- How do I select an attorney?
- Do the Costs of attorneys vary?
- What about the filing fee?
- What will a bankruptcy do for me?
- Should I try any other options prior to filing?
- How do I know what type of Bankruptcy to file?
- Will I lose any property?
- Do I need to list all debts?
- Does my spouse have to file?
- I want to keep certain debts and not include those. Can I?
- What impact will a bankruptcy have on my credit?
- What happens if I used my credit card shortly before coming to see you?
- What happens if I do not know a creditor’s address?
- Should I get a copy of my credit report? If so, how?
- Can I buy or sell a house or car while in a bankruptcy?
- How long will a bankruptcy take?
- In a Chapter 13 bankruptcy, how is my payment determined?
- In a Chapter 13, what happens if I cannot make a payment?
- I co-signed a loan for my family member/ friend/ etc…, will this affect their credit?
- Do I need copies of my tax returns?
- Will my Mortgage Company/Car Company be affected even if I am keeping the property?
- Steps in a Bankruptcy
1. How do I select an attorney?
You should pick an attorney with a good reputation and a law firm that is here to stay. You should remember that you are getting the services of a full law firm, so you should ask if that law firm handles other legal matters so that your non-bankruptcy needs can be met.
2. Do the Costs of attorneys vary?
The costs vary slightly in Chapter 7 bankruptcy cases. You may be able to employ a bankruptcy for less than you were quoted in this firm, but attorneys can only bill for time. Therefore, the attorney quoting you significantly less for the bankruptcy intends to spend less time on your case. In a Chapter 13 bankruptcy, the court sets the fees and the attorney must have the court’s permission to seek further fees. The amount required up front will vary. Generally, the firms that require money paid up front provide more personal service.
3. What about the filing fee?
The filing fee does not go to the attorney. The entire amount of the filing fee belongs to the court and is not included in the attorney fee.
4. What will a bankruptcy do for me?
If a Chapter 7 bankruptcy is appropriate, it will eliminate your dischargeable debt and allow you to make a fresh start. A Chapter 13 bankruptcy may allow you to pay off tax debt, child support, student loans and catch up on property that you about to lose. A chapter 13 will not pay the interest on a student loan or child support arrears, but will allow you to pay the principal and protect you from garnishments (except child support garnishments) tax refund intercepts (except for delinquent federal income taxes and child support) and new lawsuits (except establishing or modifying child support) while in bankruptcy. Chapter 13 will also stop any interest, charges or penalties from accruing on credit cards, medical debt and unsecured signature loans while in bankruptcy and you will receive a discharge of the unpaid balance on these debts at the completion of your Chapter 13 plan.
5. Should I try any other options prior to filing?
Absolutely. You should explore getting an unsecured loan to pay off your credit card debt, explore Consumer Credit Counseling services and explore whether there is a family member who can assist. After you have eliminated these options, bankruptcy is the remaining viable option.
6. How do I know what type of Bankruptcy to file?
A Chapter 7 bankruptcy is available for people who are not behind on cars or houses that they want to keep and who are eligible to file Chapter 7 under the “Means Test”. A Chapter 13 bankruptcy is generally best for those who are behind on a car, house or IRS debt, or for those who are not eligible to file Chapter 7 under the “Means Test”. This is a very complex legal analysis and the attorney will advise you in this regard.
7. Will I lose any property?
Usually not. The attorney will analyze your situation and would inform you of any problems and any property you might lose. Most people who file retain all of their property and cash holdings. It is absolutely essential that you disclose all of your property and assets, the attorney is not a mind reader and cannot advise you about things you do not tell him.
8. Do I need to list all debts?
Yes, Yes, Yes, and Yes. All debts, by federal law, must be listed. That does not mean, however, that you will lose your car or house because you list them. Other documents filed with the bankruptcy allow you to keep those important debts and the property. Your failure to list those debts can actually cause you to lose those properties. Besides, it is a federal crime not to list and disclose all requested information.
9. Does my spouse have to file?
Usually, yes. We live in a community property state and we usually mix and match responsibilities. There are times, however, when the other spouse may not have to file. If the spouse is not on any of the debt, has never signed receipts agreeing to become liable or if the spouses are recently married. If both spouses need to file, remember that it the attorney’s fees are the same for one or both spouses. If only one files and it turns out that the other spouse needs to file later, the legal costs have just doubled.
10. I want to keep certain debts and not include those. Can I?
You can keep your property and any debt attached to that property. Generally, though, you may not keep a “favorite” credit card. The bankruptcy trustee allows you to keep gas cards that you pay fully at the end of every month. You may not carry any balance from month to month. However, please be aware that even if you pay off a card every month, and do not list it in the bankruptcy, the credit card company will probably close the account once they check your credit report (which most credit card companies regularly do) and see the bankruptcy filing on your credit report.
11. What impact will a bankruptcy have on my credit?
A bankruptcy remains on your credit report for ten years. You do not have to wait the full time to re-establish credit. Many car lenders and house lenders will work with you immediately after you receive a bankruptcy discharge. You can also get a secured credit card. Although you will probably receive multiple credit card offers, we do not recommend that you get more than one card. It is very easy to fall right back into the same trap you were in prior to the bankruptcy.
12. What happens if I used my credit card shortly before coming to see you?
If you are filing a Chapter 7, it is recommended that you wait a full ninety days since your last credit card purchase to file the bankruptcy. Remember, there is no emergency and your bankruptcy will go much smoother if you wait. Under no circumstances should you continue to use a credit card once you see an attorney.
13. What happens if I do not know a creditor’s address?
The attorney will sometimes have an address for a particular creditor. However, if he does not that creditor cannot be noticed of the bankruptcy and will not be discharged. Therefore, addresses are critically important, including zip codes.
14. Should I get a copy of my credit report? If so, how?
We provide a copy for you of your credit reports as part of the filing process. However, you may need to obtain a copy in the future after you file to make certain the debt is shown as “discharged.” The latest numbers I have for the credit reporting agencies are as follows:
Experian—(formerly TRW) www.experian.com 1.888.397.3742
Equifax— www.equifax.com 1.800.685.1111
Trans Union— www.tuc.com 1.800.888.4213
If you have a computer, internet access and a printer, you can instantly download and print your credit report from this website:
15. Can I buy or sell a house or car while in a bankruptcy?
In a Chapter 7 bankruptcy, it is very difficult. In a Chapter 13 bankruptcy, prior to confirmation, it involves a hearing and trial before the judge. After that time, after confirmation, all you will need is permission from the trustee.
16. How long will a bankruptcy take?
In a Chapter 7, four to six months from start to finish. A Chapter 13 is a minimum of three years or a maximum of five years.
17. In a Chapter 13 bankruptcy, how is my payment determined?
Your payment is determined by a complicated formula that determines how much money it takes to actually pay off the debts that must be paid and then the formula adjusts by your disposable income.
18. In a Chapter 13, what happens if I cannot make a payment?
It depends on where you are in the process. If it is your first payment, your case will be dismissed in 48 hours. If it is prior to confirmation, you will have 15 days to catch up. If it is after confirmation, there are a variety of options for helping you. However, if you cannot keep up with your bankruptcy, you will eventually lose property just as you would if your were not in the bankruptcy. It takes longer to lose property in the bankruptcy. If you determine that you cannot make payments, the attorney can look and see if the payment can be lowered through an adjustment in the budget. You also have the option to convert to a Chapter 7. If you are realistic about what you can pay, this should never happen.
19. I co-signed a loan for my family member/ friend/ etc…, will this affect their credit?
If you are a co-signor on a debt the bankruptcy may show up on that person’s credit report. If this happens, that person will need to write a letter to that credit reporting agency stating that they have not filed bankruptcy and that only that debt is in a bankruptcy. That person can demand that the explanation be placed on the credit report. Nothing else is usually required to clarify the situation. Following is a list of credit reporting agencies:
20. Do I need copies of my tax returns?
Yes, the trustee will require you to have copies of the last 3 years tax returns (the actual return and not the W-2 forms). If you do not have those, the §341 creditors meeting may be re-set. Your failure to have those tax returns can result in additional attorney fees and much inconvenience for you. You must go down in person to the tax office.
Tax office is at the Federal Building, next to the McDonalds at:
1100 Commerce St.
Dallas, Texas 75242-1496
Tax office is at the Federal Building:
818 Taylor Street, Suite 6A14
Fort Worth, Texas.
21. Will my Mortgage Company/Car Company be affected even if I am keeping the property?
Sometimes. There are times when a Mortgage Company or car creditor will quit sending you a statement because you are in a bankruptcy. THIS DOES NOT RELIEVE YOUR OBLIGATION TO PAY. YOU MUST SEND YOUR PAYMENT TO CREDITOR ON TIME. Sometimes a creditor may notify you to send your payment to a different address.
Steps In a Bankruptcy
A. STAGES OF A BANKRUPTCY
- Meetings with Lawyer
- a. There is one meeting with the lawyer in a normal case. That meeting is designed to gather basic information and to allow the lawyer to gather general information to make a recommendation as to the type of bankruptcy you may want to file. The next step was to turn in your paperwork so that your paperwork could be completed. The final step is today where you have come in to sign the bankruptcy schedules. Your bankruptcy is not filed until it is filed with the court.
- b. Additional meetings will be scheduled on an as-needed basis.
- c. You must remain current on your house, car (unless paid through the bankruptcy) and any other secured items that you intend to keep. You will lose those items if you do not remain current after of the filing of the bankruptcy. The bankruptcy only pays the arrears on your house and cannot pay for your house. Your car will generally be paid for separately as well, but (in some cases) can be paid through the bankruptcy. DO NOT ASSUME THIS TO BE THE CASE.
- Meeting with the Trustee
- a. You are required to attend a §341 Creditor’s meeting. Failure to attend will result in the dismissal of your case. The meeting lasts from about 8:00 until 4:00. You will be notified by the Court when the meeting has been scheduled. Your attorney cannot control the scheduling of that meeting. You will be notified by the Court when the meeting has been scheduled. You must bring your Driver’s License and a social security card (or something with your number on it other than a tax return), current pay stubs and three year’s tax returns to the meeting. You must have 3 paycheck stubs for both you and your spouse (even if your spouse is not filing, if living with you that spouse’s income is used to determine the payment) The meeting will not proceed if that information is not provided. The next step is Confirmation.
- Confirmation of your Case
- a. After approximately one or two months, your case will be set for confirmation. Confirmation is the process whereby the Court takes the first “snap shot” of your case.
- b. Throughout the bankruptcy, you will get documents entitled “Proofs of Claims.” These are the documents filed by your creditors to demonstrate to the Court the exact balance of your debt at the time of the filing of the bankruptcy. You should not be concerned about these documents, other than reviewing them If, after you review the documents, you believe that they are incorrect, you must contact the bankruptcy department to set up an appointment to present the documents to prove that the debt is incorrect. You cannot just say you believe they are incorrect. You will be required to produce cancelled checks and a payment history. An incorrect amount on an unsecured claim (credit card, cash loan) will normally make no difference in a bankruptcy. You should normally only be concerned if a balance is incorrect on a secured item or a tax debt or child support claim.
- c. You may also receive something called a Notice of Appearance filed by your creditor. This is a creditor’s way of asking for copies of your bankruptcy papers from your attorney and the court. You should not be concerned and no action is required on your part.
- d. You may receive a document entitled either a Motion to Dismiss or a Motion to Lift Stay. While it is rare to receive a document such as this, you should call your attorney IMMEDIATELY if you should receive such a notice.