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Bankruptcy FAQs
Experienced Legal Help for All of Your Bankruptcy Needs
If you are facing a foreclosure on your home, repossession of your automobile or problems with your credit cards, medical bills or tax issues, the Onyeani Law Firm, LLC will be able to assist you with all of your bankruptcy needs. We are very knowledgeable and have an in-depth understanding of the realities faced by people entering into bankruptcy. We believe that we can help find realistic solutions to your difficult financial problems.
There are three main types of Bankruptcy:
Chapter 13 Bankruptcy is also called a Debt Consolidation or Debt Reorganization. Chapter 13 Bankruptcy is designed to stop a foreclosure on your home and allow you to catch up on the arrears or back payments on the home over sixty months. Also, Chapter 13 Bankruptcy could help you pay off your automobile at reduced payments and interest. A Chapter 13 Bankruptcy can lower your credit card payments and if you have money owed to the IRS, you can pay the debt back often with no interest and penalties. A good bankruptcy lawyer can accomplish many things through a Chapter 13 Bankruptcy in terms of relieving the financial and personal stress of debt.
A Chapter 7 Bankruptcy is also called a Liquidation Bankruptcy. A Chapter 7 Bankruptcy is designed to eliminate unsecured debts such as credit cards and medical bills. In a Chapter 7 Bankruptcy, you need to continue paying your mortgage and car note if you intend to keep those items.
There is also a Chapter 11 Corporate Bankruptcy or Reorganization. This Bankruptcy is usually reserved for an individual or Corporation with over one million dollars in debt. In Chapter 11, you may continue to operate your business, but your creditors and the court must approve a plan to repay your debts. There is no trustee unless the judge decides that one is necessary; if a trustee is appointed, the trustee takes control of your business and property. Our bankruptcy attorneys are trained to handle Chapter 11 corporate bankruptcy but for obvious reasons, the majority of bankruptcy filings are either Chapter 7 Bankruptcy or Chapter 13 Bankruptcy.
BANKRUPTCY FAQ’s
What Is Bankruptcy?
Bankruptcy is a legal proceeding in which a person can get a fresh financial start. Your right to file for bankruptcy is provided by federal law.
What Can Bankruptcy Do?
Bankruptcy will cancel your obligation to pay most, if not all, of your bills. This is called a discharge of your debts. The discharge will:
Stop wage garnishments, bill collector telephone calls and all other collection actions against you.
Stop foreclosure on your house and allow you an opportunity to catch up on missed mortgage payments.
Prevent repossession of a car.
Will Bankruptcy Affect My Credit?
Unfortunately, if you are behind on your bills, your credit may already be bad. Bankruptcy will probably not make things any worse.
Since bankruptcy wipes out your debts, you are likely to be in a better position to pay your current bills, and you may be able to get new credit.
Can I File for Bankruptcy?
Yes, almost everyone is eligible to file for bankruptcy. Most people may elect to file Chapter 7 Bankruptcy if they wish to. However, a person with "above average" income, small household size and low household expenses, as determined by the "financial means" test, may not have the option of filing a Chapter 7 petition. Our services include performing the "financial means" test to determine your options under the law.
Can I only list certain debts in my Bankruptcy?
No. All debts must be listed, but you can reaffirm debts such as your home, car (s) and other secured loans. You can also make voluntary payments to family or medical providers if you wish.
Will I Have to Go to Court?
Yes. You must attend a hearing called a 341(a) meeting conducted by the bankruptcy trustee. An attorney from our office will be with you at all times and will fully protect your legal rights. We advise that you be present at the Meeting at least 20-30 minutes early so that we can meet with you before bankruptcy hearing with the bankruptcy trustee. Please bring your driver’s license and social security card or evidence of your social security number, such as a health insurance card or passport.
What do I do if I receive a bill or letter from one of my Creditors after I filed Bankruptcy?
Make a copy of your Bankruptcy Hearing Notice (the one that says 341 Meeting of Creditors) and send it certified mail to the Creditor along with the bill or letter.
I filed Bankruptcy but I keep getting phone calls from Creditors. What should I do?
You can tell the Creditor you filed Bankruptcy and give him your Case Number. Usually, this will prevent any further phone calls. If the Creditor persists, have him call our office.
Do I have to attend the 341 Meeting of Creditors or Creditor Hearing?
If you file Bankruptcy, attendance at the 341 Meeting of Creditors is required. If you do not attend, your Chapter 7 or Chapter 13 Bankruptcy case will be dismissed. In a Chapter 13 Bankruptcy, you usually do not need to attend the Confirmation Hearing (where your Bankruptcy is formally approved by the bankruptcy judge), unless the bankruptcy attorney notifies you that you must attend.
How long is my credit affected if I file Bankruptcy?
A Bankruptcy is on your credit report for ten years. However, if you file Bankruptcy, either Chapter 13 or Chapter 7, your credit is affected for about 2 years.
Will filing Bankruptcy affect my spouse?
If your spouse is not a Joint Debtor or Joint Obligor on any of your Debts, filing either Chapter 13 Bankruptcy or Chapter 7 Bankruptcy will not affect them. Again, speak with one of our Bankruptcy Attorneys regarding exceptions to this rule.
Can I eliminate the second mortgage on my home if I file for Chapter 13?
One of the biggest problems that homeowners face in today's recessionary economy is the loss in value to their homes. It is not uncommon to see houses that have dropped 50% in value over the past few years, leaving many to wonder if it is even worthwhile to keep their home.
As such, many homes are "under water" or "upside down" meaning that the homes are worth less than the balance due on the mortgage. In many cases, there are two mortgages and the home is worth less than the first mortgage, making the second mortgage totally unsecured.
Chapter 13 bankruptcy affords homeowners the opportunity to get rid of the second mortgage because there is insufficient value in the property. When a judge removes the second mortgage during bankruptcy proceedings it is referred to as “stripping” the lien. When the second mortgage is “stripped” the homeowner will only be responsible for the first mortgage.
Can I buy or sell a house if I file Bankruptcy?
Generally, you are eligible to buy a house within 1-2 years if you file either Chapter 7 Bankruptcy or Chapter 13 Bankruptcy. Our office can assist you in this matter. If you wish to sell your Homestead in a Chapter 7 or Chapter 13 Bankruptcy you can generally do so and retain the proceeds. There are several limitations on your ability to do this and you should meet with our Bankruptcy Attorneys before selling your home.
How do I pay the Chapter 13 trustee?
You should receive a letter from the trustee with payment instructions. The trustee will accept money orders, cashier checks, and certified checks.
When are payments due to the Chapter 13 Trustee?
Your first payment is due 30 days after your case is filed. You will pay once a month for 36 to 60 months depending on your plan of repayment.
What debts are dischargeable in Chapter 7 Bankruptcy or Chapter 13 Bankruptcy?
Certain debts are dischargeable, meaning your Bankruptcy Attorney can eliminate those debts in a Chapter 7 Bankruptcy or Chapter 13 Bankruptcy. These debts usually include credit cards, medical bills, unsecured loans, and old phone bills. In some cases tax debts can be discharged in a Chapter 7 Bankruptcy or Chapter 13 Bankruptcy. Under some very limited circumstances, student loans can be discharged in a Chapter 7 Bankruptcy or Chapter 13 Bankruptcy. Child support and alimony payments are almost never dischargeable.
What is a Bankruptcy Trustee?
There are essentially two different kinds of Bankruptcy Trustees, a Chapter 7 Bankruptcy Trustee and a Chapter 13 Bankruptcy Trustee. A Chapter 7 Bankruptcy Trustee is assigned by the Bankruptcy Court to oversee the cases of persons who file Chapter 7 Bankruptcy. Bankruptcy Law is essentially a balancing of the interests of Debtors (those who owe money) and Creditors (those whom are owed money). In a Chapter 7 Bankruptcy, a Debtor seeks to Discharge or eliminate all or most of their debts without any payment to the Creditors. The Chapter 7 Bankruptcy Trustee function then is to attempt to secure some dividend or monies for the Creditors. Therefore, the Chapter 7 Bankruptcy Trustee seeks to take from the Debtor assets that are Non-Exempt Assets under Bankruptcy Law. The Chapter 7 Bankruptcy Trustee will then sell those assets at a public auction.
Your Bankruptcy Attorneys function, among other things, is to prevent this from happening.
A Chapter 13 Bankruptcy Trustees function is different from a Chapter 7 Bankruptcy Trustee. A Chapter 13 Bankruptcy involves a consolidation of a Debtors debts and a payment to ones Creditors. The Chapter 13 Bankruptcy Trustees main function then is to make a decision as to a fair repayment plan of Debtors debts based upon their income, assets and other considerations. Your Bankruptcy Attorneys function is to try to make that payment as low as possible.
In order to avoid the Chapter 7 Bankruptcy Trustee from taking my asset, can I put that asset in another persons name?
If you put an asset that would not be protected in Bankruptcy in someone else's name, then the Chapter 7 Bankruptcy Trustee can avoid or reverse that transaction automatically within two years of the transfer if that individual is a family member. Even if you are past the two year mark, you can have some problems under the Fraudulent Conveyance Act if it is determined that you transferred that asset to a third party in order to avoid your Creditors. Once that transaction is reversed, the Chapter 7 Bankruptcy Trustee can sell that asset at a public auction.
The Chapter 13 Bankruptcy Trustee cannot sell such asset but can seek to make a Debtors payment higher in a Chapter 13 Bankruptcy based upon such a transfer.
What if I miss a payment in my Chapter 13 Bankruptcy / Debt Consolidation?
If you miss a payment in the Chapter 13 Bankruptcy, your Bankruptcy Attorney can arrange with the Chapter 13 Bankruptcy Trustee to help you get caught up with the payments. If you are ever more than 30 days late again, the Bankruptcy Judge might dismiss your Chapter 13 Bankruptcy.
What is a US Trustee?
A US Trustee is the policeman of the Bankruptcy Court. His job is to make sure that Bankruptcy Attorneys and Debtors are acting honestly. If someone lies to a Bankruptcy Trustee or Bankruptcy Judge, the US Trustee can seek impose sanctions that can include criminal fines and even imprisonment.
Will Bankruptcy Wipe Out All My Debts? Yes, but Bankruptcy Will Not Wipe Out The Following Debts:
money owed for child support or alimony, fines, and some taxes;
credit obtained by fraud or knowingly giving false information to a creditor;
debts resulting from willful and malicious harm and
student loans
What Property Can I Keep?
In bankruptcy you can keep all property which the law says is exempt. The amounts of the exemptions are doubled when a married couple files together. In determining your exempt property remember that value of property is not what you paid for it, but what it is worth today. For many items such as furniture and cars this will be considerably less than what you paid.
Most debtors do not lose any property. The majority of all cases are administered as “No Asset” cases, meaning there are no assets that are both non-exempt and worth enough for the estate to pay the costs of administration. If you do have a large tax refund or other non-exempt asset that may be at risk, your attorney can advise you how to best protect it. Speak to our attorneys to find out about the different exemptions to protect your real and personal items.
NOTE: Evelyn Akushie- Onyeani, Esq. is a federally- designated Debt Relief Agent pursuant to Title 11 of the U.S. Code (Bankruptcy Abuse Prevention and Consumer Protection Act of 2005). As an attorney, she helps debtors file for bankruptcy relief.