Bankruptcy

Frequently
Asked
Questions

• How will bankruptcy affect my credit?

  You won’t go through the rest of your life wearing a scarlet B on your head. Your credit reports will start getting better everyday after you file your bankruptcy case. No later than 7-10 years after your filing, they will be completely clear.

• 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.

• Will Bankruptcy Wipe Out All My Debts?

  Yes, with some exceptions. Bankruptcy will not normally wipe out:
  (1) money owed for child support or alimony, fines, and some taxes;
  (2) debts not listed on your bankruptcy petition;
  (3) loans you got by knowingly giving false information to a creditor, who reasonably relied on it in making you the loan;
  (4) debts resulting from "willful and malicious" harm;
  (5) most student loans, except if the court decides that payment would be an undue hardship;
  (6) mortgages and other liens which are not paid in the bankruptcy case (but bankruptcy will wipe out your obligation to pay any additional money if the property is sold by the creditor).

• Should I Feel Ashamed To File Bankruptcy?

  Obviously, there are so many issues to think about prior to filing for bankruptcy protection; however, feeling ashamed should not be one of them. The History of Bankruptcy in the United States dates back to the founding fathers, wherein they expressly outlawed debtor's prisons and immediately instituted forgiving bankruptcy laws early in our nation's history. Over the years, some of the nation's most revered companies and people have turned to the bankruptcy system for help. Perhaps this nation's greatest President and founding father, Thomas Jefferson, filed for bankruptcy not just once, but several times to eliminate the accumulation of his huge debt. The same holds true for Walt Disney. Other notable individuals that have filed for bankruptcy protection are: Larry King, Redd Foxx, Wayne Newton, Abe Lincoln, Burt Reynolds, Johnny Unitas & Toni Braxton, just to name a few. The filing of a personal bankruptcy is better put into perspective when you know that men of Mr. Jefferson's, Mr. Disney's and Mr. Lincoln's foresight and intelligence could get themselves into and out of financial trouble.
  
  At the Consumer Attorneys LLP, we view bankruptcy as a financial planning tool. If used properly, bankruptcy will put you onto the road to recovery. Our #1 goal is to help our Clients achieve their goals. Most of our Clients tell us that their goals include Financial Freedom. We all know that to be financially free, a person cannot have debts. If our Clients use the bankruptcy process to eliminate or re-structure their debts, they are on the road to recovery, whether they know it or not. Our Clients learn from the past (about interest, penalties, fees and mortgages), continue their education throughout the process, and make good sound financial decisions in the future. Our Clients know that the mortgage companies, credit card companies and auto finance companies will do everything possible to take away your future wealth. They do it financing your future away. They are looking to lure you into high interest contracts that will literally cost you hundreds of thousands of dollars in interest or finance charges.
  
  There is a better and happier way to live, the debt free way. When an individual files for bankruptcy, they are forced to focus on their monthly budget and their debts. Once their debts are either eliminated or re-organized, then they can focus on the other debts. We strive to provide our Clients with a strategy to payoff all of their debts and become. Just imagine, if you were debt free, with no mortgage or car payments, how much money you could be investing and earning interest on. For most people that number is over $1,000.00 per month.

• What Bankruptcy Can Not Do

  Bankruptcy can not, however, cure every financial problem. Nor is it the right step for every individual. In bankruptcy, it is usually not possible to:
  (1) Eliminate certain rights of "secured" creditors. A "secured" creditor has taken a mortgage or other lien on property as collateral for the loan. Common examples are car loans and home mortgages. You can force secured creditors to take payments over time in the bankruptcy process and bankruptcy can eliminate your obligation to pay any additional money if your property is taken. Nevertheless, you generally can not keep the collateral unless you continue to pay the debt.
  (2) Discharge types of debts singled out by the bankruptcy law for special treatment, such as child support, alimony, certain other debts related to divorce, most student loans, court restitution orders, criminal fines, and some taxes.
  (3) Protect cosigners on your debts. When a relative or friend has co-signed a loan, and the consumer discharges the loan in bankruptcy, the cosigner may still have to repay all or part of the loan.
  (4) Discharge debts that arise after bankruptcy has been filed.

• What Can Bankruptcy Do for Me?

  Bankruptcy may make it possible for you to:
  (1) 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.
  (2) 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.)
  (3) Prevent repossession of a car or other property.
  (4) Stop wage garnishment, debt collection harassment, and similar creditor actions to collect a debt.
  (5) Restore or prevent termination of utility service.
  (6) Allow you to challenge the claims of creditors who have committed fraud or who are otherwise trying to collect more than you really owe.

• What Else Must I Do to Complete My Case?

  After your case is filed, you must complete an approved course in personal finances. This course will take approximately two hours to complete. Your attorney can give you a list of organizations that provide approved courses, or you can check the website for the United States Trustee Program office at www.usdoj.gov/ust
  In a chapter 7 case, you should sign up for the course soon after your case is filed. If you file a chapter 13 case, you should ask your attorney when you should take the course.

• What are some reasons to hire an attorney for your bankruptcy case?

  - Once your hire a lawyer, creditors must stop calling you.
  - Your lawyer will help identify consumer protection claims and other rights to which you might be entitled.
  - Your lawyer will be sure you list all your assets and liabilities.
  - Your lawyer can explain the different Bankruptcy chapters and decide which is best for you.
  - Your lawyer can prevent you from making mistakes which could cause you thousands of dollars or loss of assets.
  - Your lawyer can help redeem personal property, like a car, from secured debts at a fraction of your original debt.
  - Your lawyer will make sure you don’t loose your discharge for failure to take a financial management course.