What is the general process in consumer bankruptcy cases?
In a Chapter 7 bankruptcy case, several forms will be filed with the bankruptcy court disclosing the debtor’s personal and real property, his or her income and expenses, and his or her debts and property transactions. The bankruptcy court will appoint a person called a “trustee” who is assigned to oversee the debtor’s case.
About 30 days after the debtor’s case is filed, there will be a “meeting of creditors” where the trustee will review the case, verify the debtor’s identity, and probably ask a few basic questions.
Despite the name, creditors rarely attend the meeting and it lasts only a few minutes. A couple of months after the meeting of creditors the debtor should receive a notice from the court saying “all debts that qualified for discharge were discharged”.
What is bankruptcy?
Bankruptcy is a federal court process designed to help consumers and businesses eliminate their debts or repay them under the protection of the bankruptcy court.
Who can file a Chapter 7 bankruptcy petition?
In Georgia, almost any individual, partnership, or corporation may file a Chapter 7 bankruptcy petition if he or she resides, has a domicile, a place of business, or property in the United States.
If an individual was granted or denied a Chapter 7 discharge in a prior case within the last 8 years, he or she may not be entitled to receive a discharge in a subsequently filed Chapter 7 bankruptcy in Georgia.
What happens if I file a Chapter 7 bankruptcy?
In Georgia, filing a petition with the bankruptcy court commences a Chapter 7 bankruptcy proceeding. The person filing a Chapter 7 is referred to as the “debtor”.
The debtor is required to disclose to the court all of his or her property and debts and to turn over all nonexempt property to the bankruptcy trustee, who then converts it to cash for distribution to the creditors. The debtor then receives a discharge of all dischargeable debts.
What information is required at the time of my initial appointment?
- A list of creditors setting forth a good idea of who the creditors are and how much is owed to them. If bankruptcy is the right option, we will help get a copy of your credit report.
- A copy of your most recent pay stub showing net and gross income and year-to-date earnings. Additionally, your gross earnings for the prior two (2) years. If you are self-employed, the a month-to-month profit and loss statement for the past six (6) months is required.
- The payoff amount on any automobile(s) that you are financing and information on the mileage on the vehicle(s).
- Copies of all judgements, lawsuits, and/or liens pending against you. If your wages are being garnished, a copy of the wage garnishment order and your employer’s fax number will expedite our office stopping this action.
- Any and all information regarding student loans, tax obligations or co-signed obligations, if applicable.
- A payoff amount on any real property that you are financing.
- A copy of any trust instrument in which you have a beneficiary interest.
- If you are married and filing a separate case, a copy of your spouse’s paycheck stub showing net and gross income.
Will bankruptcy stop creditor calls?
When we help you file for bankruptcy, we ensure that an “automatic stay” goes into effect and is enforced. The automatic stay prohibits virtually all creditors from taking any action to collect the debts you owe them unless the bankruptcy court lifts the stay and lets the creditor proceed with collections.
Once you have retained an attorney, the creditor will be referred to your bankruptcy attorney, and then, by law, the creditors will cease their harassing calls.
How long after filing will the creditors stop calling?
Once a creditor becomes aware of a filing for bankruptcy protection, it must immediately stop all collection efforts. After you file the bankruptcy petition, the court mails a notice to all the creditors listed in your bankruptcy schedules, which usually takes a few days. Creditors will also stop calling if you inform them that you filed a bankruptcy petition, and provide them with your case number.
In urgent cases, we will contact the creditor immediately upon filing the bankruptcy petition, especially if a lawsuit is pending. If a creditor continues to use collection tactics once informed of the bankruptcy, it may be liable for court sanctions and attorney’s fees for this conduct.
Who notifies the creditors?
After the bankruptcy petition is filed, the court mails a notice to all the creditors listed in the schedules, which usually takes a few days.
Who deals with my creditors during the bankruptcy?
We will deal with your creditors once you officially retain our office for representation.
Will my employer or landlord find out about my bankruptcy?
Bankruptcy petitions are public records. However, under normal circumstances, unless your employer or landlord is a creditor, they will not know you filed a bankruptcy petition.
If your employer or landlord is a creditor, they must be listed as a creditor on the schedules and will recieve notice of the bankruptcy proceeding.
Can my employer fire me for filing bankruptcy?
No. The law prohibits government units and private employers from discriminating against a debtor because he or she filed a bankruptcy petition or because he or she failed to pay a dischargeable debt.
Can I go to jail if I don’t pay my debts?
No, unless you are willfully evading tax debts.
Does the spouse of a married person also have to file bankruptcy?
No. In some cases where only one spouse has debts, or one spouse has debts that are not dischargeable, it might be advisable to have only one spouse file.
Can I keep any credit cards?
Under some circumstances you may be able to keep some credit cards if the creditor agress.
There are many factors that must be considered, including the credit card balance at the time of the bankruptcy, what terms the credit card company is willing to accept and your ability to pay the present and future credit card debt.
Will I have to fill out forms?
Filing for bankruptcy means filling out forms. You will fill out forms in order to provide us with the information needed to prepare the bankruptcy petition. We will use the information you provide to complete the official forms.
Will I have to go to court?
Not exactly. About 30 to 40 days after filing the bankruptcy petition, you will have to attend a hearing presided over by a bankruptcy trustee. This hearing is called the First Meeting of Creditors. The trustee is not a judge, but an individual appointed by the United States Trustee to oversee bankruptcy cases.
At the First Meeting of Creditors, the trustee will ask you questions under oath regarding the content of your bankruptcy papers, your assets, debts, and other matters. Creditors will also be permitted to ask you questions, although in the majority of cases creditors do not attend the meeting.
If we are retained to represent you, we will appear at the First Meeting of Creditors with you.
After the initial meeting, you normally do not have to return to court, However, if a creditor or the trutee files a motion of an adversary action, you may have to appear in court.
Are there alternatives to bankruptcy?
Yes. Sometimes payment plans can be negotiated with creditors. Obtaining loan extensions, compromises and workout agreements require negotiation skills and experience.
These alternatives may alert your creditors of the existence of nonexempt property that the creditor could reach and can involve considerable expense. You also have the option of doing nothing.
In any event, you should seek professional advice in dealing with these alternatives.
What should I do to prepare for filing bankruptcy?
First, you should consult with a bankruptcy attorney. An attorney can help you plan for the bankruptcy, decide when to file a bankruptcy petition, or even avoid filing for bankruptcy. A few specific items are worth mentioning.
- If you intend to file bankruptcy, you should stop using your credit cards. If you borrow money with the specific intent of discharging the debt in bankruptcy instead of paying it back, the debt may not be dischargeable.
- Do not transfer your assets to friends, family and/or business associates to protect the assets from your creditors. The transfer may be considered a fraudulent conveyance. If it is, you may lose both the property and your right to a bankruptcy discharge.
- Don’t destroy any business or financial records. You can lose your right to a bankruptcy discharge.
- Carefully choose the creditors you pay. Some creditors, such as landlords, secured creditors, and some utilities should be paid under most circumstances. If you pay a credit card debt that eventually will be discharged, you may be throwing money away. We can advise you on what debts should and should not be paid while you prepare to file a bankruptcy petition.
Can I file a bankruptcy for my debts, but not include my assets?
Can I file bankruptcy to delay a creditor?
The Rules of Bankruptcy Procedure require you or your attorney to certify that your petition is not filed “for any improper purpose, such as to harass or to cause unnecassary delay.”
Bankruptcy is intended as a tool for dealing with debts that can not otherwise be paid. You should not file a bankruptcy petition for the sole reason of delaying a creditor’s actions.
Do I have to disclose all my assets?
Yes. If you knowingly and fraudulently conceal an asset from the court you have committed a felony and can be fined up to $500,000 imprisoned for up to five (5) years, or both.
In addition, the court can deny you your discharge, or dismiss or convert your bankruptcy proceeding.
What is a credit report?
Credit reports are compiled by credit bureas – private companies that gather information about your credit history and sell it to banks, mortgage lenders, credit unions, credit card companies, department stores, insurance companies, landlords and even a few employers.
Credit bureaus get most of their data from creditors. They also search court records for lawsuits, judgments, bankruptcy filings, and recorded liens (legal claims). To create a credit file for a given person, a credit bureau searches its computer files until it finds entires that match the name, Social Security number and any other available identifying information.
Credit reports include non-credit data such as names you previously went by, past and present addresses, Social Security number, employment history, marriages and divorces. Credit data includes the names of your creditors, type and number of each account, when each account was opened, your payment history for the previous 24-36 months, your credit limit or the original amount of a loan, and your current balance. The report will show if an account has been turned over to a collection agency or is in dispute.
How can I get a copy of my credit report?
There are three (3) major credit bureaus: Equifax, TransUnion and Experian.
The federal Fair Credit Reporting Act (FCRA) entitles you to a copy of your credit report, and you can get one for free if:
- You’ve been denied credit because of information in your credit report and you request a copy within 60 days of being denied credit;
- You’re unemployed and looking for work;
- You receive public assistance; or
- You believe your file contains errors due to fraud.
The law says that if you don’t qualify for a free report, you should pay no more than $8.50 to obtain a report from:
- Equifax – P.O. Box 740241 Atlanta, GA 30374, 800-685-1111
- TransUnion – P.O. Box 1000 Chester, PA 19022, 800-888-4213
- Experian – P.O. Box 2104 Allen, TX 75013-2104, 888-397-3742
When requesting a copy of your credit reports, be sure to provide the following information:
- Your full name (including generations such as Jr., Sr., III).
- Your birth date.
- Your Social Security number.
- Your spouse’s name (if applicable).
- Your telephone number.
- Your current address and addresses for the previous five (5) years.
What should I do if I find mistakes in my credit report?
As you read through your report, make a list of everything that is out-of-date. The credit bureaus should remove this information from your credit report.
- Lawsuits, paid tax liens, accounts sent out for collection, criminal records, late payments and any other adverse information older than seven (7) years.
- Bankruptcies older than ten (10) years from the discharge or dismissal.
- Credit inquiries (requests by companies for a copy of your report) older than two (2) years.
Next, look for incorrect of misleading information, such as:
- Incorrect or incomplete name, address, phone number, Social Security number or employment information.
- Bankruptcies not identified by their specific chapter number.
- Accounts that are not yours or lawsuits in which you were not involved.
- Incorrect account histories – such as late payments when you paid on time.
- Closed accounts listed as open – it may look as if you have too much open credit.
- Any account you closed that does not say “closed by consumer”
After reviewing your report, an attorney can help you contact the credit bureau and launch an investigation on incorrect items. Once it is confirmed that certain itens are incorrect, or the creditor who provided the information can no longer verify it, the credit bureau must remove the information from your report.
Credit bureaus will often remove an item on request without an investigation if rechecking the item is more bothersome than it’s worth.
Do I have to attend Credit Counseling to file for Chapter 7 Bankruptcy protection?
Yes. Before you can file a petition under the bankruptcy code under either Chapter 7 or Chapter 13, you must seek credit counseling first. The process is a phone interview that takes about 30 minutes.
Do I have to attend a Financial Management Course or receive a discharge under Chapter 7 bankruptcy of Chapter 13 bankruptcy?
Yes. Before the court will sign off on your discharge, you must attend a course on financial management.
Does a bankruptcy relieve me of all my debts?
The policy of bankruptcy law is that the honest debtor who is in debt beyond his or her ability to repay his or her debts should receive a fresh start. However, some debts must still be paid.
Generally speaking, the following debts will not be discharged:
- Spousal and child support
- Debts arising out of a willful misconduct and/or malicious misconduct by the debtor
- Liability for injury or death from driving while intoxicated
- Nondischargeable debts from a prior bankruptcy
- Student loans
- Criminal fines
- Penalties and forfeitures
Secured debts generally must be paid if the debtor intends to retain the collateral securing the debt. If they are not paid, the creditor will usually take the necessary legal steps to recover the property.
Will bankruptcy stop a wage garnishment?
Will bankruptcy stop a foreclosure?
Temporarily, yes. However, the lender is entitled to seek relief from the automatic stay to allow it to continue foreclosure proceedings.
Usually, to keep a home that is in foreclosure, the debtor will have to reach an agreement with the lender and resume making payments.
Will bankruptcy stop an eviction?
It may delay it, but the owner is entitled to possession of the property and will be able to resume eviction proceedings with court approval or after the discharge.
Filing a Chapter 7 solely to avoid an eviction might be considered an abuse of the bankruptcy law.
If the bankruptcy court finds that this is true, then the court can immediately dismiss the bankruptcy and impose other legal and monetary sanctions on you.
Will bankruptcy stop a judgment?
Yes. Most collection actions are stopped by bankruptcy.
Will bankruptcy remove a lien?
Certain liens may be removed, but this requires a motion to be filed with the court. The procedures are complex and are best done with an attorney.
Will bankruptcy discharge my obligation to pay community debts after a dissolution?
With a few exceptions, you may be discharged from all dischargeable community debts.
In some circumstances, you may still be liable to your spouse if he or she pays the debt, or files a complaint against you in bankruptcy court.
Is spousal support dischargeable?
Spousal support and child support payments generally are not dischargeable. Certain other dissolution related obligations, such as payments to others, hold harmless provisions and property settlement obligations are not dischargeable if the debtor has the ability to pay them and the detriment to the spouse outweighs the benefit of the discharge to the debtor.
Can I discharge student loans?
Generally, student loans are not discharged in bankruptcy. Although there are possible exceptions to this general rule:
- The student loan may be discharged if it is neither “insured or guaranteed by a governmental unit” nor “made under any program funded in whole or in part by a governmental unit or nonprofit institution.
- The student loan may be discharged if paying the loan will “impose an undue hardship on the debtor and the debtor’s dependents”.
The facts of the particular case will determine dischargeability. If a student loan falls into one of these exceptions, discharge of the loan is not automatic. The debtor should file an adversary proceeding in the bankruptcy court to obtain a court order declaring the debt discharged.
If I co-signed for a debt, does bankruptcy affect the obligation?
If the debt is a dischargeable debt then you will not have to pay it. Your co-signer will become primarily responsible for the debt.
What if I do not list a creditor on the bankruptcy papers?
You are required to list all creditors. If you intentionally omit a creditor from your schedules, it is considered perjury and you may lose your bankruptcy discharge. However, if a creditor is not known to exist at the time the schedules are filed, you may amend your schedules at any time while the case is still open to add an additional creditor.
What is an exemption?
Certain property is protected from creditors in bankruptcy and this property is known as exempt property.
What property is exempt?
Exactly what property is protected depends on the exemption scheme chosen. Georgia has two (2) schedules of exempt property. Determining what property is exempt requires a complete understanding of the laws governing residency and the Georgia exemption laws.
What happens to my personal property, real property and other assets?
All of the property that you own at the time of the bankruptcy filing as well as your right to receive property in the future, become the property of the bankruptcy estate. This means that the bankruptcy trustee may take control of this property and liquidate it to satisfy your creditors.
Certain property is exempt and you will be able to keep that property. Georgia has two (2) schedules of exempt property. The set of exemptions you should use depends on the nature and value of your property. All of your assets can often be protected.
Can I keep my home and automobile?
In many cases, you can retain your home and automobile in a Chapter 7 bankruptcy proceeding if:
- You are current in making payments on a loan secured by the home or automobile; and
- The home or automobile does not have equity (a liquidation value in excess of the amount owed to creditors with liens against the property) in excess of what you are allowed to exempt.
In the event you want to keep your home or automobile, you must continue to make payments after your petition is filed.
Are pension plans and 401(k) plans exempt?
The United States Supreme Court has held that pension plans, 401(k) plans, and other “ERISA-qualified plans” are generally “excluded” from the bankruptcy estate.
Do I need an attorney to file bankruptcy?
Individuals may file a bankruptcy petition without an attorney, which is called appearing in “pro-se”. Keep in mind that the bankruptcy code is very complex and filing a bankruptcy petition requires a thorough knowledge of the bankruptcy code and other laws.
How do I find an experienced bankruptcy attorney?
You have already taken your first step by looking at the Remboldt Law Firm website. If you plan to file in Georgia, Remboldt Law Firm is at your service.
What about non-attorney bankruptcy petition preparers?
Bankruptcy petition preparers are not permitted to provide you with any legal advice. The bankruptcy petition preparer’s role is limited by law solely to typing.
A bankruptcy petition preparer can not advise about the law, advise on how to answer creditor or trustee questions, assist in planning, or appear with you at the First Meeting of Creditors or in court.
What happens after I file a bankruptcy petition?
The bankruptcy court will mail to each of your creditors a “Notice of Commencemt of Case”, informing them that you have filed the petition and advising them of the date of the First Meeting of Creditors.
About 30-40 days after filing the bankruptcy petition, you will be required to attend a hearing presided over by a bankruptcy trustee. This hearing is called the First Meeting of Creditors. The trustee is not a judge, but an individual appointed by the United States Trustee to oversee bankruptcy cases.
At the First Meeting of Creditors the trustee will ask you questions under oath regarding the content of your bankruptcy papers, your assets, debts and other aspects of your financial situation.
In an ordinary Chapter 7 proceeding the bankruptcy court will automatically grant and Order of Discharge 60-75 days after the First Meeting of Creditors.
What is the “automatic stay”?
The moment a bankruptcy petition is filed, your creditors are automatically restrained from taking any action to collect the debts owed to them.
However, there are some exceptions. For example, a bankruptcy petition does not stay the commencement or continuation of a criminal action, an action to collect spousal support, or an action to enforce a government’s police or regulatory power.
If my creditors ignore the automatic stay, what can be done?
First, make sure the creditor is aware that you filed for bankruptcy and ask it to stop collection efforts. If the creditor does not respond, you may seek a court order enjoining the creditor from further action.
If you are an individual has been injured by your creditor’s willful failure to comply with the automatic stay, the law allows you to recover actual damages, including costs and attorney’s fees, and, in some circumstances, punitive damages.
Will the fact that I filed bankruptcy appear on credit reports?
The bankruptcy will be listed in credit reports for a period of up to ten (10) years.
After filing for bankruptcy, can I obtain new credit?
Yes. The decision of whether to extend your credit belongs to each particular lender. However, the fact that you filed for bankruptcy, if properly explain, can be less damaging than a history of unpaid accounts.
How can I re-establish credit after bankruptcy?
You may be able to obtain a secured credit card, where the credit limit is based on the amount of security given, or obtain credit using a co-signer not long after your case is discharged.
How long does is take to rebuild credit?
Generally it will take about two (2) years to substantially rebuild your credit. In 18-24 months after a bankruptcy, you should be able to qualify for a mortgage.