ALTHOUGH IT’S LEGAL AND POSSIBLE TO FILE BANKRUPTCY ON YOUR OWN, IN ADDITION TO KNOWING HOW TO FILL OUT ALL THE FORMS, DOZENS OF QUESTIONS COME UP. THESE ARE JUST A SAMPLE OF COMMON QUESTIONS THAT ARISE IN A BANKRUPTCY.
- Will I ever get credit after bankruptcy?
- How does bankruptcy work?
- Which is better, Chapter 7 or Chapter 13?
- How long does bankruptcy take?
- What is a reaffirmation?
- What is a medical bankruptcy?
- I don’t want to lose my boat/ATV/snowmobile, etc. Do I have to list it?
- What if I give my boat/ATV/snowmobile, etc. to my brother or a friend before I file?
- Will my employer and friends find out I filed bankruptcy?
WILL I EVER GET CREDIT AFTER BANKRUPTCY?
- Yes! Even though a bankruptcy will stay on your credit report for 10 years, most people find that within 3-5 years after receiving their discharge they are able to borrow money on roughly the same terms as people who didn’t file. After bankruptcy what’s important is how well you managed your finances. If you have a good job, pay your bills on time and haven’t been sued, you’ll likely be able to get credit within a few years.
WHAT DOES IT COST?
There are two parts to the fee. The first is for the work done by the attorney. The second is a filing fee paid to the Bankruptcy Court. Attorneys have no control over this second part. There is also a small cost for taking the required Consumer Credit Counseling Class required of all individuals who file bankruptcy. See our Bankruptcy Services page for what is included in the fee. Remember, you might find a lower cost, but does it include all services?
- Chapter 7: Most individual filings (including joint cases filed by spouses together) are $750.00 In some cases, such as where a business is involved, the fee is higher. The filing fee for Chapter 7 is $335.00.
- Chapter 13: Fees in Chapter 13 are set by the Bankruptcy Court and are paid as part of the monthly plan payments. We require a $1,000 deposit toward the total fee, with the remainder being paid through the plan. The total fee depends on the amount of the monthly payment to the trustee and whether the debtors are above or below-median income. The filing fee is $310.00.
- Consumer Credit Counseling. The Bankruptcy Code requires all individuals (including both joint debtors) to take a consumer credit counseling course from an approved agency before they can file. There are a number of such providers. The costs generally run in the $20 range.
HOW DOES BANKRUPTCY WORK?
- There are two main types of bankruptcy. Most people think of Chapter 7, sometimes called “straight bankruptcy.” In Chapter 7 the court appoints a trustee. The trustee’s job is to look at everything you own and determine if she can sell any of it to get money to pay creditors. Making a payment to creditors is called making a distribution. The trustee is limited in what she can take by two things. First, much of what you own is exempt from the trustee’s claims. This includes most household items like sofas, tables, chairs, beds, stoves, washers and dryers and refrigerators. Retirement accounts are exempt. Pensions are exempt. There is a partial exemption in houses and cars. Secondly, if you owe a creditor for an item, such as a car or your house, that debt has to be paid in full before the trustee can realize any money from the property. If the property isn’t worth what you owe plus any exemption you might be entitled to, the trustee won’t take it. In most cases the trustee doesn’t take anything.
- In Chapter 13 you make payments to the trustee to repay your debts in part. Chapter 13 is useful when you’re behind on your car or house payments because it gives you a chance to catch up the late payments over time. However, you have to make the ongoing payments that come due after you file.
- In either Chapter 7 or Chapter 13, at the end of the case you get a discharge, meaning that any debt that wasn’t paid through the bankruptcy can’t be collected from you.
WHICH IS BETTER, CHAPTER 7 OR CHAPTER 13?
- That depends on your situation. If you’re behind on your house payments and want to try to save your house, Chapter 13 would be the best option. If you just have too much debt and want to put it all behind you, Chapter 7 might work better. There’s no “right” answer for everyone. Our job is to help you explore your options and tell you what is likely to happen under either Chapter.
HOW LONG DOES BANKRUPTCY TAKE?
- Again, that depends on whether you file Chapter 7 or Chapter 13. A Chapter 7 is usually over and done in about four months. If the trustee sells any of your property it can remain open for several months but you will get your discharge about four months after you file. In Chapter 13 your case will continue for 3-5 years before you get a discharge.
- In either case, the initial process is about the same. Here’s a sample timeline.
- Meet with attorney, who will give you a packet of forms and information he needs.
- Return forms to attorney. This takes as long or short a time as you need to gather the information and complete the forms.
- Attorney prepares your bankruptcy petition, schedules and other documents. Usually 3-5 days from when you return the forms to the attorney.
- Meet with attorney to review the forms and sign everything. This again depends on your and your attorney’s schedules but is usually within a week after the attorney completes preparation of the forms.
- Attorney files your case. Usually the same day you sign.
- Notice to creditors of the bankruptcy filing and Meeting of Creditors goes out. Ten days to two weeks after you file.
- Meeting of creditors held. 30-45 days after you file.
After your meeting of creditors the timing is different depending on whether you filed Chapter 7 or Chapter 13. In Chapter 7 there is a 60 day waiting period after your meeting of creditors before you can get a discharge. Once that time passes you will ordinarily get your discharge within a few days. In Chapter 13 there will be a confirmation hearing on your Chapter 13 Plan about three months after you filed. The confirmation hearing can be continued (postponed) one or more times as your attorney, the trustee and creditors work out differences and objections to your Plan. Eventually your plan will either be confirmed or denied. If it’s confirmed you continue making payments for the life of the plan and then you get a discharge. If it’s denied the bankruptcy is dismissed. Back to Top
WHAT IS A REAFFIRMATION?
- A reaffirmation is an agreement between you and a creditor whereby you agree to pay the debt to that creditor even though you filed bankruptcy. Reaffirmation agreements are used where you want to keep something that you still owe money on, such as your car. By reaffirming you have basically excepted that debt from the bankruptcy.
WHAT IS A MEDICAL BANKRUPTCY?
- There is no such thing as a “medical bankruptcy.” Sometimes people use that phrase to indicate they filed bankruptcy because of medical debts, but bankruptcy is an all or nothing proposition. You can’t file against some of your creditors, such as medical debt. You have to include everyone or you don’t file.
I DON’T WANT TO LOSE MY BOAT/ATV/SNOWMOBILE, ETC. DO I HAVE TO LIST IT?
- Just as with your creditors, listing your property is an all or nothing proposition. You have to list everything you own. To hide something is bankruptcy fraud and you can go to prison for it.
WHAT IF I GIVE MY BOAT/ATV/SNOWMOBILE, ETC. TO MY BROTHER OR A FRIEND BEFORE I FILE?
- You are required to disclose any transfers of property you have made within two years prior to filing. If you give something away and didn’t receive fair value in return, the trustee can set the transfer aside and recover the property you gave away.
WILL MY EMPLOYER AND FRIENDS FIND OUT I FILED BANKRUPTCY?
- Generally, no. A bankruptcy filing is a public record but unless someone takes the time to go to the court and search for a particular person they won’t know you filed. Notice is given to your creditors but to no one else.
Although it’s legal and possible to file bankruptcy on your own, in addition to knowing how to fill out all the forms, dozens of questions come up. These are just a sample of common questions that arise in a bankruptcy.
IF YOU FIND YOURSELF ASKING ANY OF THESE QUESTIONS, PLEASE GIVE US A CALL (801) 413-3708
Question: Can they take my house if I am current? I am going crazy with my mortgage. They want a reaffirmation agreement. I am current on mortgage and plan to continue that way. I used a paralegal as I couldn’t afford an attorney and everything is fine except for the mortgage company .
Question: After changing from chapter 13 to 7, can I go back to 13? I now realize that I do not want to lose my home. Is it possible to go back to chapter 13?
Question: If I need to buy a car for cash because my trucks engine is blown and I pay cash for the car will my trustee find out?
Question: What types of assets are protected from seizure in bankruptcy? I’ve been waiting on an insurance settlement for an accident that occurred in recent years. However, while waiting, my family and I have experienced multiple financial setbacks. The long and short of all of this is that bankruptcy will be inevitable as any settlement received will be far short of what would be needed to become solvent again. I’m trying to wait to file bankruptcy until after the case is settled and any funds disbursed. However, I need to know what types of assets are protected from seizure in bankruptcy proceedings so that I can invest my pittance, no matter how small, in an asset class protected from seizure by bankruptcy.
Question: I am newly separated. My husband and I have no joint accounts or anything. I have moved in with family and we haven’t filed for legal separation or divorce yet. Am I able to file without having to list any of his income or personal information?
Question: How long will it take for them to return my garnished wages? It’s been a month since my chapter 7 discharge and I haven’t received a refund of garnished wages as yet. How long does this usually take? Is there something else I must do?
Question: Can they come after my husband if we just walk away now after I filed and got a discharge Chapter 7 in April in 2009? I included our mortgage which is in both mine and my husband’s name. We are now in foreclosure due to the fact we cannot pay. We did not sign any reaffirmation on the loan.
Question: Do I have to pay my chapter 13 bankruptcy plan all the way out or can I pay it off early to finish it up? Do I have to pay my chapter 13 bankruptcy plan all the way out or can I pay the total amount of payments off early and be done with the bankruptcy and move on?
Question: If my chapter 7 bankruptcy was filed last month, can I get married before the meeting of the creditors or do I have to wait for my discharge?