If I file a personal bankruptcy, how long will it remain on my credit record?

A bankruptcy filing is a public record, and will be listed with the other public records on your credit report, for seven to ten years. Other examples of public records are civil judgments and tax liens.

Do I need an attorney to file a bankruptcy?

No, the United States Bankruptcy Code does not require that you have an attorney to file a personal bankruptcy. The bankruptcy petition, schedules, statement of financial affairs, and statement of intentions may be prepared without the assistance of an attorney. However, bankruptcy law does require that you disclose the identity of any person or organization who may provide you with assistance in filling out this information. The assistance of an attorney is highly recommended so as to advise you in regard to the exemption laws which are used to protect your property. Additionally, an attorney can counsel you as to the different chapters available under bankruptcy law, so that you may make an informed decision as to the best way to handle your debts.

Given the complexity of bankruptcy filing since the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”), and the additional requirements placed upon individuals seeking bankruptcy relief, it is strongly suggested that an attorney be hired for a bankruptcy filing.

What is the difference between an attorney and a bankruptcy petition preparer?

In order to be an attorney, an individual must have received a college degree, as well as a law degree. In order to be licensed to practice, the attorney must pass the bar exam for that state. Furthermore, an attorney is required to attend annual continuing legal education, in order to keep up with current law, and remain in good standing with the bar. Bankruptcy attorneys are also required to be admitted to practice in federal court.

A bankruptcy attorney is allowed to provide legal advice and guidance to a consumer regarding their bankruptcy options. This includes explanation of domestic issues, contract issues, lease issues, employment issues, and other legal matters which may affect the bankruptcy filing, or which may be affected by the bankruptcy filing. A bankruptcy attorney is also allowed to explain the exemptions available under applicable state or federal law, so that a consumer may protect their property when filing bankruptcy.

A bankruptcy petition preparer is prohibited from giving legal advice, or explaining the consequences of a bankruptcy filing. They are only allowed to prepare a bankruptcy petition, in a form approved by the Bankruptcy Court of that jurisdiction. They are not allowed to assist the debtor in choosing exemptions, which is essential to the protection of the consumer’s property in bankruptcy. Likewise, they cannot address any non-bankruptcy legal issues which may also arise in a consumer’s financial situation. Finally, they cannot prepare you for your court hearing(s) or accompany you to court.

How do I get up to date information on my credit and finances?

If you believe that you will be unable to provide our office with up-to-date information, you may wish to consider downloading a copy of your free annual credit report from www.annualcreditreport.com. You are entitled to one free credit report per year from the participating credit reporting agencies. For security purposes, we would recommend that you do not permit anyone else to utilize the  www.annualcreditreport.com website to obtain the information on your behalf. Please be aware that many websites that advertise “free” credit reports are actually soliciting enrollment in various credit-monitoring programs that may charge you a periodic fee.

What type of personal bankruptcy should I file?

Most consumers typically file a Chapter 7 or Chapter 13 bankruptcy. Each type of bankruptcy has some advantages and disadvantages, depending upon the type of debts you owe, the value of your assets, and the amount of your income.

A Chapter 13 bankruptcy is usually recommended in a situation where an individual is facing foreclosure of real estate and/or the repossession of an automobile. Additionally, a Chapter 13 may be preferred option for an individual who has debts that cannot be eliminated in a Chapter 7 bankruptcy, such as some taxes and/or student loans. Finally, a Chapter 13 may be an option to allow a consumer to protect assets which may not be exempt in a Chapter 7 bankruptcy.

An individual who does not have any non-exempt equity in real property or personal property, and does not have an excess of monthly income, may be a better candidate for a Chapter 7 case. At Leiden and Leiden, the primary purpose of our initial consultation with clients is to analyze their financial situation, and explain the alternatives available under both Chapter 7 and Chapter 13.

Under the Bankruptcy Abuse Prevention and Consumer Protect Act (“BAPCA”), consumers are required to submit to a “means test” to determine their eligibility for a Chapter 7 bankruptcy. This requires the bankruptcy attorney to verify the client’s income, based upon their tax returns, as well as pay stubs and other proof of income. Once the consumer’s income is accurately determined, it is compared to IRS guidelines, as well as actual expenses of the consumer, to determine if there is any excess income. If this test demonstrates that there is excess income, then the Bankruptcy Court can compel a debtor to file a Chapter 13 case, where they would repay all or a portion of their debts over a five year period.

As part of your free consultation with our firm, we will calculate the means test based upon your verifiable income and expenses, in order to determine your eligibility under the different chapters of bankruptcy.

Will I lose my home, car, retirement plan or any other assets dure to filing a bankruptcy?

Under bankruptcy law, certain exemptions are available to protect consumer assets such as real estate, automobiles, retirement plans, social security and disability benefits, as well as other assets. At this time, the exemptions vary depending upon the state of your residence. Even in a situation where a consumer may not be able to exempt all of their assets, there may be a bankruptcy option available, such as Chapter 13, which would enable the consumer to retain those assets. Since retaining assets is usually the primary concern of most consumers, most bankruptcy attorneys will take the time to explain what exemptions are applicable to your particular case, and whether or not any assets may be at risk in the event that you filed a bankruptcy.

Do I need to include all of my creditors in a bankruptcy filing?

Yes. It is a requirement of the Bankruptcy Court that you disclose all of the creditors to whom you owe money. This includes creditors that you wish to continue to pay, such as those who have financed a house, mobile home, car or furniture. The Statement of Intentions which is included in your bankruptcy petition will identify the creditors which you wish to keep.

Please note that “creditors” includes anyone to who you owe money, or who may have a claim against you. This would include personal loans from friends or family members. This would also include any debts which are in dispute. If you have a question as to whether or not a potential debt or claim should be included, consult your bankruptcy attorney.

What information do I need to provide to my bankruptcy attorney if I decide to file a bankruptcy?

Verification of income for at least the sixty days prior to the bankruptcy filing, including recent pay stubs, social security statements or retirement statements. It is also necessary to provide any information regarding other income, even though it may not be taxable or otherwise disclosed.

Creditor information, including any recent correspondence that the consumer has received from the creditor within the ninety days prior to filing. This is necessary because the law requires that creditors be notified by the Bankruptcy Court at the address listed on the most recent correspondence mailed to the consumer.

Copies of any lawsuits, judgments, and/or garnishments against you.

In all cases, the bankruptcy attorney will need to review the consumer’s income tax returns, when required to file, for the two years immediately preceding the bankruptcy filing. Additionally, in all Chapter 13 cases, a consumer will be required to file all annual income tax returns, if applicable, on a timely basis, and retain copies in the event that they should be requested by the court.

If you own real estate, you may be requested to provide copies of any county property tax appraisals, or any recent private appraisals which have been performed on your real estate. The attorney may need to review copies of all deeds to property that the consumer may own, either individually, or with other persons. Additionally, it may be necessary for the debtor to provide proof of any mortgages and/or liens against the property.

If you are financing an automobile, you will be required to maintain full coverage insurance on that vehicle, and provide proof of that insurance to your attorney. In certain cases, it may be necessary for the attorney to inspect the title to all vehicles owned by the consumer, as well as copies of the sale contracts for vehicles which are being financed.

If a consumer is a participant and/or contributor to any type of pension, retirement plan, 401K plan, IRA, or any other type of investment program, then copies of those documents should be made available to your attorney for inspection.

Since January 1, 2002, all consumers who file bankruptcy are required to provide a picture I.D. and government issued proof of their social security number at their first court hearing.

Will I have to go to court?

Under both Chapter 7 and Chapter 13, the debtor in a bankruptcy case is required to attend a Meeting of Creditors, which is scheduled approximately 28-40 days after the case is filed. Your attorney will accompany you to this hearing. The purpose of the Meeting of Creditors is for the debtor to be questioned about the bankruptcy petition which they have filed, and any property which they own. The meeting is presided over by the bankruptcy trustee, and creditors are invited to attend. Attendance by creditors in the Augusta division is uncommon.

There may be additional hearings in a chapter 7 case, depending upon whether or not the debtor intends to return any property back to creditors, and whether or not any creditors object. Additionally, in a Chapter 7 asset case, where assets may be sold for the benefit of creditors, additional court hearings will be scheduled. If applicable, your attorney will advise you as to whether or not attendance at these additional hearings will be necessary.

In Chapter 13 cases, a confirmation hearing is scheduled in addition to the Meeting of Creditors. The debtor’s attendance is required at this hearing as well. There may be additional hearings involved in a Chapter 13 case, for Motions for Relief from Stay or Motions to Dismiss, which the debtor would have to attend as necessary. Your bankruptcy attorney should advise you at your initial consultation and during the course of representation as to what court hearings you should have to attend, and what you should expect at these hearings.

What happens when I go to court for my meeting of creditors?

The Meeting of Creditors (sometimes referred to as a “341 Meeting”) is presided over by a bankruptcy trustee. This is an attorney who is appointed by the court to supervise your case, question you about the petition and schedules which you have filed with the Bankruptcy Court, and liquidate any non-exempt assets for the benefit of your creditors. Your creditors are notified about the Meeting of Creditors as well, and may attend, although they are not required to do so. Your bankruptcy attorney will attend the Meeting of Creditors with you as well.

What fees are involved in a consumer bankruptcy filing and how are they paid?

Presently, the filing fee for a Chapter 7 bankruptcy is $335.00. The filing fee for a Chapter 13 bankruptcy is $310.00. These fees may be subject to change, due to periodic evaluation of the cost of processing bankruptcy cases by the bankruptcy courts.

At Leiden and Leiden, there is no set amount of attorney fees for the filing of a Chapter 7 bankruptcy case. Because every case is unique, our firm uses the free consultation to evaluate each case on its own, and determine the amount of time and effort necessary to accomplish the client’s objectives. The fees are based on the amount of work involved, due to the factual circumstances, and legal issues presented in each particular case. The amount of the fee, and method for payment, will be discussed with the client at the end of the consultation.

In Chapter 13 cases, arrangements can be made for some or all of the fees to be paid through the court supervised Chapter 13 plan. The amount of money charged for a Chapter 13, absent special circumstances, is set by the court. The amount of fees to be paid prior to filing a Chapter 13 case will depend upon special circumstances of that case, including complex legal issues, or creditor objections.

All fees associated with the filing of the bankruptcy, as well as the manner of payment of those fees, is required to be disclosed to the Bankruptcy Court. The Bankruptcy Court has the authority to order the refund of any attorney fees which are unreasonable or unjustified.

Can I include tax debt in a bankruptcy filing?

In a Chapter 7 bankruptcy, federal and state income taxes can only be discharged in certain circumstances. This will depend upon the age of the tax, the timeliness of the filing of the returns, and other factors surrounding the reporting of income to federal and state taxing authorities. However, even if the tax debt can be discharged in a Chapter 7 bankruptcy, any tax liens on real or personal property may remain.

Income taxes may be repaid through a Chapter 13 bankruptcy, without interest or penalties. However, income tax returns must have been filed, where applicable, for all years prior to the filing of the Chapter 13 bankruptcy. You should notify your attorney if you failed to file income tax returns as required by law.

Can I include student loans in a bankruptcy filing?

Under the Higher Education Act of 1994, loans obtained for educational purposes cannot be discharged in a Chapter 7 bankruptcy. There may be special circumstances in some cases which would allow an individual to discharge some or all of their student loan debt.

Student loan debt can be included in a Chapter 13 repayment plan. Whether or not the student loans can be paid off entirely in the Chapter 13 plan would depend upon the particular requirements of the case.

While the Bankruptcy Code offers little assistance with the management of student loan debt, there may be options available. If you have federally guaranteed student loan debt, you may wish to visit the Income Based Repayment website at ibrinfo.org to research your alternatives.

What type of bankruptcy should I file?

The type of consumer bankruptcy which would best suit you, whether Chapter 7 or Chapter 13, will depend upon your particular and unique financial circumstances. Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, there will be certain situations where a consumer may prefer a Chapter 7 bankruptcy, but is required by the new law to file a Chapter 13. Furthermore, if a consumer has filed a previous bankruptcy, then there may be limitations on the type of bankruptcy that they would be allowed to file under the new law. Please notify your attorney if you have ever filed a bankruptcy, so that they will be able to provide you with the best possible advice. Your bankruptcy attorney should recommend the best option for you depending upon these factors.

Unsure if you need to file bankruptcy or what type to file, click here for view our Bankruptcy Questionare

What do I have to do to be eligible to file a bankruptcy?

The Bankruptcy Abuse Prevention and Consumer Protect Act of 2005 requires that an individual must participate in credit counseling with a credit counseling agency that is certified by the United States Trustee of the district in which the consumer resides. A list of approved credit counseling agencies will be available at the Bankruptcy Court clerk’s office, as well as our office. A current list of approved and recommended credit counseling agencies are available on our Credit Counseling portion of the website, or at our office.

Bankruptcy Courts are authorized to make limited exceptions from the credit counseling requirement. This would involve a situation where suitable approved credit counseling is not available in the location where the consumer resides. Furthermore, credit counseling may be temporarily waived in the event of an emergency, provided the consumer engages in such credit counseling following the filing of the case. However, the courts that have ruled on this issue since the passage of BAPCPA have strictly interpreted the definition of an emergency, so such a waiver has not been granted very frequently.

While each credit counseling agency will have its own requirements for what a consumer must provide in order to receive counseling, it is safe to assume that they will have to review the same documents that a bankruptcy attorney would have to review, in order to counsel a consumer about their options under bankruptcy law.

Are there alternatives to filing a consumer bankruptcy which I should consider?

Nowadays, it is almost impossible to watch television, read the newspaper or surf the internet without being bombarded by supposed bankruptcy alternatives or debt remedies. These proposed solutions may include non-profit credit counseling, compensated debt management programs, second mortgages and/or refinancing of a principal mortgage. Finally, some individuals may be able to negotiate directly with creditors, in order to reduce or eliminate interest, and decrease the payments.

At Leiden and Leiden, as well as many other bankruptcy firms in the CSRA, there is no charge for the initial bankruptcy consultation. As a result, an individual can take advantage of the opportunity to consider bankruptcy alternatives before taking steps which may further jeopardize their financial situation, such as accumulating more debt against their residence.

Credit counseling may be successful if the creditors are willing to cooperate. However, there are some types of creditors who will not participate in credit counseling. Secured debt and tax debt can often not be included in credit counseling arrangements. In addition, credit counseling may not be an option for an individual who has been served with a lawsuit, or has a judgment.

There are many scams, especially on the internet, in regard to debt management programs that promise to reduce or eliminate your monthly payments. The legitimacy of such programs can be investigated by calling the Attorney General’s Office for your particular state, Better Business Bureau, or contacting the Federal Trade Commission.

Is there any charge for my inital bankruptcy consultation?

Leiden and Leiden, P.C., like most firms locally, does not charge a consultation fee for the initial bankruptcy consultation. Fees are usually discussed after the consultation, once a bankruptcy alternative is selected.

Will my employer be notified of my bankruptcy filing?

This depends on the type of bankruptcy that you file. In a Chapter 7 bankruptcy, an employer would not be notified unless that employer was also a creditor, or a co-signer or guarantor on a debt.

In Chapter 13 cases, the Chapter 13 plan is funded by deductions from the employee’s paycheck. The Bankruptcy Court sends a Salary Deduction Order to the employer, so that the money can be deducted and forwarded to the Chapter 13 Trustee. In some circumstances, an employer may not be notified if there is an alternate source for the Chapter 13 payment, such as military retirement income.

Will my bankruptcy be printed in the newspaper?

No. Unlike some legal proceedings like foreclosures or name changes, bankruptcies are not required to be published in the newspaper. While some high profile bankruptcy cases may receive media attention, consumer bankruptcies usually do not.

Will a bankruptcy stop lawsuits and garnishments pending against me?

The filing of a bankruptcy stops or “stays” any collection activity pending against you, even if a lawsuit has been filed, or a judgment received. It also prevents the garnishment of wages, and bank accounts. If the purpose of a lawsuit is something other than to collect a debt or recover property, such as a domestic matter, then it may not be affected by the filing of a bankruptcy.

If I am married, does my spouse have to file bankruptcy with me?

There is no legal requirement that a married couple needs to file a bankruptcy together. However, most attorneys will usually recommend a joint filing in a situation where both spouses are liable for debts that would be discharged in a bankruptcy. For example, if a husband and wife are both liable on a credit card debt, and the husband files bankruptcy alone, the credit card company will still be able to pursue the wife for the debt.

Will I be able to obtain credit after my bankruptcy is over?

Your ability to obtain credit after the filing of a bankruptcy will depend upon a variety of factors. In addition to reviewing your credit report, future lenders will also consider your employment, income and expenses in considering any applications for credit. Bankruptcy law does not prohibit you from attempting to obtain credit after your case is discharged.

Are there other types of bankruptcy besides Chapter 7 and Chapter 13?

In addition to the types of bankruptcy already discussed, the Bankruptcy Code also provides special bankruptcy protections for Family Farmers (Chapter 12) and businesses that wish to reorganize and restructure their debt (Chapter 11). Your attorney should advise you about your eligibility to file one of these types of bankruptcy, where applicable.