Bankruptcy Advice: Bankruptcy FAQs
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How long does the bankruptcy process take?
Typically if you're filing chapter 7 bankruptcy the process is a little more simple if you have no assets or have a limited number of assets. It's the liquidations phase that would delay the process, which could stretch for up to six months. However if not assets are involved then the process would mostly take no more than three months to get a discharge.
The process is different for chapter 13 cases, where you must present a plan for repaying your creditors. The bankruptcy trustee will demand that the plan be between 36 and 60 months. This is the period in which you will have paid the debt you owe under the new plan you have provided.
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What is the best way to find out if I qualify for bankruptcy?
The best way to figure this out is to take the means test, which is best done by an experienced bankruptcy attorney. The means test provides a set of formulas that measure your financial state in terms of debt to income to the median income in the state where you are filing, this helps the attorney determine if you qualify for bankruptcy and also which bankruptcy chapter you need to file under.
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What documentation do I need to file bankruptcy?
Here's a basic list of things you'll need to provide your attorney, though more information may be required depending on who you file with and what state you live in.
Copies of pay stubs for up to a month, Bank statements for a month as well, Tax returns for at least the last three years, An accurate list of all your debts owed with creditor's names and addresses, An accurate list of assets.
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What is community property and the bankruptcy estate?
Not all states abide by the community property law, some states use the term joint properties for anything that's owned by a husband and wife in which case they're also allowed to have separate assets. What this means is that in community property states, all assets in a marriage are considered community property meaning that when you file bankruptcy without your spouse even your spouse's assets will be included in the bankruptcy estate. In a non-community property state, only jointly held assets are used in the bankruptcy estate, while the individually held assets can be considered exempt. Be sure to contact your attorney for a more detailed explanation on this rule.
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How do I file bankruptcy if I own a business?
This all depends on why you're filing bankruptcy, is your business the reason why you need to file bankruptcy? You can file chapter 13 for your personal debts, but if these are debts that you incurred from your business expenses or if your business is carrying more debt than profit then you'd want to file chapter 11 bankruptcy for your business.
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What is the automatic stay and how does it protect me?
The automatic stay goes into effect the moment your petition is filed. This in essence is what bankruptcy protection is, it protects you against your creditors. They can no longer attempt to collect payments, this includes collections agencies, any attempts to repossess or foreclose any property is also prohibited by law. Typically creditors will know better than to make any attempts to collect once you're in the process of bankruptcy for they know they could be liable.
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What is the effect of the bankruptcy law changes of Oct 2005?
The changes to the bankruptcy code in 2005 made it more difficult for self filers to be successful at filing their own petitions, now there are additional rules and paperwork to file when your petition is submitted. Because average citizens are not thoroughly familiar with the bankruptcy code it is easy to make mistakes and under the new laws penalties can be given if a petition is denied because of errors or if it is found to contain fraudulent information. If fraud is determined a jail sentence can also be given. The additional paperwork required to file these cases today also means higher fees when filing with an attorney.
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Why do I need a lawyer and why do they cost so much?
It's certainly still possible to successfully file your own case, granted that you familiarize yourself with the laws in the bankruptcy code, just remember that you will need to pay close attention and prepare your case with care to avoid being denied. A bankruptcy attorney will be a lot more effective in filing your case for you, you will be relieved of the burden of document preparation and filing, you simply provide the information and let the attorney worry about the rest. It's also important to hire an experienced attorney to handle your case.
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How do I know whether to file chapter 7 or chapter 13?
This mostly depends on whether you have disposable income or not, once you take the means test it will be easier to determine which chapter fits your situation best. If you are unemployed or have very little income in comparison to your unsecured debts then more than likely you'll file under chapter 7. If you have stable employment and it is feasible to repay your creditors under a new plan with lower interest rates and lower balances then chapter 13 may be the best solution. Contact your attorney and make an appointment to take the means test.
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Can I keep my bankruptcy file secret?
You are certainly not obligated to disclose having filed for bankruptcy to anyone, unless it is required when you apply for employment, although most institutions for which you'd file an application with will be able to to check your credit and do a background investigation which will reveal your bankruptcy file. No need to deny it, besides your bankruptcy file is public record, anyone who needs to find out can in fact find out and very easily.
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Can I be fired from my job for filing bankruptcy?
Definitely not! U.S.C. Sec. 525, prohibits employers from discriminating against anyone who has filed for bankruptcy.
