Bankruptcy FAQ
Frequently Asked Bankruptcy Questions
What is bankruptcy?
Who can file a Chapter 7 bankruptcy?
What is the general process in Chapter 7 bankruptcy cases?
What information and documentation should I have available for my initial consultation with the attorney?
Will bankruptcy stop abusive or harassing creditor calls?
How long will I have to wait before the creditors stop calling?
Will my employer, landlord, or friends find out about my bankruptcy?
Can my employer fire me for filing bankruptcy?
Does my spouse also have to file bankruptcy if I wish to file?
Can I keep some credit cards to use after bankruptcy?
Will I have to go to court?
How can I best prepare for filing bankruptcy?
Do I have to disclose all of my assets?
I've heard that I have to attend a Credit Counseling class in order to file bankruptcy. Is this true?
Are there any other education requirements that I must complete to receive a discharge of my debts?
Does a bankruptcy discharge or eliminate all of my debts?
Will bankruptcy stop a wage garnishment?
Will bankruptcy stop foreclosure?
Will bankruptcy stop an eviction?
Will bankruptcy remove a lien?
I co-signed for another person's debt, or someone co-signed for my debt. How will bankruptcy affect that loan?
Are my student loans dischargeable in bankruptcy?
What if I do not list a creditor on the bankruptcy papers?
Bankruptcy is a process that uses both federal and state laws to help individuals and businesses eliminate or repay their debts under the protection of the bankruptcy code.
Who can file a Chapter 7 bankruptcy?
Almost any individual, partnership, or corporation may file a chapter 7 bankruptcy petition if he, she, or it resides, has a domicile, a place of business, or property in the United States.
If you were granted or denied a Chapter 7 discharge in a prior case within the last 8 years, you might not be entitled to receive a discharge in a subsequently filed Chapter 7 bankruptcy in California
What is the general process in Chapter 7 bankruptcy cases?
In a Chapter 7 bankruptcy case, we will file several forms with the bankruptcy court disclosing your personal and real property, your income and expenses, debts and property transactions. The Bankruptcy Court will appoint a person called a "Trustee," who is assigned to oversee your case.
About 30 days after your case is filed, we will accompany you to the "Meeting of Creditors" where the Trustee reviews your case, verifies your identity, and may have a few basic questions.
Despite the name, creditors rarely attend. And, because your petition and accompanying schedules are prepared properly and thoroughly reviewed by experienced attorneys, the meetings typically last only a few minutes and should be complete with just the one conversation with the Trustee. About 3 to 5 months later, you should receive a notice from the court that all debts that qualified for discharge were discharged.
What information and documentation should I have available for my initial consultation with the attorney?
1. A basic list of creditors setting forth at least a general idea of who your creditors are and how much you owe. If we determine together that bankruptcy is the right option for you, we will help you get a copy of your credit report that will have a more complete list of creditors.
2. A copy of your most recent pay stub showing net and gross income and year-to-date earnings. If you are self employed, please prepare at least a simple or estimated month-to-month Profit and Loss statement for the past six (6) months.
3. Information about your assets including real estate, vehicles, financial accounts, retirement accounts, business interests, trusts, etc.
4. Copies of all judgments and lawsuits and liens pending against you.
5. If you are married and filing a separate case, a copy of your spouse's paycheck stub showing net and gross income.
Will bankruptcy stop abusive or harassing creditor calls?
When we help you file for bankruptcy, an "automatic stay" immediately goes into effect and is enforced. The automatic stay prohibits virtually all creditors from taking any action to collect the debts you owe them unless the bankruptcy court lifts the stay and lets the creditor proceed with collections.
As an added bonus, once you have retained Fenn Law Firm even simply to begin the process of filing bankruptcy, you can immediately begin referring creditors to us. Upon doing so, by law, the creditors must cease their harassing calls.
How long will I have to wait before the creditors stop calling?
Once a creditor becomes aware of a filing for bankruptcy protection, it must immediately stop all collection efforts. Within a few days of filing your bankruptcy petition, the court mails a notice to all the creditors listed in your bankruptcy schedules. Creditors will also stop calling if you inform them that you filed the bankruptcy petition and provide them your case number.
In cases where a creditors need to be notified immediately of the bankruptcy filing, we will contact the creditor ourselves upon filing the bankruptcy petition, especially if a lawsuit, garnishment, or foreclosure is looming or in place. If a creditor continues to use collection tactics once informed of the bankruptcy, it may be liable for court sanctions and attorney's fees for this conduct.
Will my employer, landlord, or friends find out about my bankruptcy?
Bankruptcy petitions are public records. However, under normal circumstances, unless your employer, landlord, or friend is a creditor, they will not know you filed a bankruptcy.
Can my employer fire me for filing bankruptcy?
No. The law prohibits government units and private employers from discriminating against you because you filed a bankruptcy petition or because you failed to pay a dischargeable debt.
Does my spouse also have to file bankruptcy if I wish to file?
No. In some cases where only one spouse has debts, or one spouse has debts that are not dischargeable, it might be advisable to have only one spouse file.
Can I keep some credit cards to use after bankruptcy?
Under some circumstances you may be able to keep some credit cards if the creditor agrees; however, it is the exception rather than the rule.
There are many factors that must be considered, including the credit card balance at the time of the bankruptcy, what terms the credit card company is willing to accept and your ability to pay the present and future credit card debt.
Do not despair! Many clients receive offers for new credit cards and loans while they are still in the middle of the bankruptcy!
Probably not in the way you're imagining it. About 30 to 40 days after filing the bankruptcy petition, you will have to attend a hearing where you will meet with a bankruptcy trustee. This hearing is called the First Meeting of Creditors. The trustee is not a judge, but an individual appointed by the United States Trustee to oversee bankruptcy cases. Most of the time, Trustees are attorneys or CPAs.
At the First Meeting of Creditors, the trustee will ask you questions under oath regarding the content of your bankruptcy papers, your assets, debts, and other matters. Creditors will also be permitted to ask you questions, although in the vast majority of cases, no creditors will attend the meeting.
If we are retained to represent you, we will appear at the First Meeting of Creditors with you, and in the vast majority of our cases, only one hearing will be required.
How can I best prepare for filing bankruptcy?
First, you should consult with an experienced bankruptcy attorney. An attorney can help you plan for the bankruptcy, decide when to file a bankruptcy petition, or even avoid filing for bankruptcy. Here are a few useful do's and don'ts:
1. If you intend to file bankruptcy, you should stop using your credit cards. Each time you use credit, you are promising to pay, but when you use credit on the eve of filing a bankruptcy, your promise to pay appears to be hollow and can be regarded as fraudulent. If you borrow money with the specific intent of discharging the debt in bankruptcy instead of paying it back, the debt may not be dischargeable.
2. Don't transfer your assets to friends, family, and business associates to protect the assets from your creditors. The transfer may be considered a fraudulent conveyance. If it is, you may lose both the property and your right to a bankruptcy discharge.
3. Don't destroy any business or financial records. You can lose your right to a bankruptcy discharge as a result.
4. Carefully choose the creditors you pay. Some creditors, such as landlords, secured creditors, and some utilities should be paid under most circumstances. If you pay a credit card debt that eventually will be discharged, you may be throwing good money at bad debt. During the initial consultation and beyond, our attorneys and staff will be able to advise you on whom to pay or avoid paying.
Do I have to disclose all of my assets?
Yes. If you knowingly and fraudulently conceal an asset from the court, you have committed a felony and can be fined up to $500,000 imprisoned for up to five years, or both.
In addition, the court can deny you your discharge or dismiss or convert your bankruptcy proceeding.
I've heard that I have to attend a Credit Counseling class in order to file bankruptcy. Is this true?
Yes. Under new bankruptcy legislation enacted in 2005, before you can file a petition under the bankruptcy code under either Chapter 7 or Chapter 13, you must seek Credit Counseling first. The course can be completed over the internet and should take no more than an hour.
Are there any other education requirements that I must complete to receive a discharge of my debts?
Yes. Under new bankruptcy legislation enacted in 2005, before the court will sign off on your discharge, you must attend a course on financial management. Like the Credit Counseling class, the course in financial management can be completed online; however, this second course tends to be slightly longer - maybe an hour and a half.
Does a bankruptcy discharge or eliminate all of my debts?
Generally speaking, the following debts will not be discharged: recent income taxes, spousal and child support, debts arising out of willful misconduct and/or malicious misconduct by the debtor, liability for injury or death from driving while intoxicated, student loans, criminal fines and penalties.
Secured debts generally must be paid if the debtor intends to retain the collateral securing the debt. If they are not paid, the creditor will usually take the necessary legal steps to recover the property.
Will bankruptcy stop a wage garnishment?
Yes. However, certain garnishments, such as garnishments for spousal or child support will remain in place.
Will bankruptcy stop foreclosure?
Temporarily, yes. However, the lender is entitled to seek relief from the automatic stay to allow it to continue foreclosure proceedings. This process typically takes a month or two if the credit chooses to go this route.
Usually, to keep a home that is in foreclosure, the debtor will have to reach an agreement with the lender and resume making payments. Chapter 13 has some very helpful mechanisms for those trying to keep their home and catch up on past due payments.
Will bankruptcy stop an eviction?
It may delay it, but the owner is entitled to possession of the property and will be able to resume eviction proceedings with court approval or after the discharge. If the owner already has a judgment for possession, the automatic stay will have no effect.
Filing a Chapter 7 solely to avoid an eviction might be considered an abuse of the bankruptcy law.
If the Bankruptcy Court finds that this is true, then the court can immediately dismiss the bankruptcy and impose other legal and monetary sanctions on you.
Will bankruptcy stop a judgment?
Yes. Most collection actions are stopped by bankruptcy.
Will bankruptcy remove a lien?
Not automatically. Certain liens may be removed, but a motion must be filed with the court. The procedures are complex and usually require the assistance of an experienced attorney.
Are my student loans dischargeable in bankruptcy?
Generally, student loans are not discharged in bankruptcy. There are at least some theoretical exceptions to this general rule; however, the exceptions are so narrow so as to make it nearly impossible for anyone to take advantage of them.
The facts of the particular case will determine dischargeability. If a student loan falls into one of the exceptions, discharge of the loan is still not automatic. The debtor should file an adversary proceeding (basically a lawsuit within the bankruptcy process) in the bankruptcy court to obtain a court order declaring the debt discharged.
I co-signed for another person's debt, or someone co-signed for my debt. How will bankruptcy affect that loan?
If the debt is a dischargeable debt then YOU, the co-signer, will not have to pay it. However, the other person who either acted as co-signer or as the primary borrower will become primarily and completely responsible for the debt.
What if I do not list a creditor on the bankruptcy papers?
You are required to list all creditors. If you intentionally omit a creditor from your schedules, you may lose your bankruptcy discharge. However, if a creditor is not known to exist at the time the schedules are filed, you may amend your schedules at any time the case is open to add an additional creditor.
