Frequently Asked Questions About Bankruptcy and Debt Management
ZLG Law has included this page to address some of the most frequently asked questions about bankruptcy we encounter. However, exceptions may exist so please consult with an attorney regarding concerns about your particular situation.
- Will I lose my home if I file bankruptcy?
- Will I lose my personal belongings in bankruptcy?
- How did the law change in 2005 affect the bankruptcy process?
- Does my spouse have to file bankruptcy with me?
- Can I not list debts in my bankruptcy that I want to keep?
- What do I need to bring to my 341 meeting?
- Will I have to go to Court?
Related Bankruptcy Articles
1. Will bankruptcy erase all of my debts?
While bankruptcy does eliminate most types of debts that were incurred without fraudulent intent, including medical bills, credit card debts, and other unsecured loans, there are some types of debt that are only discharged if certain requirements are met and some debt that are almost never dischargeable. Tax debts, student loans, and child support are examples of these types of debts and should be brought to the attention of your bankruptcy attorney.
2. What Do I Need to Bring With Me to My Free Consultation?
In a typical consumer case, we require that potential clients fill out a short intake form. This contains the information necessary to give our attorneys the chance to quickly evaluate your situation and effectively discuss your options. While more documentation can be brought, this is all that we require for your first meeting.
Business cases are never typical, but we do have a short intake form which must be filled out prior to the meeting and advise that potential business clients bring balance sheets, a monthly profit and loss statement for the past 3 months and the past year, and a list of top creditors which reflects balances owed and debt statuses.
3. What is Chapter 7 Bankruptcy?
At its core, Chapter 7 of the Bankruptcy Code was designed to give those who qualify a fresh start. In most cases, all unsecured, non-priority, debt is extinguished within 90 days after filing and secured debts like mortgages and car loans can be kept if the monthly payments can be made.
4. What is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy can be a great tool for those who earn too much to qualify for chapter 7 relief or wish to take advantage of the automatic stay to avoid foreclosure or repossession of a home or vehicle they want to keep. Successful petitioners pay their disposable income (income after taxes, costs of living, and others are deducted) towards a plan for three to five years and have any remaining unsecured debts discharged at the end of the plan period.
5. How often can I file bankruptcy?
Ordinarily, a person who obtains a chapter 7 discharge must wait eight years after the date of their first filing before filing for chapter 7 relief again. Anyone who receives a discharge in a chapter 13 case must wait six years after their initial filing before seeking for chapter 7 relief.
A person can not receive a chapter 13 discharge if one was received in a previous chapter 13 case in the last two years or a previous chapter 7 case in the last four years. This bar applies to the discharge date in a new case, not to the filing itself.
6. How will bankruptcy affect my credit rating?
When someone files bankruptcy, this action is relayed to the credit reporting agencies by creditors. As a result, that person’s credit score takes an immediate dip usually ranging from 100 to 200 points. Although discharged debts remain on your credit report for up to ten years, proactive filers can see their credit scores improve much sooner than that with the appropriate tactics.
7. Will bankruptcy affect my job?
It is illegal for employers to discriminate against employees based solely on the fact that they have filed bankruptcy. Filing bankruptcy can affect some professional licenses, however, so inform your attorney if you think your license is at risk.
8. Will I lose my home if I file bankruptcy?
In most cases, those who are able to afford their monthly mortgage payment and are current as of the date of filing have no problem keeping their home, both in chapter 7 and chapter 13. In fact, Texas is one of the most homestead-friendly states in the country. However, there are restrictions based on equity in the home and drastic accumulation of equity prior to filing.
9. Will I lose my personal belongings in bankruptcy?
Most people who file bankruptcy do not end up losing any property. This is because of the favorable exemption statutes in Texas which list out the amount and type of property bankruptcy filers are allowed to keep. However, each case is different and non-exempt property will likely be claimed by the bankruptcy trustee.
10. How did the law change in 2005 affect the bankruptcy process?
In short, The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) has made things much more difficult for filers. For starters, the sheer amount of paperwork necessary for a bankruptcy filing has increased significantly. Also, legal fees have increased due to the complexity of the new law and the uncertainty surrounding its enforcement. Lastly, BAPCPA enacted the Means Test, which most chapter 7 bankruptcy filers must pass in order to qualify for relief and which plays a role in the duration and allowable expenses of a chapter 13 plan.
11. Does my spouse have to file bankruptcy with me?
The short answer is no – with a catch. Since Texas is a community property state, most property acquired and income earned after a couple gets married is considered owned by each of them, regardless of how it is titled or who made the purchase. Therefore, when it comes time to list your assets and determine which are exempt from collection, everything must be accounted for. The advantage of filing with your spouse is that you get to double your exemptions, which may be necessary if the value of your property exceeds the statutory cap for a single filer.
12. Can I not list debts in my bankruptcy that I want to keep?
No. One of the chief requirements for a bankruptcy discharge is that all debts outstanding as of the date of filing must be listed on the petition. Failure to do so intentionally could be prosecuted as a bankruptcy crime. That being said, nothing prohibits a person from voluntarily paying debts back after legal discharge.
13. What do I need to bring to my 341 meeting?
If your attorney has done his work properly and you have given him everything he has requested, then all you should need to bring to your 341 meeting is proof of your social security number – usually your social security card – and a picture ID – your license. Situations do vary, however, and additional documentation is sometimes necessary. Your lawyer should let you know in advance if this is the case.
14. Will I have to go to Court?
In most cases you only have to attend the 341 Meeting, which is a meeting in a small room with the bankruptcy trustee and your attorney. In some chapter 13 cases and complicated chapter 7 cases, court attendance may be required. If a court appearance is necessary, you will receive advance notice of the date and time from your attorney.