Attorneys at Law
Informational Knowledge on Bankruptcy
informational knowledge on bankruptcy is intended for the explicit use of
clients of Blair & Fitzsimmons, P.C.
This document was created with the sole purpose of providing
clients with common knowledge regarding bankruptcy.
Use or reproduction of this document by permission.
bankruptcy can be a very stressful time for any individual(s) or
business. However, a
majority of the stress and
worries result from the misunderstanding of the paperwork involved.
This informational guide will hopefully ease some of your stress
by explaining the bankruptcy process and some general questions
regarding the process. Congress
recently completed an extensive re-writing of the bankruptcy laws which
went into effect October 17, 2005, called the Bankruptcy Abuse
Prevention and Consumer Protection Act of 2005.
A great deal of mis-information has been disseminated about this
law. In particular, mis-information
to the effect that the law makes many individuals ineligible to file
bankruptcy. This is not
correct, although the new law does impose some additional requirements
for filing. With that said, this informational guide should only be used
as a background for questions that may arise during your bankruptcy
begin a bankruptcy, you will be asked to fill out a questionnaire.
This questionnaire asks for some general information such as
name, address, social security number, etc.
You will also be asked to list all assets and debts.
It is extremely important that this questionnaire be filled out
completely and as accurately as possible.
After talking to an attorney over the phone, this questionnaire
is usually sent out to the client(s) with instructions to fill out the
questionnaire and then make an appointment with the attorney.
To make the initial meeting much more efficient, PLEASE take the
time to fill out the questionnaire as accurately, thoroughly and
completely as possible. This will take some time.
Taking the time to accurately answer all questions will help your
bankruptcy process move more efficiently.
laws were adopted in the United States to protect the debtor(s) from the
onslaught of multiple collection attempts and to enable debtors to get a
fresh start. Depending upon
the circumstances, your bankruptcy may be filed in a federal court under
different categories known as chapters.
Each chapter varies on the amount of relief that the court can
grant. Listed on the next
page is a brief description of each chapter that bankruptcy can be filed
a bankruptcy under this chapter is the most common for individuals. Upon the court issuing an order restraining creditors from
contacting you about previous debts, a Trustee will be appointed to sell
any property of yours that is not exempt.
a bankruptcy under this chapter is most common for businesses, but once
in a while, an individual debtor will file under chapter 11.
Regular operations continue and the debtor is allowed to keep
most, if not all, of the property.
During a chapter 11 bankruptcy, the debtor and the creditors
negotiate a plan for the
payment of debts. The cost
of reorganizing a business, and the numerous mailings, hearings, and
negotiations, is higher than in a chapter 7 filing.
Chapter 12 is strictly for those individual debtors
involved with agriculture, i.e. farmers.
Filing under chapter 12 is much like a chapter 13 (listed
below), however due to the fact that capital equipment in
agriculture is much more expensive, the guidelines for some debt limits
are much higher.
chapter 13 guidelines, individual debtors are allowed to retain almost
all of their property through a propose payment plan between the debtors
and creditors. This payment
plan is over 5 years. The
individual debtors make payments to a Trustee on a regular basis, who
then distributes the payments to the creditors.
MYTHS ABOUT BANKRUPTCY
MYTH # 1:
The new bankruptcy law places many new restrictions on who is
eligible to file bankruptcy.
The new bankruptcy law contains a “means test” which is used
to determine who is eligible to file bankruptcy.
Basically, a debtors income is reviewed to determine what types
of bankruptcy debtors will be eligible to file.
The means test was intended to force more debtors into filing
Chapter 13 instead of Chapter7. However,
it is estimated that most debtors who would have been eligible to file
Chapter 7 under the prior law will be eligible to do so under the new
I file chapter 7 bankruptcy, the court will take everything that I own
in order to pay the creditors.
7 bankruptcy allows you to keep all of your exempt property. Each
state varies on the exact items and value of property that may be
claimed as exempt. Property that is subject to a properly
perfected security agreement, such as a mortgage or a security agreement
cannot be kept unless the debt is reaffirmed.
the new bankruptcy law I will not be able to file on my credit card
card debts can be filed on and discharged under the new bankruptcy law.
The new law will require you to go through additional steps to file and
that the new law takes out some of the classes (clauses) that used to
exist under the old law. For most people, there is no difference
between what is permitted under the old law and the new law.
a chapter 7 bankruptcy will automatically erase my debt.
types of debts cannot be discharged or eliminated by filing bankruptcy.
Four most common items that bankruptcy will not discharge or bar
collection activities on include:
1. Criminal restitution and fines
2. Child support or alimony
3. Recent taxes owed to the state and federal government
4. Student loans
The court may also decide that other kinds of debts such as those
created through fraud, may not be discharged. Failure to obey
court orders, missing hearings, and or making false statements on your
petition and schedules also may impact what type of debts the court
allows to be discharged.
#5: By filing a bankruptcy , I
will never be able to get credit again!
on the type of lending agency, standards of giving credit greatly vary.
Some lending agencies may look at your bankruptcy as a business
opportunity and give you credit, since your debts have been discharged
and you cannot file again for eight years. Other lending agencies
tend not to give credit to bankruptcy filers. The majority of
lending agencies fall somewhere in between for giving credit to those
who have filed bankruptcy.
#6: I don’t have to appear in
court when filing a bankruptcy.
will have to appear for a hearing called a “341" Meeting.
This meeting usually lasts around 10 to 20 minutes. The purpose of
the 341 Meeting is for the Trustee to determine if your bankruptcy
petition is accurate and to determine if you have any non-exempt
property available which could be used to pay creditors. The trustee
conducts the meeting and creditors do not usually appear for
consumer bankruptcies. YOU MUST PERSONALLY APPEAR AT THIS MEETING.
#7: As soon as I file bankruptcy, creditors will stop
harassing me about my unpaid bills.
initial filing prohibits creditors from contacting you. This
ordinarily lasts until a discharge is granted. If there are no
objections to your bankruptcy, this discharge is granted 60 days after
the 341 Meeting. If a creditor does contact you after your filing,
they will receive a notice to stop. If creditors continue to
contact you after this first notice, sanctions can be ordered by the
court. The creditors can be ordered to pay you for their
harassment. After the discharge is entered, there is an injunction
against creditors contacting you about any discharged debts.
should not be looked at as a quick way out of your financial
responsibilities. Only when
it seems that there is no possible way that you can repay your financial
debts, should you then seek to file bankruptcy.
All other possible options should be examined before filing
& Fitzsimmons, P.C. is a debt relief agency.
We help people file bankruptcy.
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