Latest Bankruptcy Interview Questions Part – 2
I’m Married, Can I File By Myself?
Yes, but your spouse will still be liable for any joint debts. If you file together you will be able to double your exemptions. In some cases where only one spouse has debts, or one spouse has debts that are not dischargeable then it might be advisable to have only one spouse file. If the spouses have joint debts, the fact that one spouse discharged the debt may show on the other spouses credit report.
Can Filing Bankruptcy Stop Bill Collectors From Calling?
Yes. The automatic stay prevents bill collectors from taking any action to collect debts.
How Long After Filing Will The Creditors Stop Calling?
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.
Can I Erase My Student Loans By Filing Bankruptcy?
Generally, student loans are not discharged in bankruptcy. In 11 U.S.C. sec. 523(a)(8) there are two exceptions to this general rule:
The student loan may be discharged if it is neither – Insured or guaranteed by a governmental unit, nor
– Made under any program funded in whole or in part by a governmental unit or nonprofit institution.
The student loan may be discharged if paying the loan will “impose an undue hardship on the debtor and the debtor’s dependents.”
Student loans more than 7 years old used to be dischargeable under certain circumstances, but this provision was removed by an appropriations bill passed in October of 1998.
Whether an exception applies depends on the facts of the particular case and may also depend on local court decisions. Even if a student loan falls into one of the two exceptions, discharge of the loan may not be automatic. You may have to file an adversary proceeding in the bankruptcy court to obtain a court order declaring the debt discharged.
Where Do I File If I Haven’t Lived In The Same State Or District For The Last Two Years?
If you haven’t lived in your current state for 91 days you must wait until you have lived there for 91 days and then file in your current state.
If you lived in your current state for more than 91 days but less than two years, you will file in your current state but use the exemptions from where you lived for majority of the 180 day period immediately previous to the 2 year period before you filed.
If you bought your home within the last 40 months and/or haven’t lived in your current state for the last 2 years then your homestead exemption may be limited.
If I Am Going Through A Divorce How Will My Ex-spouse Filing Bankruptcy Affect Our Divorce Settlement?
Alimony, maintenance, and/or support are protected from discharge. Divorce decrees and separation agreements are covered by 11 U.S.C. Section 523(a)(15).
This section states that these debts are not dischargeable unless:
the debtor does not have the ability to pay such debt from income or property of the debtor not reasonably necessary to be expended for the maintenance or support of the debtor or a dependent of the debtor and, if the debtor is engaged in a business, for the payment of expenditures necessary for the continuation, preservation, and operation of such business;
or discharging such debt would result in a benefit to the debtor that outweighs the detrimental consequences to a spouse, former spouse, or child of the debtor.
What Should I Do If A Creditor Demands Payment Of A Debt After I File My Case?
Most efforts by a creditor to collect a pre-petition debt (one that you owe as of the filing of your case) or to repossess your property without the permission of the bankruptcy court are violations of the automatic stay. If a creditor repossesses any property, such as your car, after you file for bankruptcy, the creditor must return the property to you.
The court may punish a creditor who knowingly violates the automatic stay and the creditor is liable to the debtor for harm caused. If you did not list a debt on the schedules filed with the court, the creditor may not be on notice of the bankruptcy. Therefore, you should inform the creditor of your bankruptcy and request that the creditor stop the collection efforts.
If you are represented by an attorney, you should give the creditor your attorney’s name and telephone number. If you are not represented by an attorney, you should give the creditor additional information about the case, the date of filing, the court in which the case was filed and the case number.
If improper collection action continues, you should consult with an attorney, notify the trustee or seek protection from the court.
What Should I Do If I Discover That I Forgot To List A Creditor In The Bankruptcy Schedules?
You should notify your attorney and provide him or her with all the information necessary to complete the schedule (the amount of the debt, the type and value of any collateral, and the name and address of the creditor). This is very important, because if you do not list a debt on your schedules, that debt might not be discharged. That means you will be required to pay the debt in full after bankruptcy.
If an omitted creditor demands payment of the debt, you should inform the creditor of the bankruptcy, as discussed below.
Do I Have To List All Creditors On The Bankruptcy Schedules?
Yes. You must list all your debts, with the name and address of the creditors. This is so creditors receive notice of the bankruptcy and get their fair share of any money paid to creditors. You may think that you should omit a creditor because you want to continue to pay the debt.
This would violate the law, and it is unnecessary because you can always choose to pay a debt voluntarily, even though the debt has been discharged and there is no legal obligation to make payment. However, creditors are prohibited from taking any action to collect discharged debts.
Must I Produce Tax Returns Before And After My Bankruptcy?
Yes. You must provide the trustee and/or any creditor with copies of any federal tax return that you filed for the year prior to filing. If you do not comply with this request, the court may dismiss your bankruptcy case.
You must also file copies of any federal tax returns filed during the case with the bankruptcy court.
Any taxing authority may request dismissal of a bankruptcy case if you fail to file all required tax returns.
Are There Additional Documents And Other Requirements In A Chapter 13 Case? What Is Required In The Chapter 13 Plan?
If you are filing a chapter 13 case, rather than a chapter 7, in addition to the documents mentioned above, you must file a plan that describes how much you will pay your creditors and over what time period.
Your plan must provide that you pay creditors at least what they could have received in chapter 7 liquidation case, which basically means creditors must receive payments equal to the value of your non-exempt assets. Your lawyer will prepare your plan.
In addition, the plan must provide that you contribute all your “disposable income” to the plan. Disposable income is the income above what is necessary for the support of you and your family. However, in many cases the means test formula determines that amount.
The means test is a very complicated test, but essentially requires that you average your income over the past six months (from any source including regular gifts from family members), then deduct a series of allowed expenses, and see what is left to pay creditors. You will need an attorney to complete this analysis.
The chapter 13 plan lasts until the earlier of you pay your debts in full or the end of a three- to five-year period. If your income is below your state’s median income, the maximum plan period without court approval is three years. If your income is not below your state’s median income, creditors may be able to insist that the debtor pay a five-year plan.
Within 30 days of filing your petition, you must begin making payments under your plan. You make the payments to a trustee, who distributes the payments to the creditors.
Like in a chapter 7 case, after filing the bankruptcy petition, you must attend a creditors’ meeting (also known as a 341 meeting, named after the section of the bankruptcy law that requires the meeting). The chapter 13 trustee will conduct the meeting and will question you under oath about the paperwork you filed in your case.
This creditors’ meeting will last longer than a meeting in a chapter 7 case. The trustee will likely question you about your income and your expenses, and may also require additional documentation at the meeting.
After the meeting of creditors, you, the chapter 13 trustee, and those creditors who wish to attend will come to court for a hearing on your chapter 13 plan. If there are no problems, the court will approve (“confirm”) your plan.
After completing payments under the plan and completing any financial counseling required, you will receive a discharge of any debts not paid under the plan.
What Will Happen In My Chapter 7 Case After I File All These Documents?
Chapter 7 cases are pretty simple for the most part. In most cases, you will attend one creditors’ meeting and just wait for your discharge notice to come in the mail.
The bankruptcy Trustee runs the creditors’ meeting, which is also called a 341 meeting (named after the section of the bankruptcy law that requires the meeting), and will question you under oath about all the information contained in your bankruptcy documents.
If you and your spouse file a Joint Petition, you must both attend the creditors’ meeting and answer questions. It is important to cooperate with the trustee and to provide any records or documents requested.
In a simple case, the meeting will usually last just five minutes or so. While all creditors may attend, very few actually do. Be sure to bring a form of identification to the meeting, as well as proof of your Social Security number (usually your Social Security card). The trustee may ask you to provide additional documentation during the meeting and give you a few days to produce it.
The discharge notice will arrive in the mail about 60 days after you attend the creditors’ meeting. This piece of paper is proof that most of your debts have been discharged. You should keep it in a safe place.
What Documents Do I Need To File In A Chapter 7 Case?
Your lawyer will prepare the forms that you must file in a chapter 7 case. To prepare those forms, your lawyer will need certain information from you. The information you should take with you to your lawyer is listed below.
Information to Take With You When Consulting a Bankruptcy Attorney
A copy of every bill or letter you have received from a collection agency;
A copy of any lawsuit or pleading you have received in a case in which you are involved;
Two pay stubs representing an average pay period (include pay stubs for your spouse, even if he/she is not filing bankruptcy with you);
Deeds to real estate in which you have any (even a partial) interest (including real estate you are purchasing or that you already own);
The original or memorandum title for any cars, trucks, trailers, boats, motorcycles, mobile or motor homes you own or are purchasing, or other documents showing the value of your assets;
Appraisals of your home, jewelry, etc., if you have them;
Any policies of life insurance you have on your life, and/or the life of your spouse or children (where possible, you should contact the agent who sold you the policy and find out if the policy has any “cash surrender value.” If your policy has “cash surrender value”, please provide your attorney with that value); and
Income Tax Returns filed in the previous two years.
You need to file these forms, all of which should be prepared by an attorney:
the bankruptcy petition;
a list of creditors;
a list of assets and liabilities;
a list of current income and current expenditures;
a statement of your financial affairs;
a certificate from the attorney or bankruptcy petition preparer (if there is one) indicating that you received a notice describing the different bankruptcy chapters and the services available from the credit counseling agencies as well as a statement specifying that anyone who knowingly or fraudulently conceals assets or makes a false statement under oath is subject to fine, imprisonment or both (if no one assisted you, then you must file a certificate that such notice was received from the court and read by you);
copies of all pay stubs received by you within 60 days before filing;
a statement of your monthly net income itemized to show how it is calculated; and
a statement disclosing a reasonably anticipated increase in income or expenditures over the following 12 months.
If you fail to file all information noted above within 45 days of filing the petition, the court will dismiss your case. If your case is dismissed, you will lose the benefit of the automatic stay and your creditors can resume their collection efforts.
You will also have to file the following documents with the court. Again, your lawyer will help you with these.
if you have property that secures a debt, such as a car or home, a Statement of Intention stating whether you plan to keep or give up the property;
a certificate from the approved non-profit budget and credit counseling agency that describes the services provided to you and a copy of the debt repayment plan, if any, developed by that agency;
a record of any interest that you have in an individual retirement account; and
an analysis of the means test.
If I Decide To File For Bankruptcy, What Do I Have To Do Before I File?
In order to be eligible to file bankruptcy, you must receive credit counseling within the 180 days prior to filing. Specifically, the law requires you to receive, from an approved agency, a briefing outlining the opportunities for credit counseling and help with a budget analysis.
You may do this alone or in a group, and in person, on the phone, or even on the Internet. If, due to an emergency, you are unable to obtain credit counseling services from an approved agency during a 5-day period, the court may excuse the requirement temporarily but you still must fulfill it within 30 days (or in some instances 45 days) after filing.
If you use a bankruptcy attorney, he/she will most likely be able to help you complete this requirement.
You can find a list of approved non-profit budget and credit counseling agencies at the office of the United States Trustee or Bankruptcy Administrator, at the bankruptcy court Clerk’s office, or online at the links we provide under Resources.
Can I Obtain Bankruptcy Protection Again If I Have Filed A Bankruptcy In The Past And Am Now Falling Behind In Payments Again?
Yes, you can file again, unless you have been in bankruptcy within the past six months and either:
your case was dismissed because you did not follow the orders of the bankruptcy court or did not show up in court when you were supposed to; or
you asked the court to dismiss your case after a creditor moved for relief from the Automatic Stay.
If you have been in bankruptcy within the past year, you may not get the full protection of the Automatic Stay. Because the automatic stay protects you from your creditors after you file a bankruptcy case, it might not be worth it for you to file for bankruptcy if the automatic stay will not apply. Your lawyer can tell you if it makes sense for you to file for bankruptcy if you have been in bankruptcy within the past year.
As explained above, the bankruptcy Discharge gives you your fresh start. But if you have received a bankruptcy discharge in the past, you may not be eligible for another discharge right now.
If your last bankruptcy was a chapter 7 and:
you filed within the last four years, you will not receive a Chapter 13 discharge or a Chapter 7 discharge if you file today;
you filed within the past eight years, you will not receive a Chapter 7 discharge if you file today.
If your last bankruptcy was a chapter 13 and:
you filed within the past two years, you will not receive a Chapter 13 discharge if you file today;
you filed within the past six years, you will not receive a Chapter 7 discharge unless you paid your creditors at least 70% of what they were owed in your Chapter 13 plan.
your lawyer can tell you whether it makes sense to file for bankruptcy even if you cannot receive a discharge.
How Much Does It Cost To File Bankruptcy?
The current filing fee for a chapter 7 case is $306 and for a chapter 13 case is $281. Some courts also impose an additional administrative fee. You may pay the filing fee in installments. The court may waive the filing fee in a chapter 7 case if your income is below specified levels and the court finds that you cannot pay the filing fee in installments.
You should hire an attorney to assist you with filing bankruptcy. Attorneys usually charge a fixed fee for certain services in a bankruptcy case and the fees typically differ depending on the chapter under which you file. Your lawyer may request payment up front, especially if you are filing for chapter 7.
Do All Debts Get Discharged?
No, not all debts will be discharged through the bankruptcy, even if you have followed all of the Bankruptcy Code’s rules during your case. First, a bankruptcy case only discharges debts that you owed and listed at the time you filed the case, not those you incurred after filing the case.
In addition, even after bankruptcy, you will have to pay debts that are not discharged. Non-dischargeable debts include:
debts for income and property taxes
debts to creditors you did not list in your bankruptcy paperwork
domestic support obligations such as alimony and child support debts
fines payable to any governmental unit, such as a city or state
restitution imposed on you as part of a criminal sentence
student loans
Other debts that may not be discharged include debts you may have incurred through fraud or by willful or malicious actions. An example of a debt incurred by fraud is a loan you obtained when you knew you could not repay. Some credit card use immediately before bankruptcy may be considered fradulent, especially if you use the card to pay for “luxury” goods or services, such as a vacation. If the creditor does not ask the court to rule on these debts, they will be discharged.
What Is A Discharge?
If a debt is discharged, you no longer have an obligation to pay the debt, and the creditor may not make any effort to compel you to repay. However, if some other person (such as a relative or friend) has co-signed or guaranteed your loan, his/her obligation is not discharged.
In addition, if you have property that is collateral for a loan, the creditor may still be able to repossess that property if you do not repay the loan.
How Does Bankruptcy Help Me In The Short Run?
The moment you file for bankruptcy, you are protected from your creditors. The Automatic Stay stops all collection efforts against you and against your property. Creditors must stop calling you and sending letters to you. If a creditor has already sued you, that lawsuit must stop. The automatic stay also prevents creditors from repossessing your property and from foreclosing on your home.
What Is A Reaffirmation Agreement And How Does It Work?
A reaffirmation agreement is an agreement providing that you will pay a creditor’s debt even though the debt would otherwise be discharged in bankruptcy. Your creditor must agree to the reaffirmation, so while the debt can be renegotiated, but most reaffirmation agreements simply require you to pay the debt as originally agreed.
People usually reaffirm a debt so that they can keep property that they gave as collateral for the debt. Thus, most reaffirmation agreements deal with secured debts, and chapter 7 debtors enter them to keep the creditor from repossessing or foreclosing on the property securing the debt.
A valid reaffirmation agreement puts you under a legal obligation to repay the otherwise dischargeable debt. If you default on the payments required under the reaffirmation agreement, the creditor can repossess or foreclose on the property and seek a personal judgment against you.
In order for a reaffirmation to be valid, you and your creditor must sign the agreement and file it with the court before you receive a discharge. In addition, either your attorney or the court must determine that the agreement does not impose an “undue hardship” on your family.
The Bankruptcy Code contains many other requirements for reaffirmation agreements. To see there requirements, you can look at the reaffirmation agreement form here.
If you and your creditor do not comply with all the requirements for a reaffirmation, the agreement may not be binding. In that event, you would have no personal obligation to make payments under the agreement.
As a rule, you should think very carefully about whether to reaffirm debt, as this limits your bankruptcy discharge.