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Bankruptcy FAQ's
Should I file bankruptcy?
This might sound over-simplified however, frankly, if you are visiting my site and reading this then there is a very high probability that you need to file bankruptcy. I can tell you that by the time my clients call, make an appointment and come in to talk to me that there is a 99.99% chance that it is in their best interest to file bankruptcy immediately.
What does it cost to file bankruptcy?
After October 16, 2005 court costs are $299 for a chapter 7 and $274 for a chapter 13. Pursuant to the amendments in the forms, there are additional costs for Consumer Credit Counseling certification, tri-merge credit report, and a financial management course. With our present suppliers, the credit counseling is done over the internet in a short period of time and the financial management course is nothing more than a book and a test. A tri-merge credit report is normally ordered and received by the paralegal while she is reviewing the case with you.
As of 2007, the national average total of attorney’s fees alone, without any costs or filing fees is $1,500. Chapter 13 fees are approved by the sitting Bankruptcy Court Judge. Chapter 13 hold flat fees, sometimes called “no-look” fees, which are historically approved by the court. The chapter 13 fee is split between a fee before the case is filed any the remainder through the Plan. Chapter 13 fees are somewhat higher than Chapter 7 fees and are set by the Bankruptcy Judge.
What happens when I file?
When you file a bankruptcy with the court, the court order goes into effect immediately and all collection activity must stop. This includes stopping foreclosures, garnishments, repossessions, creditors calling and harassing you, and even collection efforts by tax authorities. The sooner you come in to the law office, the sooner you get relief (as long as we are able to file your case with the court immediately) and the more money you can save from your creditors. You will have a 341 meeting within three to six weeks of your bankruptcy filing. When the bankruptcy is finally over, you will receive a discharge order issued by the court. It is extremely important for you to hang on to your copy of this discharge order, even though the original is filed by the court. You will need this for future credit and we charge for copies, as we’ll have to go to our warehouse, pull your file and make an extra copy for you. The discharge order is the final and permanent order to stop all collection activities, and declaring that the debts are non-collectable.
Can I go to court other than near where I live?
No. Pursuant to local rule and federal law, you must file in the jurisdiction wherein you resided last, and you must go to court, pursuant to local rule, in the proper venue (i.e. nearest place where the meeting/court is held).
Can I plan my bankruptcy?
Absolutely. A good strategy is like a chess game and should be pursued with the most experienced bankruptcy attorney.
Can I file chapter 7?
Whether you file a chapter 7 or a chapter 13 may be ultimately up to you. I certainly will give you my recommendations. Due to the amendments, it may not realistically be possible to file a chapter 7; however, I will always entertain that option with you and give you my advice thereon. Each chapter has its benefits, but it is most import to know your options.
How long will bankruptcy take?
A chapter 7 is normally open for 3-4 months. A chapter 13 is normally open for a minimum of 3 years and a maximum of 5 years.
What are the most common mistakes when filing?
Not showing up to the hearing and not listing all your assets and debts. Failure to show up to the hearing can result in your case being dismissed. Failure to disclose all your debts can be grounds for a dismissal and prosecution, and it can cause you to owe the debt after the bankruptcy is finalized. Also, under-estimating your tax refund can be a crucial mistake. The best policy is to provide your attorney with the best, most accurate information possible.
Is it possible for the court to not approve my chapter 7 or chapter 13?
Anything is possible. However, if everything is done correctly and all information is fully disclosed, there is a 99% chance your case will be approved.
Do you take personal checks?
Unfortunately, I do not normally take personal checks. The exception to this is if it is a partial payment, with a strict understanding that your case will not be filed until the check clears, payment is made in full, all necessary documents are provided, and you meet at a sufficient time with my office personnel, sign all necessary papers, and provide all requested documentation, I will accept your check. However, we absolutely will not accept any personal checks if you wish to have your case filed within two weeks. In other words, I require two weeks for a personal check to be cleared to my bank account.
Can I provide my own credit report?
No. We use up to the minute credit reports which are “tri-merge” and merges together all three credit reporting agencies, (i.e. Equifax, TransUnion, Experian).
Can I file jointly with my spouse.
Yes.
Does my spouse have to file?
No.
Will this affect my spouse’s credit?
No.
Is my spouse responsible for my credit cards if they are an authorized user?
No.
When would my spouse be liable for my credit cards?
If your spouse signed the original application or any addendum, then your spouse would be responsible for your credit cards.
Will my cosigner be protected?
No. Generally not. The only way to protect your cosigner is with a chapter 13 wherein the credit in question is paid 100% plus interest.
Can I file a personal bankruptcy and not have it affect my business?
No. If it is a corporation, you own the stocks, as assets of the corporation. If you do not have a corporation, then you are the business. The good news is that, generally speaking, the court is only interested in the liquidation value of the assets. Therefore, this is a very important issue to discuss with your bankruptcy attorney.
Can bankruptcy stop foreclosure, wage garnishments, help bank freezes, judgment, or remove a lien?
Yes. But, the lien removal will require an additional procedure.
What will happen with my bills?
When the Bankruptcy Court issues a Discharge Order, you are no longer legally bound to pay the bills that have been discharged.
What if I keep on getting my bills?
It is not unusual to receive some bills after you file your bankruptcy. The rule of thumb is that if you receive bills after you go to court, that you should bring them to our attention.
Who notifies the creditors and bill collectors?
After the bankruptcy petition is filed electronically with the court, the court and United States Trustee issue notices to chapter 7 on chapter 7 cases and the Chapter 13 Trustee notices on chapter 13 cases. As far as I know, the bankruptcy information is transferred electronically to a corporation in Virginia who has the contract to send out notices. Although my name and return address may return on the envelope, this corporation sends out the notices to all parties that are listed in the creditor matrix, plus the Trustee, the debtors and the bankruptcy attorney. Obviously, it will take some time for the notices to filter through the United States Mail and get to the creditors. Then, some creditors are tardy at inputting the information into their computers. Should you get any contact from any creditors after you file, you should contact my office immediately.
Where is my 341 creditors hearing held?
County |
Chapter 7 |
Chapter 13 |
Allegany |
Olean |
Olean |
Chautauqua |
Mayville |
Mayville |
Cattaraugus |
Olean |
Olean |
Erie |
Erie |
Erie |
McKean |
Warren |
Erie |
Potter |
Williamsport |
Wilkes Barre |
Warren |
Warren |
Erie |
What do I wear to the hearing?
Dress as if you are going to church. If you do not go to church, dress as if you are going on a date – but without too much jewelry or perfume.
Do you appear with me at the hearing?
Yes. I do appear with you at the hearing, unless I have a conflict. In that case, I will contact you and advise you of the name of an experienced bankruptcy attorney that will appearing with you.
Is my tax refund always protected from my creditors and the Trustee?
No. This is different for every case and should be discussed with an expert Bankruptcy Attorney.
What will happen with my house and car?
Usually, you get to keep them both. The real issue is the amount of “equity” that you have in your assets. This is why it is important to discuss these issues with an experienced Bankruptcy Attorney.
Do I have to keep full coverage insurance on my vehicle?
If you owe a creditor on your vehicle, the answer is yes. Furthermore, you should provide a copy of that coverage, both at your second interview and when you come to court. If you do not provide said copy, it is possible for the creditor to simply repossess your vehicle.
Who normally prepares a Reaffirmation Agreement?
The creditor.
What is your procedure with Reaffirmation Agreements?
They are automatically sent to the debtor with an explanation letter.
What if the creditor does not provide a Reaffirmation Agreement?
We have a standard letter that states that a Reaffirmation Agreement is required under BAPCPA and that if they do not provide one that they are waiving their rights to that provision of the law.
Why can’t the Attorney draft a Reaffirmation Agreement?
It can easily be drawn, but the attorney does not usually have the relevant information to fill out the Reaffirmation Agreement. The attorney normally does not have the original copy of the contract, the amount of interest and whether it has been changed, the payment amount, the last payment made, or the signature of an officer of the creditor corporation.
May I choose which creditors I wish to repay?
Not during the bankruptcy proceedings. After the bankruptcy proceedings have been completed, you can voluntarily pay anyone you wish.
Can I revoke a Reaffirmation Agreement?
Yes. But it must be revoked within 60 days of the 341 hearing, or before discharge, whichever comes first. It should be revoked in writing and sent via certified mail.
If I want to surrender my house or vehicle, will I lose them immediately?
No. Normally the creditor has to file a §362 Lift Motion and that Motion has to be granted by the court. Once the order is signed by the judge and is entered, then anytime thereafter the asset can be taken over by the creditor. (A foreclosure may take extra time.)
Will I lose my 401k or retirement fund?
No. Retirements are normally protected up to $1,000,000.00.
If I have a personal injury lawsuit – will I lose those funds?
As a general rule, payment for personal injury settlements are protected up to $7,500 in New York and approximately $15,000 in Pennsylvania.
ABC Mortgage Company sold my mortgage to XYZ Mortgage Company, do I have to pay my mortgage?
Yes. No matter what, if you wish to keep your house, you must make sure your mortgages are paid, (there are exceptions which are best to be discussed with an expert bankruptcy attorney).
I have not received a statement to pay my mortgage or my car – do I need to pay them?
If you wish to keep them, then yes, you do need to pay them. If you do not know the amount, look in your checkbook and pay the same amount you did before. If these payments are returned for some reason, contact my office immediately. I will probably have you bring in the check or the funds so that my office can send it directly to your creditor.
Am I personally liable for Real Estate taxes on the house that I surrendered through the bankruptcy?
No. Taxes “follow” the Real Estate.
The municipality is trying to enforce building codes on property I have surrendered – must I comply?
Yes. Until the Real Estate is out of your name, you are technically required to comply. Therefore, it may be in your best interest to rent the property to offset the upkeep. Furthermore, anytime you wish to surrender a property, it is always advisable to maintain liability insurance and to have the property winterized, should you not maintain heat.
If the Trustee doesn’t want the property can I have it?
Yes. But if you hide an asset, you have committed fraud. You may not only lose your asset, you may also lose your freedom.
How long do I have to repay in a chapter 13?
You can stretch out your payments for up to 5 years.
What happens if I stop making my chapter 13 payments?
The court will dismiss your chapter 13, and it will be as if you never filed; therefore, the creditors can sue you and pursue all their remedies against you.
Can I reduce my monthly payments in a chapter 13?
Although a chapter 13 will normally reduce your monthly payments to your original creditors, once a chapter 13 plan is approved, it is difficult to have it reduced. However, it is best to contact my office to have us review your case and give you a determination thereon.
Do I pay 100% back of what I owe in a chapter 13?
No. Not usually. You can repay as little as 5% to unsecured creditors over a period of 5 years which equates to 1% per year.
Can I pay some creditors and not others in a chapter 13?
No. You cannot discriminate against creditors or give priority to other creditors.
Can I go bankrupt on a utility bill?
Yes. But, you will be required to pay a deposit of at least two times the monthly average. Therefore, unless you have an outrageous utility bill, I do not recommend filing against it.
Can bankruptcy stop a lawsuit?
Yes. But, it will not stop criminal cases, criminal restitution or divorce or family court litigation.
Can bankruptcy help with tax bidders or high interest rates and penalties?
Yes. Bankruptcy can get rid of some taxes, reduce interest and stop penalties. But, each case is different.
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