1. What is Bankruptcy?
Bankruptcy is a court proceeding which allows people who owe more money than they can currently repay, to either repay a portion of the money over time (Chapter 13) or to have their bills and debts discharged or eliminated in whole or in part (Chapter 7).
The Bankruptcy Code and Federal Rules of Bankruptcy Procedure determine which chapter one is eligible to file, which debts can be eliminated, how long repayment must continue, which possessions can be kept, etc. A Debtor must abide by these federal laws and rules.
The filing of a Chapter 7 Bankruptcy is done in order to give Debtors a "Fresh Financial Start" in life. In a Chapter 7 Bankruptcy case, a Debtor may be required to surrender certain personal property or assets to a Trustee, subject to the "Exemptions" allowed under Florida State law. Most of our clients do not have to surrender anything to the Trustee. We look for all legal exemptions available and apply them to your case.
2. Can bill collectors keep calling after a Bankruptcy case is filed?
After a Debtor has filed a case (i.e., "Petition"), creditors must stop all collection efforts against the Debtor for a period of time, unless they get permission from the bankruptcy court to continue. This protection from collection efforts is referred to as the "automatic stay."
3. Do you need an attorney to represent you in a Bankruptcy case?
Every person or couple filing for Bankruptcy has a right to represent themselves. However, the use of an attorney is strongly recommended. The Bankruptcy Law is extremely complex and difficult to understand. A person's lack of knowledge or ignorance of the law may cost him or her far more than an attorney's fee. Individuals who choose to represent themselves will not be able to obtain legal advice from court personnel or from the Trustee appointed to their case. Paralegals and form typists can not advise you about the law. In short, no, you don't need a lawyer to represent you in your bankruptcy but in the end it may be a lot less costly to hire one.
4. How much does filing a Bankruptcy cost?
The court charges a $304 filing fee to file an individual or joint Chapter 7 Bankruptcy case. The law requires that a debtor's education class be taken before filing the case and that a second educational class be taken after filing but before the discharge is entered. Each class costs approximately $50. In my office we will also want to run a Credit Bureau Report, to make sure that all of your debts are included in your case, and that costs about $50. Total costs are approximately $450 exclusive of the attorney's fees. The fees by the Slonaker Law Firm for a Chapter 7 case are extremely reasonable and are based upon the facts and issues of the case. Typically the fees charged by the Slonaker Law Firm range between $995 and $1995, which are in addition to the costs. At the Slonaker Law Firm, we understand the difficult times of the economy that we are all facing and we do work out payment plans for our clients in these hard economic times.
5. How can I get the money for the Bankruptcy costs and fees?
You may want to consider not paying your consumer debts while still making payments on property you have financed and are going to keep such as your home and car. It makes no sense to keep paying on bills you are going to discharge in the Bankruptcy. Then, use the money that you would have paid on those bills to fund your Bankruptcy case. However, if you are planning on keeping a financed item, such as a car, then you must continue making the required payments. If you are planning on letting your home or auto go in the bankruptcy then you can stop making those payments as well.
6. What services can a Bankruptcy Petition Preparer provide?
Services of a paralegal or a petition preparer are limited to the typing of forms. Petition Preparers are not lawyers and can not practice law and therefore can not provide debtors with legal advice. Practicing law without a license is illegal and a crime. While typists and paralegals can prepare the Bankruptcy Petition for you, that is all they can do - they can not advise you on tactics to permit you to take full advantage of your exemptions, or the timing of when to file a Petition, nor can they deal with the Court or the Trustee for you.
7. Can I discharge all of my Debts in a Chapter 7 Bankruptcy?
Most consumer debts are allowed to be discharged. However, certain debts can not be discharged, including:
- Certain taxes and fines. Some taxes may be discharged;
- Debts arising from certain fraudulent conduct;
- Debts not listed in your bankruptcy petition;
- Alimony, child maintenance or support, and certain other related debts arising out of a divorce decree or separation agreement;
- Debts caused by the Debtor's willful and malicious injury to another;
- Government guaranteed student loans;
- Debts caused by a death or personal injury related to your operation of a motor vehicle while intoxicated; and
- Post-bankruptcy condominium or cooperative owner's association fees.
At our firm, we will review each and every one of your bills and debts and tell you if they can or can not be discharged so you can make an intelligent decision of whether filing Bankruptcy is right for you and your family.
8. What is a Bankruptcy discharge?
A Chapter 7 Bankruptcy Discharge is a legal court order which releases you from personal liability for any discharged debts. A Discharge prevents the creditors you owed money to from taking any action against you to collect the money you owed them, such as wage garnishment. Most, but not all, types of debts are discharged if they existed on the date the bankruptcy case was filed and were listed on the schedules. Debts which are secured by property, such as a car or a house are not discharged if the Debtor obtains permission to redeem the property or to reaffirm the debt. If secured loans are not reaffirmed or the property redeemed then the Creditor may repossess or foreclose on the property.
9. What is the role of a Trustee assigned in a Chapter 7 case?
In a Chapter 7 case, an impartial Trustee is appointed to "administer" the case. The Trustee has the authority to do such things as object to exemptions, collect and sell a Debtor's non-exempt assets and then distribute the proceeds from the sale of non-exempt assets among certain Creditors. Often, an attorney can negotiate with the Trustee on behalf of the Debtor and arrange "buy-outs" where the Debtor basically repurchases certain property from theTrustee rather thAn surrendering it to the Trustee for resale.
10. Will I have to go to court on my case?
Most people who file a Chapter 7 case never have to go into a courtroom or meet with a judge. You will have to attend a "341 Meeting" and answer questions from the Trustee regarding your Petition, your assets, and your income, etc. Paralegals and Petition Preparers or typists can not go to the 341 Meeting of Creditors or to Court for you - only an attorney can represent you at either.
11. What is a 341 meeting?
This meeting is referred to as the "Meeting of Creditors." All creditors are notified so that they may attend but they rarely come to the meeting. Debtors have a duty to appear and testify under oath and answer questions by the Trustee or their Creditors if they appear. This meeting is presided over by the Trustee assigned to your case and is held approximately 40 days after the petition is filed.
12. Can I keep my car or my home if a Chapter 7 Bankruptcy case is filed?
If you have property that is financed you may either let the Creditor take it back (surrender it), redeem it, or reaffirm the loan. If you want to keep your home or car you should keep making payments even if you file bankruptcy. To redeem secured property basically means you pay it off in full. A reaffirmation is an agreement between the Debtor and a Creditor where the Debtor agrees to pay all or a portion of the money owed, even though the Debtor has filed bankruptcy. In return, the Creditor promises that, as long as payments are made, the Creditor will not repossess or take back its collateral. This means that the Debtor will remain personally liable on that debt. Such agreements must be approved by the Judge.
As a more practical matter, do you owe more on the home or car than it is worth?
At the Slonaker Law Firm we get many calls from people who owe $50 - $100,000 more than the Fair Market Value of their home. If underwater on your home or car it may not be in your best financial interest to try and keep the property. While I truly understand the emotional attachment that my clients have for their homes, does it make practical or business sense to essentially agree to pay thousands of dollars more for a home then it is worth - does it make practical sense to basically buy back a car that is worth less than is owed? If you didn't already live in the home, would you buy it from a stranger for $100,000 more than its worth? Would you pay a stranger $10,000 more for a car than it is worth? Of course not - but those are the difficult questions which must be considered in a bankruptcy case.
13. Who is eligible to file a Chapter 7 Bankruptcy?
Since 2005, individuals have to financially "qualify" to file a Chapter 7 Bankruptcy. This involves comparing your household's size and its income, for the 6 month period prior to the month the case is filed, with Florida's "median income" for that household size. Many different items may be included in the monthly income determination, such as wages, business income, rents, child support, workers compensation, and annuity payments, among some of them. If the household income is below the Florida state median for that size household, then you can file. If your income exceeds the median level, then you must complete and pass the "Means Test" to qualify for Chapter 7. The "means test" is extremely complicated to compute. My office will tell you if you do or do not pass the Chapter 7 means test.
You are not allowed to file a Chapter 7 Banruptcy case if you had a prior Chapter 7 discharge within the last 8 years or a Chapter 13 discharge in the last 6 years. You can not file a Chapter 7 unless more then 180 days have passed if you filed a previous Chapter 7 case and it was "dismissed" by the court.
14. Can I get Credit after a Chapter 7 - Will it be on my Credit History?
Odds are that if you are considering a Chapter 7 Bankruptcy, your credit history is already damaged. A bankruptcy can stay on your credit history for 10 years. Most of our clients will see an increase in their Credit score once the Bankruptcy is filed and discharged. It is likely your debt to income ratio will also increase.
Some Creditors see you as a good risk after being granted a Bankruptcy discharge because they know you can't file another bankruptcy for 8 years. Under current law, you may be eligible for an FHA mortgage a few years after you file, and you may qualify in as little as 2 years.
You may pay higher interest until you rehabilitate your creditworthiness - but you are likely paying outrageous interest rates now.
15. How long does the Bankruptcy take?
There is a lot of information required to file a Bankruptcy Petition and it takes our clients a week or more to get it all together. Once we have the information we will input it into a very sophisticated bankruptcy software program which we use to file our cases electronically with the court. You will need to complete the pre-filing counseling class and provide the certificate of completion, which can be done electronically. We will then file and pay the filing fees electronically with the court.
Once the case is filed, the Meeting of Creditors will be scheduled and conducted. The Trustee will then file a report with the court and then the court will issue your Discharge. Most cases are finished within a few months of the petition being filed with the court.
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