FAQs Frequently Asked Questions about BankruptcyIn October of 2005, the bankruptcy laws in the United States underwent some changes. These alterations to the existing laws have caused some bankruptcy attorneys to panic and decide that it is virtually impossible for their clients to file for bankruptcy any longer. I say differently. I am bankruptcy attorney Walter Metzen and I have been practicing law in the area of bankruptcy for over 14 years. I have helped thousands of individuals file for debt relief in the state of Michigan and have successfully handled hundreds of cases under the new law. The good news is that the law, although more work for the attorney, still can result in a discharge of debt by Federal Court Order and is helping people obtain a Fresh Financial Start. The new bankruptcy laws mainly have an affect on issues concerning increased paperwork and filing requirements for lawyers. Correspondingly, the cost of filing for bankruptcy increased due to the rise in the amount of work each attorney does to file the bankruptcy effectively. I devote the time and attention to each client and case in order to ensure that we file right the first time. Clients still have to go to court once on a Chapter 7 filing and twice on a Chapter 13.
1. What is bankruptcy?Bankruptcy is a legal proceeding in which a person (the debtor) who is unable pay his or her bills (the creditors) can get a fresh start. Bankruptcy is started by filing a petition with the Federal Bankruptcy Court. The petition discloses all of the debtor's financial affairs including assets and liabilities. Filing bankruptcy immediately and instantly, though sometimes only temporarily, stops creditors from seeking to collect debts. Bankruptcy may also eliminate a debtor's obligation to pay many, if not all, debts incurred prior to the bankruptcy filing 2. Who can file a bankruptcy?
3. Is it true that I can wipe out all my bills?The underlying policy of bankruptcy law is that the honest debtor who is in debt beyond his/her ability to repay the debt should be given a fresh start through the discharge of debts in a bankruptcy proceeding. Not all debts are dischargeable. Generally speaking, the following debts will not be discharged: Taxes; Spousal and Child Support; Debts arising out of willful misconduct and or malicious misconduct by the debtor; liability for injury or death from driving while intoxicated; nondischargeable debts from a prior bankruptcy; Student loans; Criminal fines and penalties and Forfeitures. Those debts which are secured will be discharged, however, expect the creditor to take the necessary legal steps to take back the property. In most cases if the debtor's equity interest in the property is exempt, the debtor may retain the property by redemption or reaffirmation. 4. What are the most common reasons for a Chapter 7 bankruptcy?The most common reasons for consumer bankruptcy are: Unemployment; large medical expenses; seriously over extended credit; marital problems and other large unexpected expenses. 5. Can I stop the bill collectors from calling?One of the major benefits of filing for protection under Chapter 7 is that many creditor actions are stayed. This means that debt collection efforts and foreclosure is halted. 6. How long after I file will the creditors stop calling?Once a creditor or bill collector becomes aware that you have filed for bankruptcy protection, he/she must stop all efforts to collect the debt. After your bankruptcy is filed, the court mails a notice to all the creditors listed in your schedules. This usually takes a couple of weeks. If this is not soon enough, then you should have your representative inform the creditor immediately. 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. 7. I am married, does my spouse also have to file bankruptcy?No. 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. In cases where real property is involved the question regarding a joint bankruptcy is beyond the scope of this FAQ, see an attorney. 8. Will I lose my job?No. Bankruptcy laws prohibits discrimination based upon a debtor filing for protection under the bankruptcy laws. 9. Can I go to jail if I file bankruptcy?No. There are no debtor's prisons in the United States. 10. Will my employer find out about my bankruptcy?Under normal circumstances, unless your employer is a creditor, your employer will not know. 11. What happens to my personal property, real property and other assets?Once the bankruptcy is filed, all the property of the debtor at the time of the filing and certain other property to be received in the future, becomes the property of the bankruptcy estate. This means that the bankruptcy trustee will take control of this property for purposes of satisfying the creditors. HOWEVER, there is certain property which is either excluded or exempt and the debtor will be able to keep it. Property or asset exemption are determined based upon your situation, income and the laws of your state. The best way to determine which property to keep requires a detailed analysis of your situation. You need a good lawyer. Don't pick one that advertises in your local paper. 12. Can I keep my car after bankruptcy?Depending upon which exemption scheme is selected, you make keep your car if your equity is equal to or less than the allowed exemption. Generally speaking, depending upon the exemption scheme selected, you may exempt as little as $1200 or as much as $9100. When calculating your equity you should use the Kelly Blue Book or a comparable guide. Once you know the value, then subtract the amount owed from the value to calculate the equity. Generally, most courts understand that you need a car to work to get back on your feet. Apply rules of common sense here: If you own vintage cars which are free and clear and worth thousands of dollars, you are probably not going to be able to keep them. If, on the other hand, you have a car worth 10,000 and you owe $8000 on it, you will most likely keep it. Again, the need to talk to a good lawyer should be evident. Most leased vehicles have no equity and therefore are entirely exempt. If you owe money on your car or it is leased you must still make the payments. In those instances you will have to redeem or reaffirm the property to keep it. However, in some circumstance your representative can re-negotiate the loan or the lease to get a more favorable deal for you. 13. Can I keep my credit cards after bankruptcy?Under some circumstances you may keep your credit cards. There are many factors which must be considered. Some of those include the credit card balance at the time of the bankruptcy, what the credit card company is willing to do and your ability to pay the present and future credit card debt. 14. Will bankruptcy stop a wage attachment?Yes. 15. Will bankruptcy stop a judgment?Yes. Most civil judgments are stopped by bankruptcy. 16. I am a co-signer for a debt, how does bankruptcy affect my obligation?If the debt is a dischargeable debt then you will not have to pay it. However, the cosigner will become primarily responsible for the debt. Be sure to list the co-signer as a creditor in your schedules as they have a contingent claim against you. You can always voluntarily pay the debt after the bankruptcy if you wish to protect the co-signer, but by law, the creditor cannot attempt to collect from you if you do not wish to voluntarily pay. 17. Who notifies the creditors and bill collectors?After your bankruptcy is filed, the court mails a notice to all the creditors listed in your schedules. This usually takes a couple of weeks. If this is not soon enough, then you should have your representative inform the creditors immediately. 18. Are there any debts that I can't wipe out in bankruptcy?Yes, there are certain debts that are NOT dischargeable in bankruptcy. Generally speaking, the following debts will not be discharged: Taxes; Spousal and Child Support; Debts arising out of willful misconduct and or malicious misconduct by the debtor; liability for injury or death from driving while intoxicated; nondischargeable debts from a prior bankruptcy; student loans and criminal fines, penalties and forfeitures. Those debts which are secured will be discharged, however, expect the creditor to take the necessary legal steps to take back the property. In most cases if the debtor's equity interest in the property is exempt, the debtor may retain the property by redemption or reaffirmation. 19. Do I have to go to court?Yes. About 30 to 40 days after you file the bankruptcy you will have to attend a hearing presided over by the bankruptcy trustee. This hearing is called the First Meeting of Creditors. At this hearing the trustee will ask questions under oath regarding the content of your bankruptcy papers, assets, debts and other matters. After the trustee is done, your creditors will be permitted to question you. Do not worry, your attorney will be there to represent you and your attorney will help you prepare for the hearing. Sometimes, after your hearing is over, various creditors will approach you to discuss the status of secured property or the your desire to retain a credit card. Your attorney will negotiate with them, with your knowledge and approval. After this hearing you will normally not need to return to court. However, if a creditor files a motion or an adversary action, most likely you will have to return to court. This is the exception and only your attorney can determine if this is likely to happen. 20. What happens after I file my bankruptcy?Under normal circumstances, the bankruptcy court will automatically issue the discharge 60 to 75 days after the First Meeting of Creditors provided you have completed the required Consumer Debtor Education required by the new law. My office will assist you in how to complete this educational course. 21. Who deals with the creditors and bill collectors during the bankruptcy?Your attorney deals with your creditors. It may be the only time you ever have the luxury of saying "you'll have to talk to my lawyer". 22. What if I forget to list a creditor on my bankruptcy papers?You are permitted to file an amendment to your schedules up to a certain time before discharge. If the amendment is timely filed then the omitted creditor is added to the bankruptcy. It is perjury to intentionally omit a creditor. However, if you do not know that a creditor exists and there are no assets for your creditors, the debt will be discharged. This is a hassle after the fact, so be sure you be thorough and list everything. 23. What happens to my credit rating after bankruptcy?For more info on re-establishing your credit, please see Credit Repair. The bankruptcy is a judgment and will be listed for a period of up to 10 years after the discharge. 24. After bankruptcy, can I get credit?Sure. For a while though, expect to pay through the nose in interest and fees. There is a whole new mortgage industry springing into action loaning to people with less-than perfect (read rotten) credit. Again, see Credit Repair. 25. Is there any thing I should not do if I am contemplating bankruptcy?
26. If I need to file bankruptcy again, how long do I have to wait?You must wait 6 years to file again or if your bankruptcy was dismissed you must usually wait for 180 days to re-file.
Contact me, bankruptcy attorney Walter Metzen to learn more about how the new Chapter 7 bankruptcy law may affect your case. I offer a free initial consultation so we can discuss your case personally. We are a Debt Relief Agency helping people file for bankruptcy relief under the Bankruptcy Code. Let us help you decide if bankruptcy is right for you. |
Walter Metzen
645 Griswold, Suite 3156
Penobscot Building
Detroit MI 48226
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