Frequently Asked Questions
1. Q: What is bankruptcy?
A: Bankruptcy is a proceeding to allow a debtor who cannot pay his bills a “fresh start” in life. Depending on the type of debt you have, and the type of Bankruptcy you file for, many, if not most or all of your debts, can be eliminated (“discharged”) by this process. The right to file for Bankruptcy is provided by Federal law, and the process is administered by the Federal Bankruptcy Court. There are for the most part two types of Bankruptcy applicable to most consumers Chapter 7 (a liquidation) or Chapter 13 (a repayment plan).
2. Q: After I file for Bankruptcy, can my creditors still try to collect money from me ?
A: No. Once you file for Bankruptcy protection, your creditors have to immediately stop trying to collect money from you. They cannot legally call or write to you to collect money, start or continue a lawsuit against you, start or continue to garnish (take a portion of) your paycheck, start or continue to “freeze” your bank account, or engage in any other activities to try and collect money from you. This includes repossessing your vehicle or foreclosing on your home. According to Bankruptcy law, this immediate freeze on all collection activities is referred to in legal terms as the “automatic stay”.
3. Q: Who should consider filing for Bankruptcy?
A: You should consider Bankruptcy, if: (a) you don’t want anymore collection calls, or hate going through your mail; (b) all or most of your credit cards are already at their maximum spending amounts; (c) at this point of your life you can only afford to pay the minimum payments listed each month on your credit card statements; (d) you have tried a debt or credit counseling service and you cannot make the required monthly payment arranged for you by a credit counseling service; (e) your debt consolidation loan was declined; (f) you need your retirement funds to pay your credit cards bills; or (g) you have problems with your family because of disputes over your finances or are preoccupied with your debt.
If these situations sound familiar, you should consider the option of filing for Bankruptcy. Just remember, you are not alone. Many major US Corporations file for bankruptcy every year. Over a million of US citizens file for Bankruptcy protection annually.
4. Q: If I already filed for Bankruptcy once before. Can I use Bankruptcy protection again?
A: Yes, if you previously filed for a discharge in a Chapter 7 Bankruptcy, you must wait at least eight (8) years from the date of the filing of this prior Chapter 7 Bankruptcy case before obtaining a discharge in a new Chapter 7 Bankruptcy case. If you previously received a discharge in a Chapter 13 Bankruptcy, you must wait at least six (6) years from the filing of this prior Chapter 13 case before obtaining a discharge in a new Chapter 7 Bankruptcy case. You can file for a Chapter 13 Bankruptcy within six (6) years of a prior Chapter 7 discharge. Also, in both Chapter 7 & 13 Bankruptcies, you cannot file for Bankruptcy if, within six (6) months prior to the current filing, you had filed for Bankruptcy and either: (a) had the case dismissed by the Court for your failure to appear, or (b) you voluntarily withdrew the prior Bankruptcy filing.
5. Q: If I declare Bankruptcy, can I still get credit, or mortgage, buy a house later on?
A: Yes, you will get credit again, and generally within a very short period of time after filing for Bankruptcy. Although this may seem surprising, you will be in a better position to get credit after you file for Bankruptcy then you are now.
The credit card companies understand that: you now cannot refile for Chapter 7 Bankruptcy again for at least eight years; and most, if not all, of your prior loand and debts have now been eliminated by your Bankruptcy. You are now a good candidate to receive credit than someone who has a lot of outstanding debt, and who may in the short future go Bankrupt. Some credit card companies will actively pursue people after Chapter 7 filing.
Once you get new credit cards and are able to pay new credit card bills as they become due, you will now be establishing a positive credit history. If you continue to try to build a positive credit history post-Bankruptcy, you will be more likely to obtain a mortgage loan sometime in the future. Filing for Bankruptcy will put you in a position where you can begin rebuilding your credit. If you continue to with you current situation, your chances of improving your credit history and obtaining a mortgage loan are probably not good.
6. Q: Can I still keep my home, car and other property if I file for Bankruptcy?
A: Yes. You are allowed to keep your “exempt” assets in a Chapter 7 Bankruptcy. See the notes about Chapter 7 page for a discussion of what is exempt property for New York State residents. In a Chapter 13 Bankruptcy, you keep all your assets. See page about Chapter 13 for an explanation of Chapter 13. We file your bankruptcy case in a way so you can take full advantage of all your allowed exemptions. We will make sure you keep as much of your assets as the bankruptcy code allows, but the results will vary depending on your circumstances and the type of Bankruptcy you choose.
7. Q: Is a person allowed to have any property at the time of filing for Bankruptcy?
A: Yes. The law provides for list of exemp assets, you do not have to be down to your last dollar to file for Bankruptcy. Noone has to get to such poverty level, the longer you wait the more you cause yourself and your family to suffer. See our notes on Exempt Property.
8. Q: Will I get fired if I file for Bankruptcy?
A: No. Your employer is not notified, and unless he is one of the creditors he will not find out. It is also a violation of Federal law for your employer to fire you or otherwise discriminate against you because you filed for Bankruptcy.
9. Q: Can I transfer some of my assets to a friend/relative before I file for Bankruptcy?
A: No. This is something we call a “fraudulent conveyance”, do not do this, you will get yourself in big trouble. Often right exemption planning (you legally arrange your assets to take full advantage of your allowable exemptions) can legally achieve the same results that you are trying to through a fraudulent conveyance. So don’t make a mistake that will cost you a lot more later.
11. Q: Will I need to come to Court?
A: Yes. If you file for a Chapter 7 or 13, you will come to Court for what is called the Section 341 Meeting. Your creditors have the right to appear at this meeting and ask you questions under oath. The meeting will be conducted by the Trustee, who is a lawyer in private practice assigned by the court to administer your case.
The Trustee will ask you questions about Bankruptcy forms, whether you disclosed all relevant information regarding your financial circumstances, and also on whether you have any “non-exempt” assets. If you file for a Chapter 13, you will also need to appear for a “Confirmation Hearing” before a Bankruptcy Court Judge, to determine if your Chapter 13 Plan will be approved (or “confirmed”) by the Court.
The Hearings are recorded, and are under penalty of perjury, so it is important to be prepared in advance. If you retain our law firm to represent you, we will personally appear with you at these Hearings to protect your rights. We will also prepare you in advance for these Hearings, so that you will know what to expect and will feel more comfortable.
12. Q: Filing for Bankruptcy feels “wrong” ?
A: If it feels wrong that you are not repaying your creditors in full, you can always, at some point in the future, when your Bankruptcy case is over, voluntarily repay your creditors. They will be happy to take your money then. But at this point you could repay them on your terms, when it is easier for you.