General Bankruptcy FAQs
What is the difference between Chapter 7 and Chapter 13 bankruptcy?
Chapter 7 bankruptcy is commonly call “straight” bankruptcy or just “bankruptcy”. In a Chapter 7 bankruptcy, the objective is to cancel or discharge all of your unsecured debt and thereby give a fresh start to a struggling debtor. In a Chapter 7 bankruptcy, a debtor must turn over any nonexempt property, if such exists, to the Trustee, who then liquidates the property for cash and uses the cash to pay the debtor’s creditors. Once such is completed the debtor receives a discharge of the remainder of his/her unsecured debt. A Chapter 13 bankruptcy is commonly call a “reorganization”. In this type of bankruptcy, a debtor attempts to repay his creditor some portion of what they may be owed over an extended period of time. Chapter 13 bankruptcy allows for the protection of certain assets and requires a steady income on which to base a repayment plan. Upon completion of the plan a debtor who has filed a Chapter 13 bankruptcy receives a discharge (similar to that in a Chapter 7 bankruptcy) of any remaining unpaid debts, not fully paid through the Chapter 13 repayment plan.
Will I have to go to bankruptcy court?
After filing a petition for bankruptcy, a meeting is set for the trustee to meet the debtor and ask questions of him/her. At this meeting the creditors may be present and may ask questions of the debtor, though most do not. Typically, the meeting lasts less than fifteen minutes and takes place in a office of the federal courts building of the city in which your bankruptcy was filed. The meetings are generally scheduled within 30 days of a Chapter 7 bankruptcy filing, and within 45 days of a Chapter 13 bankruptcy filing. Your attorney will be present at this meeting with you.
Do both my spouse and I have to file bankruptcy together? What if I want to file, but my spouse does not?
Debt is normally only apportioned to the party who signed the original document creating the debt. In some marriages, one spouse may have all the debt in his/her name and the other spouse may be relatively debt free (at least on paper). In that case, only the party in whose name the debt stands need file bankruptcy and the other spouse may remain outside the bankruptcy. In other cases, a spouse may wish to pay off the debts that are in their name and not join in the bankruptcy. That is not a problem, so long as the debts, on which the bankruptcy are filed, are not joint debts in both spouses’ names. In that case the discharge of one spouse will not release the other of liability on the debt. It may then be wise to have both spouses join in the bankruptcy.
Does filing bankruptcy actually keep creditors from harassing me?
Immediately upon filing a petition for bankruptcy an implied court order becomes effective (known generally as an “automatic stay”) which stops creditors from attempting to collect any outstanding debts you may owe them. This stay prevents phone calls, letters and lawsuits and remains in effect throughout the duration of the bankruptcy case unless lifted by the court for some reason. If a creditor violates the automatic stay they may be subject to severe penalties from the bankruptcy court and may be subject to violation of the state’s fair debt collection practice laws.
What will it cost me to file for bankruptcy?
There is a court filing fee for bankruptcy, which is paid to the Federal Bankruptcy Clerk. Presently, that fee is $200.00 for Chapter 7 cases and $185.00 for Chapter 13 cases. During your consultation with your attorney, he/she will review all charges and how you are to pay the law office. Fees and payment arrangements, at the law office of Earp & Associates, P.C., are structured so that if you choose to file bankruptcy, you can afford to.