What is a Chapter 7 bankruptcy?Bankruptcy is a legal proceeding in which a person who cannot pay his or her bills can get a fresh financial start. The right to file for bankruptcy is provided by federal law, and all bankruptcy cases are handled in federal court. Filing bankruptcy immediately stops all of your creditors from seeking to collect debts from you, at least until your debts are sorted out according to the law. Chapter 7 is a way to legally discharge or cancel your indebtedness. Chapter 7 gives a person a fresh start on your economic life within certain limitations. A person can only file a Chapter 7 once every 6 years. Moreover, certain types of debts are not dischargeable. Chapter 7 is not for everyone. For example, it is not for people who run up their credit cards with the intent of shortly thereafter going into bankruptcy. Bankruptcy is not for people who deliberately charges much more than they could ever pay just to discharge those debts. Bankruptcy is not for anyone who basically acts in a dishonest or fraudulent manner. Bankruptcy is not for a parent who is trying to get their child support and alimony discharged and wiped out. Bankruptcy is designed as relief for the honest debtors, who find themselves overwhelmed in debt. The debtor is not required to prove that he ruined his life and made terrible mistakes by getting themselves in massive debt. The debtor is not required to prove that he made errors in their judgment and got themselves into financial straits. A Chapter 7 bankruptcy is also not for someone who is trying to save their home from a mortgage foreclosure. Generally, if a person is about to lose your home for any reason, a Chapter 13 should be filed. Further, Chapter 7 is not for someone who has the ability to make some reasonable payment on a month basis to unsecured creditors. For instance, if a person’s budget would allow them to pay ten cents on a dollar to creditors, they the debtor should generally file a Chapter 13 instead.
After a person’s case is filed, they will be asked to attend a "meeting of creditors." This "meeting" is actually not much of a meeting at all. Generally, no one attends, with a few exceptions. The lawyer will attend, the debtor must attend, and the US Bankruptcy Trustee will be there. The trustee is an attorney who is appointed to ask you questions about your case, which you will be required to answer under oath. The trustee then reports to the bankruptcy judge as to whether he recommends a discharge. All this may sound scary, but it is actually a brief and routine procedure. Most people are amazed at how easy it is. You will learn more of this later in the case. Naturally, your creditors may attend the meeting, but they rarely do. Once the meeting of creditors is concluded, the trustee will make his report to the court and will usually recommend a discharge. If there is a problem with the case, then it is the lawyers job to fix the case. Most of the time, a competent bankruptcy court can fix any problems that the trustee raises at the meeting of the creditors. After the trustee makes his recommendation, the court will enter a "discharge" within three months. The reason you will not be granted a discharge immediately, is that the creditors are given some time to object to your discharge, or tell the court why their particular debt should not be discharged. Again, few do take advantage of this opportunity. At the meeting of the creditors, the trustees scrutinize the debtors budget and expenses. If the debtor has more than $500 to $1,000 of disposable income after paying all of their expenses, then some trustees will request that the debtor explain some of their debts. Moreover, the trustee in rare cases will recommend that the debtor not be given a trustee if he believes that the debtor has too much disposable income. Only some trustees follow this doctrine. Some trustees are more reasonable and just make sure that the petition is accurate. However, there many trustees are creating a trend to scrutinize a debtor’s disposable income, and to analyze their expenditures on personal care items, and non-essential expenses. For instance, if a debtor lists a luxury car in his petition then some trustees may make this a major issue. An experienced bankruptcy petitioner should alert any potential client of these potential issues before filing.
What are the most common reasons for a Chapter 7 bankruptcy?The most common reasons for filing bankruptcy are:
Is it moral to file for bankruptcy?The bible teaches us to "Forgive us our debts, as we forgive our debtors." (Matthew, 6:12). If Providian, Chase, Citibank, Household and all those other credit card companies and collection agencies would be a little more forgiving, we wouldn't need bankruptcy laws, would we? The fact is, we need these laws. These laws are the first and most important line of consumer defense. It is your right to have relief, and you should have an experienced attorney on your side to make it happen successfully.
What can a bankruptcy do for me?Bankruptcy may make it possible for you to: Eliminate the legal obligation to pay most or all of your debts. This is called a "discharge" of debts. It is designed to give you a fresh financial start. Stop foreclosure on your house or mobile home and allow you an opportunity to catch up on missed payments. (Bankruptcy does not, however, automatically eliminate mortgages and other liens on your property without payment.)
What can’t a bankruptcy do?Bankruptcy cannot, however, cure every financial problem. Nor is it the right step for every individual. In bankruptcy, it is usually not possible to:
What are the different types of bankruptcy cases that I should consider?There are two major types of bankruptcy cases for the consumer.
What is a Chapter 7 (Straight Bankruptcy)?In a bankruptcy case under chapter 7, you file a petition asking the court to discharge your debts. The basic idea in a chapter 7 bankruptcy is to wipe out (discharge) your debts in exchange for your giving up property, except for "exempt" property which the law allows you to keep. In most cases, all of your property will be exempt. But property which is not exempt is sold, with the money distributed to creditors. If you want to keep property like a home or a car and are behind on the payments on a mortgage or car loan, a chapter 7 case probably will not be the right choice for you. That is because chapter 7 bankruptcy does not eliminate the right of mortgage holders or car loan creditors to take your property to cover your debt.
What is Chapter 13 bankruptcy? (Reorganization)In a chapter 13 case you file a "plan" showing how you will pay off some of your past-due and current debts over three to five years. The most important thing about a chapter 13 case is that it will allow you to keep valuable property--especially your home and car--which might otherwise be lost, if you can make the payments which the bankruptcy law requires to be made to your creditors. In most cases, these payments will be at least as much as your regular monthly payments on your mortgage or car loan, with some extra payment to get caught up on the amount you have fallen behind. You should consider filing a chapter 13 plan if you
You will need to have enough income in chapter 13 to pay for your necessities and to keep up with the required payments as they come due.
It now costs $209 to file for bankruptcy under chapter 7 and $194 to file for bankruptcy under chapter 13, whether for one person or a married couple. The court may allow you to pay this filing fee in installments if you cannot pay all at once. If you hire an attorney you will also have to pay the attorney's fees you agree to.
Where is a Chapter 7 case filed?In the office of the Clerk of the Bankruptcy Court in the district where you have lived or maintained your principal place of business for the greatest portion of the last 180 days. The bankruptcy court is a federal court and is a unit of the United States District Court.
How long does a Chapter 7 case last?A Chapter 7 case begins with the filing of the case and ends with the closing of the case by the court. If the debtor has no nonexempt money or property for the trustee to collect, the case will most likely be closed shortly after the debtor receives his discharge, which is usually about four months after the case is filed. If the debtor has nonexempt money or property for the trustee to collect, the length of the case will depend on how long it takes the trustee to collect the assets and perform his other duties in the case. Most consumer cases with assets last about six months, but some last considerably longer.
What can bankruptcy do for a person?Bankruptcy may make it possible for a person to:
What can’t bankruptcy do for a person?Bankruptcy cannot, however, cure every financial problem. Nor is it the right step for every individual. In bankruptcy, it is usually not possible to:
Is a Chapter 7 (Straight Bankruptcy) right for the debtor?In a bankruptcy case under Chapter 7, the debtor files a petition asking the court to discharge your debts. The basic idea in a chapter 7 bankruptcy is to wipe out (discharge) your debts in exchange for your giving up property, except for "exempt" property which the law allows you to keep. In most cases, all of your property will be exempt. But property which is not exempt is sold, with the money distributed to creditors. If you want to keep property like a home or a car and are behind on the payments on a mortgage or car loan, a chapter 7 case probably will not be the right choice for you. That is because chapter 7 bankruptcy does not eliminate the right of mortgage holders or car loan creditors to take your property to cover your debt
Is a Chapter 13 bankruptcy (Reorganization) right for the debtor?In a chapter 13 case you file a "plan" showing how you will pay off some of your past-due and current debts over three to five years. The most important thing about a chapter 13 case is that it will allow you to keep valuable property--especially your home and car--which might otherwise be lost, if you can make the payments which the bankruptcy law requires to be made to your creditors. In most cases, these payments will be at least as much as your regular monthly payments on your mortgage or car loan, with some extra payment to get caught up on the amount you have fallen behind. You should consider filing a chapter 13 plan if you:
A debtor will need to have enough income in chapter 13 to pay for their necessities and to keep up with the required payments as they come due.
Who pays for a person’s debts when they file for bankruptcy?When a person files for Chapter 7 no one pays the debts. When someone files a chapter 7, the creditors suffer a loss. Most of the debts discharged in a Chapter 7 are credit card debts. Credit card companies are some of the most profitable companies in the world. These credit card companies are still making billions even though millions of their debts are discharged in personal bankruptcy in the United States.
Are the names of persons who file under Chapter 7 published?When a Chapter 7 case if filed, it becomes a public record and the name of the debtor may be published by some credit-reporting agencies. However, regular newspapers do not usually report or publish the names of consumers who file under Chapter 7.
Are the Chapter 7 bankruptcy laws going to change?For the past ten years there has been constant “talk” that the bankruptcy laws were going to change. Basically, the credit card companies and banks have millions of dollars that they use to lobby the senate and the house of representatives. There was a big push to change the Chapter 7 laws in the mid to late 1990's. This time was the roaring 90's. There was a significant amount of support for bankruptcy reform because times were good. The Chapter 7 bankruptcy laws almost became law in 2002. However, very controversial abortion discharge provisions, basically killed the bills. In my opinion, as long as the country is in recession, there will be no bankruptcy reform. However, once the recession is over, it is a very real probability that there will be some type of bankruptcy reform. The new bill is called S.625 (Senate version-passed)/ HR 833 (House version). This bill would limit a consumer's bankruptcy rights severely. Some of the changes proposed may be:
It is very probable that some version of this law will be signed into law in the near future. Your friendly consumer credit lobby spends millions of dollars in lobbying costs to change the law. I suggest that if you find these changes repulsive, that maybe you should let your congressman and U.S. Senator know your feelings.
Utility services--Public utilities, such as the electric company, cannot refuse or cut off service because you have filed for bankruptcy. However, the utility can require a deposit for future service and you do have to pay bills which arise after bankruptcy is filed. Discrimination--An employer or government agency cannot discriminate against you because you have filed for bankruptcy. Driver's license--If you lost your license solely because you couldn't pay court-ordered damages caused in an accident, bankruptcy will allow you to get your license back. Co-signers--If someone has co-signed a loan with you and you file for bankruptcy, the co-signer may have to pay your debt. If you file a chapter 13, you may be able to protect co-signers, depending upon the terms of your chapter 13 plan.
Should a debtor seek consumer credit counseling before they file for bankruptcy?At the present time, there is no requirement that a debtor must enroll in a consumer credit counseling program before he files for bankruptcy. In certain situations, consumer credit counseling may be a good alternative to avoid bankruptcy. However, any person must be advised of the following factors. First, when a person goes to a credit counselor he will be asked to provide detailed income and asset data, living expenses, household information, lists of creditors and other debt information. Some counselors may ask you to sign an agreement and may even charge a fee. A repayment plan is then developed which may include reduced payments to creditors. Keep in mind, however, that most creditors do not stop charging interest (unless you have a prior agreement respecting that) and may even report negative information on your credit report. This is notwithstanding the fact that you may be current in you payment plan. Creditors may also, and most likely will, cancel your charge privileges. Credit counselors get paid by a percentage, known as a "fair share," of what is paid to the creditors, by the creditors receiving the funds. This sum usually amounts to between 0% to 15% of the payment you make to the creditor. The creditor does credit you with the full amount of the payment, however. Then why should you care what the credit counselor receives, especially if it is not coming from your share? You should care because the credit counselors have an interest in seeing that the creditors get the maximum. Credit counselors do not have a "confidential relationship" with you. They are not attorneys, who are legally obligated to protect you, and only you. A confidential relationship is created when you hire legal counsel. The attorney is obligated by law to avoid conflicts and represent only your interests. An attorney could be disciplined or disbarred from accepting payments from adverse parties, such as your creditors; something counselors routinely do. Statements made to attorneys are always confidential, if made in private (between you, your spouse and the attorney, with no one else present). Statements made to a counselor are not. Credit counseling can be good for some people. It helps many people avoid bankruptcy. However, it is an open question whether is makes much of a difference on your credit record. The new bankruptcy law may require counseling, however, for now, there is no reason to follow the mandates of a statute that may never be passed, unless you want to for your own reasons. As a side note, I would estimate that one half of my clients have first tried consumer credit counseling before they decided to take the plunge, and file for Chapter 7. Most of the time, the clients are so financially strapped, that they should have never even tried a consumer credit counseling program. The bottom line is that the debts do not go away in a consumer credit counseling program. Most of the time, the debtors could have saved themselves thousands of dollars, and enormous stress, if they would have elected to file for Chapter 7 immediately, instead of fooling themselves that they could climb out of their “mountain of debt.”
Can a debtor re-file for a Chapter 7 if he needs to do it again? Is there a limit to a person re-filing for bankruptcy?Once you receive your discharge in a chapter 7 case, you cannot file another bankruptcy and get another discharge, in a chapter 7 case unless six years have passed between the date this bankruptcy was filed and the date on which the new bankruptcy (chapter 7) is filed. This does not mean you cannot file for relief under Chapter 13 of the Bankruptcy Code, also known as a "Wage Earner Plan." You may indeed obtain substantial assistance through a Wage Earner Plan under Chapter 13.
When is the best time to file under Chapter 7?The answer depends on the status of the debtor's dischargeable debts and the nature of his nonexempt assets. The 'watchword" is pre-petition planning. The attorney can advise you, only after a full review of your individual situation. However, some general rules the debtor should follow are:
Yes, but it depends on how the business is owned, the value of your business, and other factors including what you intend to do with the business. The business itself may require bankruptcy protection; if you are a sole proprietor, or have guaranteed your business' debts, you may require bankruptcy protection for yourself, as well.
Will filing for bankruptcy make the IRS go after me?I am preparing to file for Chapter 7 bankruptcy and have been advised that the IRS will look at this as a HUGE red flag. Will filing for bankruptcy make the IRS audit me, and review my finances?I am not aware of any policies -- written or unwritten -- targeting bankrupts for audits or other IRS problems. Please keep in mind that approximately 1.5 million people file for bankruptcy each year. The IRS would quickly run out of man-power if it targeted or specially screened the tax returns of former bankrupts. In summary, the IRS will not audit a taxpayer simply because they file for bankruptcy.
Do I have to file bankruptcy on all the accounts I owe, or can I keep some?You must include all the debts you owe in your petition and schedules. You may opt to keep some debts by ““reaffirming”” the specific debt. Reaffirming is not advised. You can repay the debt voluntarily. However, I would advise a debtor not to become legally obligated to repay the debt. By signing the reaffirmation agreement, the debtor becomes legally obligated to repay the debt.
What if I forgot to include a debt on my schedule? Can I do it later?After filing the petition, if you discover that an entry is inaccurate or missing, the documents typically may be corrected by filing of an amendment. Remember, you're submitting the petition under the penalty of perjury, so take care with the initial filing. In my opinion, the most important part of the entire bankruptcy process is to make sure that the petition is as complete as possible. Quite often, the debtors are very unorganized, and they just do not take the time their entire financial picture. A debtor must provide to their lawyer a detailed list of all of their debts, and the creditors address. Ordering a credit report may enable the debtor to determine who they owe monies to. However, all debtors must be warned to not rely on a credit report, to assess who you owe monies to.
How can a person stop their creditors from harassing them?Federal law greatly protects that harassed debtor; The Fair Debt Collection Practice bars credits from harassing overwhelmed debtors. The Fair Debt Collection Practices Act ("FDCPA") gives a person specific legal rights to sue creditors who threaten or harass you, call you at off-hours, or make false representations to you including saying that they are going to attach your wages, sue or bring any kind of legal action when they are not. After a lawyer is retained, no creditor may contact you without your permission after they are advised that a lawyer represents you. You must first say that a lawyer (whoever it is) is representing you and that they should contact him/her. Give them the lawyer’s telephone number. If the creditor contacts you by any means (phone, letter, personal contact) again, NOTIFY YOUR LAWYER AT ONCE. You may have a right of action. Also, each contact that a creditor makes must contain words to the effect that: "I am _________. I am a debt collector representing ____________(creditor). Information obtained during the course of this call will be used for the purpose of collecting the debt. If the creditor has not been advising you as above, you may have a right to sue. Moreover, when you come to my office, bring your letters attempting to collect from you. They too must contain warnings such as: This is an attempt to collect a debt. Any information obtained will be used for that purpose. Unless within 30 days of your receipt of this notice, you notify us that you dispute the validity of this debt, it will be assumed to be correct. If you notify this office within thirty days that you dispute the validity of the debt, we will obtain verification of the debt or a copy of the judgment. If you request it within 30 days, we will provide you with the name and address of the original creditor (if different from the current creditor). If the letter does not state the above, or words similar or close to the above, you may also have a right of action. Lawsuits under FDCPA allow for counsel fees, damages, and costs. You should be diligent in protecting your rights. The statute of limitations for bring such actions is only one year, so don't wait to bring up the situation to the lawyer.
How long after the bankruptcy filing will the creditors stop calling?Immediately! Once a creditor or bill collector becomes aware of a filing for bankruptcy protection, it must immediately stop all collection efforts. After you file the bankruptcy petition, the court mails a notice to all the creditors listed in your bankruptcy schedules. This usually takes a couple of weeks. Creditors will also stop calling if you inform them that you filed the bankruptcy petition, and supply them with your case number. In some cases, you or your attorney should contact the creditor immediately upon filing the bankruptcy petition, especially if a lawsuit is pending. If a creditor continues to use collection tactics once informed of the bankruptcy they may be liable for court sanctions and attorney fees for this conduct.
Once a bankruptcy is filed, creditors are generally stopped from pursuing collection activities, including telephone calls and filing or continuing law suits to collect their debt. Garnishments and foreclosures can be stopped.
Absolutely, YES. Many debtors file bankruptcy immediately to stop wage garnishments. All wage orders, garnishments, etc., except for child support are vacated by the automatic stay provisions under section 362 of the Bankruptcy Code, (11 U.S.C. 362). Remember, a garnishment from Family Court Probation is not stopped by bankruptcy. The kids must eat.
Does a bankruptcy filing stop lawsuits and wage garnishments?The filing of a Chapter 7 case automatically stays or stops most lawsuits, garnishments and attachments that have been filed against the debtor. A few days after a Chapter 7 case if filed, the court will mail a notice to all creditors ordering them to refrain from any further action against the debtor. If the debtor cannot wait this long, it is permissible for him or his attorney to notify one or more of the creditors of the filing of the case. Any creditor who intentionally violates this court order may be liable to the debtor in damages. The most common actions not affected by the filing of a Chapter 7 case are criminal proceedings and actions for the collection of debts for alimony, maintenance, or support from exempt property or from property or funds acquired or earned by the debtor after the case was filed.
Does the automatic stay provisions of the Bankruptcy Code protect money in the debtor’s bank, or is it seized by the court?The debtor’s money in the bank may or may not be taken by the trustee. This entirely depends on the bankruptcy exemptions claimed. Your exemptions may be either federal or state. Most ordinary debtor's bank accounts should be exempted, but you must consult your attorney about this issue. Ordinarily, the trustee is the only party that can seize your account once you have filed your bankruptcy case with the court. A bankruptcy filing is also a great way to stop a creditor from seizing a debtor’s bank account. Quite often, a creditor will file a writ of execution that seizes all of the debtor’s money. Once the debtor’s bank account is frozen, then the creditor will have to file an application for the court to turn over these monies to the creditor. A bankruptcy filing will freeze this process, and the creditor will have to release the “freeze”, and the debtor can get back his much needed monies. Most of the time, the debtor will be able to have sufficient exemptions to keep their bank accounts. Only in very few cases, will a trustee seize a person’s bank accounts. If a debtor has too much money in a bank account, then he or she should consult with their lawyer as to whether a Chapter 13 may be a better alternative.
Will bankruptcy wipe out all my debts?Yes, with some exceptions. Bankruptcy will not normally wipe out:
Will I have to go to court?In most bankruptcy cases, you only have to go to a proceeding called the "meeting of creditors" to meet with the bankruptcy trustee and any creditor who chooses to come. Most of the time, this meeting will be a short and simple procedure where you are asked a few questions about your bankruptcy forms and your financial situation. Occasionally, if complications arise, or if you choose to dispute a debt, you may have to appear before a judge at a hearing. If you need to go to court, you will receive notice of the court date and time from the court and/or from your attorney. What is the "automatic stay" and why should I be concerned about it? What can a person do if there is a violation of the “automatic stay”? The basic purpose of the stay is to protect the debtor and his or property. The automatic stay is one of the fundamental debtor protections provided by the bankruptcy laws. It gives the debtor a breathing spell from his creditors. It stops all collection efforts, all harassment, and all foreclosure actions. It permits the debtor to attempt a repayment or reorganization, or simply to be relieved of the financial pressures that drove him into bankruptcy. If there is a violation of the automatic stay, then the debtor’s lawyer can seek sanctions against the creditor. Basically, the creditor must automatically stop all efforts to collect any debts. The bankruptcy lawyer can file a motion to obtain damages for the debtor is the automatic stay is violated. In most case, the bankruptcy court will only grant the debtor damages if the violation of the automatic stay is egregious, and the creditor was warned at least once.
What happens to property with liens on them? Are these debts also discharged?Yes, but the lien remains; and it is still subject to seizure once the case is finished. However, the following may rules are very important: Note: You can pay anybody you want after your discharge, however, few debtors do. It is important that you know the significance of your discharge order. If a debt is discharged, that creditor cannot force you to pay that particular debt. This means that the creditors cannot legally file an action against you (for that debt), continue an action they had filed before the bankruptcy, send you collection letters or harass you in any other way. If this type of harassment occurs, you may be able to sue the creditor. If a debtor has moved out of their home with the intention of having the mortgage company take possession of it, and the mortgage company does not act to take title (change the name on the deed from your name to their name) for any reason, you still have legal responsibility to maintain your property so that it does not violate local, county, state or federal laws. A person can cannot let their property deteriorate to such an extent that it becomes a danger to the community.
Can a debtor still file a Chapter 7 if they own a house?The answer is an absolute yes. You can file a case no matter what you own. A debtor can claim a very good portion of their equity under the homestead exemption. If the real estate is owned by two debtors, then two homestead exemptions can be claimed. Moreover, both debtors can also have their wild card exemptions applied to the equity in the home. In simple terms, an individual debtor can have about $20,000 worth of equity in their homes, and still qualify for a Chapter 7, and keep their homes. In a joint filing between spouses, the debtors can keep about $40,000 of equity in their homes. Another key point is that there is a cost of sale factor that is considered into assessing how much equity a debtor(s) has. Most trustees factor in a 10% cost of sale factor in determining that amount of equity that a debtor has. A Chapter 7 bankruptcy for debtor who owns a home is more involved than a straight credit card Chapter 7. The legal fees are higher. Moreover, in many cases that trustee will require that the debtor(s) obtain a real estate appraisal of the home. Sometimes, a market analysis from a local real estate agent can be good enough for the trustee. Moreover, the debtor(s) will have to produce their deed, mortgage statement, and copies of any liens to the trustee at the meeting of the creditor. Sometimes, the debtors may even have more equity than the $40,000 limit, and the cost of sale factor. However, in many cases that trust may still file a notice of abandonment of any excess equity. Every case is different. If a trustee believes that the debtors have too much equity than they will force the debtor to file a Chapter 13 instead. If a debtor can get their Chapter 7 through even if they own a home, this does not mean that the debtor can take a vacation from their mortgage payments. The mortgage on the real estate remains unaffected and valid. If the debtor stops making their mortgage payments, even for a month, the mortgagee (bank) could ask the Bankruptcy Court for relief from the automatic stay and receive permission to foreclose against the real estate. Therefore, in order to file a chapter 7 where the debtor owns real estate, the real estate equity must be exempt under state or federal law, and, the payments must be current upon filing and maintained current.
Unfortunately, mortgagees (banks) generally do not care what reasons that the debtor has for not making their mortgage payments. Banks are concerned with profits for their shareholders. Banks are not charitable organizations and will happily foreclose on any mortgagor who is delinquent, regardless of the reason. When a debtor falls behind in a chapter 7, the debtor may elect to convert the case to a chapter 13. A chapter 13 case has provisions for curing, among other things, a mortgage default over a maximum period of 60 months.
What happens if the debtor forgot to list a creditor in their bankruptcy schedules?Generally debts that are not listed in a debtor's bankruptcy schedules are not discharged. This means that the debtor will still owe the creditor even after his bankruptcy case is completed. Therefore, the debtor has a MUST list all types and manner of debt, no matter what the source. "Debts" includes any money owed or alleged to be owed to any creditor for any reason.
Can a debtor just list and discharge the “bad” debts, and keep the “good debts”?No. All debts must be listed. Even debts to people you like, or feel a special obligation. After the case is discharged, nothing prevents you from paying anyone at all. If you fail to list a creditor, you chances of a discharge are decreased, and they are eliminated for the debt you did not list.
Can filing for bankruptcy help a person get their New Jersey driver's license back?If a driver loses their license solely because they couldn't pay court-ordered damages caused in an accident, bankruptcy will allow them to get your license back. However, a Chapter 7 bankruptcy can not permit a person to wipe off their New Jersey DMV surcharges. DMV surcharges can only be partially discharged in a chapter 13. Basically, the debtor will have to pay back a small portion of the surcharges over three years. If the debtor does not own any real estate, in most cases, the debtor can only pay $50 in a wage earner plan in a Chapter 13. This will enable the debtor to wipe out the DMV surcharge. Remember, DMV surcharges are not wiped out in a Chapter 7. After the automatic stay is over, NJ DMV will continue to send out surcharges to the debtor if they only filed for a Chapter 7.
Absolutely no way. Any debtor should not use their credit cards for at least 90 days before they file. If a debtor files within the 90 day period, then a credit card company can file an adversary proceeding, and object to the debtor’s discharge. To avoid this aggravation, and additional lawyer fees, all the cards should be frozen for at least 90 days before filing. Trustees also scrutinize the petition for abuses. Beware if a debtor uses their credit to pay for a vacation, fancy clothes, or other luxury goods. If there is a gross abuse, then a credit card company can file an adversary proceeding. Moreover, the trustee may not recommend the debtor for a discharge. All debtors should not go on huge buying sprees before they file for bankruptcy. There is major trend that many credit card companies are filing more and more adversary proceedings. Most of these cases are settled. However, the credit card companies usually extract some portion of the debt as a settlement. All of this aggravation can be avoided if the debtor freezes their cards, and waits for about six months before they file. If the debtor does go on a buying spree with their credit cards, then the longer the wait before filing, then the less likely there will be problems with the case. In summary, the Bankruptcy Courts only like “HONEST” debtors. The trustees and the judges do like to give discharges to people who run up their credit cards right before they file. Moreover, the judges and the trustees do no like to grant discharges to people who has amassed credit card debts on fancy vacations, expensive clothing, and restaurants. If this is your situation, then you should wait at least six months after any credit card transaction before you file. A word of caution for all gamblers. Credit card cash advances for gambling debts can cause a mess. Sometimes a credit card company may file an adversary complaint to object to the discharge of this cash advance. Some courts are sympathetic to debtors who are addicted to gambling. Others courts are not. If you are filing for bankruptcy primarily because of gambling debts make sure that you hire a very experienced consumer bankruptcy lawyer, who has handled gambling adversary complaints before. Gambling debts can really turn a simply Chapter 7 case into a mess.
This is one of the least known advantages of filing for bankruptcy protection. Many people do not know that the bankruptcy laws do provide certain protection against federal and state tax obligations. It is possible to discharge some tax obligations, depending on a number of factors, including the type of tax owed, the age of tax obligation, and whether you filed a tax return. Some taxes can be discharged, and we have been successful on a many occasions. If this is one of your concerns, you need to see an experienced Attorney to determine whether your tax obligations can be discharged in bankruptcy.
No! The Bankruptcy Code has long prohibited debtors from discharging liabilities incurred on account of their fraud, carrying forth a basic policy of affording relief only to an "honest but unfortunate debtor." Congress did not favor giving perpetrators of fraud a fresh start (by allowing them to wipe out their debts in bankruptcy) over the interest in protecting victims of fraud when it wrote the Bankruptcy Laws. Accordingly, Section 523(a)(2)(A) of the Bankruptcy Code excepts from discharge in bankruptcy "any debt . . for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by . . . false pretenses, a false representation, or actual fraud." 11 U.S.C. §§ 523(a)(2)(A).
Can a debtor be discriminated against for filing bankruptcy?No. 11 U.S.C. sec. 525 prohibits governmental units and private employers from discriminating against you because you filed a bankruptcy petition or because you failed to pay a dischargeable debt. However, be advised that many employers now routinely look at a person’s credit report before they are hired. Some of my debtors have advised me that they have lost jobs because their potential employer was concerned with their credit report. Some potential employers believe that filing bankruptcy shows poor character. Please be further advised that many landlords also carefully scrutinize a potential tenant’s credit report before they sign a lease. Many landlords won’t touch a person if they have a bankruptcy on their credit report. A person who files for bankruptcy should always have a secure lease before they file for bankruptcy. |
