Bankruptcy Frequently Asked Questions
#1. What happens to my assets in a Chapter 7 bankruptcy?
A debtor's non-exempt assets or unprotected assets, if any, are sold by the Chapter 7 trustee and the proceeds distributed to creditors according to the priorities established in the United States Bankruptcy Code. In most consumer cases, all the debtor's assets are exempt, and therefore there are no assets to liquidate and there is no dividend to creditors. These cases are called "no-asset" cases. A bankruptcy trustee cannot take property if it is exempt from legal process.
#2. What types of debt cannot be discharged in a Chapter 7 or Chapter 13 bankruptcy?
Some debts will not be discharged in a Chapter 7 or a Chapter 13 case. Typically, debts that are not eliminated in Chapter 7 are child support, alimony, student loans, certain taxes, loans from governmental units, debts incurred by fraud, debts for personal injury caused when driving under the influence, and criminal restitution. Therefore, you will be responsible for repayment of these debts, even after you receive a Chapter 7 discharge. The list of debts that are not dischargeable in Chapter 13 is intentionally shorter than the list of debts which are not dischargeable in Chapter 7. In other words, Chapter 13 allows the debtor to discharge more types of debts than Chapter 7 does. In some cases, debts that cannot be discharged in Chapter 7 bankruptcy can be paid in Chapter 13 without penalties, interest and or fees, including most taxes.
#3. What can I do about those harassing calls from creditors?
One of the benefits to filing bankruptcy is that it puts into effect something called the "automatic stay." The automatic stay immediately stops your creditors from trying to collect money from you. At that point, creditors cannot legally garnish your wages, empty your bank account, take your car, house or other property. If you continue to receive calls from creditors after you have filed for bankruptcy protection, our attorneys can help you take the steps necessary to obtain relief.
#4. Can a company file for Chapter 13 debt relief?
To file Chapter 13, you must be an individual (no corporations or partnerships), have a regular income greater than your reasonable living expenses, have liquidated, unsecured debts not exceeding $360,475 and secured debts not exceeding $ 1,081,400.
#5. How often can I file for bankruptcy?
While you can only file Chapter 7 every 8 years, you can file a Chapter 13 bankruptcy even if you got a discharge in a Chapter 7 case filed at least 4 years ago. Under the amended Bankruptcy Code, you can file a second Chapter 13 within two years of filing a previous Chapter 13.
#6. Will people think it's a bad thing if I file bankruptcy?
The right to file for bankruptcy is a constitutional right. Most people who file got in a "hole" because of circumstances such as job loss, divorce, medical bills, etc. and not because of flagrant overspending. In addition, it is a business decision that countless others have made before you. Many of our nation's top entrepreneurs have filed for bankruptcy. Some of these individuals include Abraham Lincoln, Walt Disney, Henry Ford, Ulysses S. Grant, H.J. Heinz, Donald Trump.
#7. Does filing bankruptcy under Chapter 13 have any advantages over filing under Chapter 7?
Chapter 13 has certain advantages over Chapter 7 in consumer bankruptcies. The biggest advantage for many people is that Chapter 13 allows individuals an opportunity to keep their homes and avoid foreclosure. Chapter 13 also permits individuals to reschedule secured debts and extend them over the life of the plan. In addition, Chapter 13 allows the debtor to discharge more types of debts than Chapter 7 does. Further, under Chapter 7, the court may order that all of the consumer's assets be sold, whereas under Chapter 13 the debtor may be able to retain more of his or her assets. A consumer's choice between Chapter 7 and Chapter 13 is not necessarily the last word; once bankruptcy proceedings have begun, a case may be converted to a different chapter. Once converted, however, the case may not be converted back again.
#8. Does filing bankruptcy under Chapter 13 have any disadvantages over filing under Chapter 7?
The 2005 bankruptcy law increased the amount and complexity of paperwork including a "means test" needed to be filed. Gather your documents and contact us now at 303-301-2650 or at bk@alawfirmpc.com to get a fresh start .
#9. Should I file for bankruptcy?
Bankruptcy can give you a fresh start by erasing much of your debt (under a Chapter 7 liquidation) or giving you the breathing room to pay it off over five years (under a Chapter 13 repayment plan). But it's not for everyone. We can help you decide if filing for bankruptcy is right for you.