointly.
If you are filing a chapter 13 case, rather than a chapter 7, in addition to the documents mentioned above, you must file a plan that describes how much you will pay your creditors and over what time period. Your plan must provide that you pay creditors at least what they could have received in chapter 7 liquidation case, which basically me creditors must receive payments equal to the value of your non-exempt assets. Your lawyer will prepare your plan.
In addition, the plan must provide that you contribute all your "disposable income" to the plan. Disposable income is the income above what is necessary for the support of you and your family. However, in many cases the me test formula determines that amount. The me test is a very complicated test, but essentially requires that you average your income over the past six months (from any source including regular gifts from family members), then deduct a series of allowed expenses, and see what is left to pay creditors. You will need an attorney to complete this analysis.
The chapter 13 plan lasts until the earlier of you pay your debts in full or the end of a three- to five-year period. If your income is below your state's median income, the maximum plan period without court approval is three years. If your income is not below your state’s median income, creditors may be able to insist that the debtor pay a five-year plan.
Within 30 days of filing your petition, you must begin making payments under your plan. You make the payments to a trustee, who distributes the payments to the creditors.
Like in a chapter 7 case, after filing the bankruptcy petition, you must attend a creditors' meeting (also known as a 341 meeting, named after the section of the bankruptcy law that requires the meeting). The chapter 13 trustee will conduct the meeting and will question you under oath about the paperwork you filed in your case. This creditors' meeting will last longer than a meeting in a chapter 7 case. The trustee will likely question you about your income and your expenses, and may also require additional documentation at the meeting.
After the meeting of creditors, you, the chapter 13 trustee, and those creditors who wish to attend will come to court for a hearing on your chapter 13 plan. If there are no problems, the court will approve ("confirm") your plan.
After completing payments under the plan and completing any financial counseling required, you will receive a discharge of any debts not paid under the plan.
If a debt is discharged, you no longer have an obligation to pay the debt, and the creditor may not make any effort to compel you to repay. However, if some other person (such as a relative or friend) has co-signed or guaranteed your loan, his/her obligation is not discharged. In addition, if you have property that is collateral for a loan, the creditor may still be able to repossess that property if you do not repay the loan.
A reaffirmation agreement is an agreement providing that you will pay a creditor's debt even though the debt would otherwise be discharged in bankruptcy. Your creditor must agree to the reaffirmation, so while the debt can be renegotiated, but most reaffirmation agreements simply require you to pay the debt as originally agreed.
People usually reaffirm a debt so that they can keep property that they gave as collateral for the debt. Thus, most reaffirmation agreements deal with secured debts, and chapter 7 debtors enter them to keep the creditor from repossessing or foreclosing on the property securing the debt. A valid reaffirmation agreement puts you under a legal obligation to repay the otherwise dischargeable debt. If you default on the payments required under the reaffirmation agreement, the creditor can repossess or foreclose on the property and seek a personal judgment against you.
In order for a reaffirmation to be valid, you and your creditor must sign the agreement and file it with the court before you receive a discharge. In addition, either your attorney or the court must determine that the agreement does not impose an "undue hardship" on your family. The Bankruptcy Code contains many other requirements for reaffirmation agreements. To see there requirements, you can look at the reaffirmation agreement form here.
If you and your creditor do not comply with all the requirements for a reaffirmation, the agreement may not be binding. In that event, you would have no personal obligation to make payments under the agreement.
As a rule, you should think very carefully about whether to reaffirm debt, as this limits your bankruptcy discharge.
In a bankruptcy case under chapter 7, you file a petition asking the court to discharge your debts. The basic idea in a chapter 7 bankruptcy is to wipe out (discharge) your debts in exchange for your giving up property, except for “exempt” property which the law allows you to keep. In most cases, all of your property will be exempt. But property which is not exempt is sold, with the money distributed to creditors. If you want to keep property like a home or a car and are behind on the payments on a mortgage or car loan, a chapter 7 case probably will not be the right choice for you. That is because chapter 7 bankruptcy does not eliminate the right of mortgage holders or car loan creditors to take your property to cover your debt.
The federal judiciary proves public access to federal appellate, district and bankruptcy court documents through Public Access to Court Electronic Records (PACER), an electronic public access service.
Generally, student lo are not discharged in bankruptcy. In 11 U.S.C. sec. 523(a)(8) there are two exceptions to this general rule:
Student lo more than 7 years old used to be dischargeable under certain circumstances, but this provision was removed by an appropriations bill passed in October of 1998.
Whether an exception applies depends on the facts of the particular case and may also depend on local court decisions. Even if a student loan falls into one of the two exceptions, discharge of the loan may not be automatic. You may have to file an adversary proceeding in the bankruptcy court to obtain a court order declaring the debt discharged.
If someone has co-signed a loan with you and you file for bankruptcy, the co-signer may have to pay your debt.
Yes. You must list all your debts, with the name and address of the creditors. This is so creditors receive notice of the bankruptcy and get their fair share of any money paid to creditors. You may think that you should omit a creditor because you want to continue to pay the debt. This would violate the law, and it is unnecessary because you can always choose to pay a debt voluntarily, even though the debt has been discharged and there is no legal obligation to make payment. However, creditors are prohibited from taking any action to collect discharged debts.
Chapter 7 cases are pretty simple for the most part. In most cases, you will attend one creditors' meeting and just wait for your discharge notice to come in the mail.
The bankruptcy Trustee runs the creditors' meeting, which is also called a 341 meeting (named after the section of the bankruptcy law that requires the meeting), and will question you under oath about all the information contained in your bankruptcy documents.
If you and your spouse file a Joint Petition, you must both attend the creditors' meeting and wer questions. It is important to cooperate with the trustee and to provide any records or documents requested.
In a simple case, the meeting will usually last just five minutes or so. While all creditors may attend, very few actually do. Be sure to bring a form of identification to the meeting, as well as proof of your Social Security number (usually your Social Security card). The trustee may ask you to provide additional documentation during the meeting and give you a few days to produce it.
The discharge notice will arrive in the mail about 60 days after you attend the creditors' meeting. This piece of paper is proof that most of your debts have been discharged. You should keep it in a safe place.
No. 11 U.S.C. sec. 525 prohibits governmental units and private employers from discriminating against you because you filed a bankruptcy petition or because you failed to pay a dischargeable debt.
Yes. You must provide the trustee and/or any creditor with copies of any federal tax return that you filed for the year prior to filing. If you do not comply with this request, the court may dismiss your bankruptcy case.
You must also file copies of any federal tax returns filed during the case with the bankruptcy court.
Any taxing authority may request dismissal of a bankruptcy case if you fail to file all required tax returns.
Yes. The automatic stay prevents bill collectors from taking any action to collect debts.
You cannot receive a discharge in a Chapter 7 case if you received a discharge under a Chapter 7 case filed in the last eight years or a Chapter 13 filed in the last six years. You cannot receive a discharge in a Chapter 13 case if you received a discharge under a Chapter 7 case filed in the last four years or a Chapter 13 filed in the last two years. If didn’t received a discharge in the previous bankruptcy filing, depending on why this is the case, you can file and receive a discharge without any time restrictions.
In order to be eligible to file bankruptcy, you must receive credit counseling within the 180 days prior to filing. Specifically, the law requires you to receive, from an approved agency, a briefing outlining the opportunities for credit counseling and help with a budget analysis. You may do this alone or in a group, and in person, on the phone, or even on the Internet. If, due to an emergency, you are unable to obtain credit counseling services from an approved agency during a 5-day period, the court may excuse the requirement temporarily but you still must fulfill it within 30 days (or in some instances 45 days) after filing. If you use a bankruptcy attorney, he/she will most likely be able to help you complete this requirement.
You can find a list of approved non-profit budget and credit counseling agencies at the office of the United States Trustee or Bankruptcy Administrator, at the bankruptcy court Clerk's office, or online at the links we provide under Resources.
In a chapter 7 case, you can keep all property which the law says is “exempt” from the claims of creditors. California exemptions provides list of the exemptions available for California. In determining whether property is exempt, you must keep a few things in mind. The value of property is not the amount you paid for it, but what it is worth now. Especially for furniture and cars, this may be a lot less than what you paid or what it would cost to buy a replacement. You also only need to look at your actual equity in any property.
This me that you count your exemptions against the full value minus any money that you owe on mortgages or liens. For example, if you own a $50,000 house with a $40,000 mortgage, you count your exemptions against the $10,000 which is your equity if you sell it. While your exemptions allow you to keep property even in a chapter 7 case, your exemptions do not make any difference to the right of a mortgage holder or car loan creditor to take the property to cover the debt if you are behind on payments. In a chapter 13 case, you can keep all of your property if your plan meets the requirements of the bankruptcy law. In most cases you will have to pay the mortgages or liens as you would if you didn’t file bankruptcy.
Most efforts by a creditor to collect a pre-petition debt (one that you owe as of the filing of your case) or to repossess your property without the permission of the bankruptcy court are violations of the automatic stay. If a creditor repossesses any property, such as your car, after you file for bankruptcy, the creditor must return the property to you.
The court may punish a creditor who knowingly violates the automatic stay and the creditor is liable to the debtor for harm caused. If you did not list a debt on the schedules filed with the court, the creditor may not be on notice of the bankruptcy. Therefore, you should inform the creditor of your bankruptcy and request that the creditor stop the collection efforts.
If you are represented by an attorney, you should give the creditor your attorney's name and telephone number. If you are not represented by an attorney, you should give the creditor additional information about the case, the date of filing, the court in which the case was filed and the case number. If improper collection action continues, you should consult with an attorney, notify the trustee or seek protection from the court.
Yes, you can file again, unless you have been in bankruptcy within the past six months and either:
If you have been in bankruptcy within the past year, you may not get the full protection of the Automatic Stay. Because the automatic stay protects you from your creditors after you file a bankruptcy case, it might not be worth it for you to file for bankruptcy if the automatic stay will not apply. Your lawyer can tell you if it makes sense for you to file for bankruptcy if you have been in bankruptcy within the past year.
As explained above, the bankruptcy Discharge gives you your fresh start. But if you have received a bankruptcy discharge in the past, you may not be eligible for another discharge right now.
If your last bankruptcy was a chapter 7 and:
In most bankruptcy cases, you only have to go to a proceeding called the “meeting of creditors” to meet with the bankruptcy trustee and any creditor who chooses to come. Most of the time, this meeting will be a short and simple procedure where you are asked a few questions about your bankruptcy forms and your financial situation. Occasionally, if complications arise, or if you choose to dispute a debt, you may have to appear before a judge at a hearing. If you need to go to court, you will receive notice of the court date and time from the court and/or from your attorney. To find the location of the court that serves your area visit the California Federal Bankruptcy Court Directory page.
Yes. Many people believe 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 your bankruptcy, that money or property may have to be paid to your creditors if the property or money is not exempt. You can also keep any property covered by California bankruptcy exemptions through the bankruptcy.
Yes, there are several options available. While technically not a credit card you could use a bank or debit card to perform activities for which you normally would use a credit card. You also may be able to keep the credit card you already have if the creditor grants approval. If these options do not work you can get secured credit card which is backed by your own bank account.