Bankruptcy is the legal method for people or businesses that owe more money than they can pay to get relief from their debts.  Using the federal law called the Bankruptcy Code, a plan can be worked out to repay money over time or get a fresh start by having their dischargeable debts wiped out.  Provided is some general information about bankruptcy but it is not complete. You may need legal advice, please feel free to contact Gary Miller for an appointment to discuss your situation.

In general there are four kinds of bankruptcy:

Chapter 7 – This is for both individuals and businesses. A trustee is appointed to take over your property. There are many exemptions that allow a debtor to keep different types of property such as homes and vehicles.  Any property with a value above the exemption amount will be sold or turned into money to pay your creditors. You may be able to keep your furniture, vehicles and personal items and real estate depending on the value of the property and whether it fits an exemption to which you are entitled.  At the end of the Chaper 7 bankruptcy all dischargeable debts are wiped out.

Chapter 13 – This is commonly referred to as Reorganization. You usually keep your property, but you must earn wages or have a source of regular income and agree to pay part of your income to your creditors. The Court must approve your repayment plan and your budget. A trustee is appointed and collects the payments from you, pays your creditors some or all of your debts.  How much of your debts are paid back depends on a number of factors including your income, monthly living expenses and the total value of the property you own.  The trustee also makes sure you live up to the terms of your repayment plan.

Charper 12 – This is like Chapter 13 reorganization, but for family farmers only.

Chapter 11 – This is similar to Charpter 13 but is designed for businesses. You 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 business property. 

Who can file for bankruptcy?

Any person, partnership, or coproration may file bankruptcy. Chapter 13 is limited to individual debtors.  A common myth is that under the new bankruptcy law, most people can no longer file a Chaper 7 bankruptcy.  This is false.  Bankruptcy remains a viable option for getting a fresh start and relief from overwhelming debt. Call Gary Miller at     812-282-6697 to make an appointment and together we can discuss your situation and needs.Can I choose which debts to include in the bankruptcy?

No.  You must include any and all debts owed to anyone and all of your property.  If you do not list a debt, it is possible the debt will not be discharged.  You must also include any property you may have an ownership interest in whether the property is in you possession or not. You also have to list property you own but which may be in the possesion of someone else.Do I have to include my property even if I want to keep paying the loan on the property?

If you wish to keep property such as a vehicle which is secured by a loan, you may keep your vehicle by promising to keep paying that debt. This is called a reaffirmation agreement. Reaffirmation Agreements are voluntary and must not place too heavy a burden on your or our family. The reaffirmation agreement can be cancelled in writing within 60 days after the agreement is filed with the court or at any time before the Court issues your discharge, whichever comes first.  If you reaffirm a debt and then fail to pay it, you owe the debt the same as though there was no bankruptcy. The debt will not be discharged and the creditor can take action to repossess any property on which it has a lien or mortgage. The creditor can also take legal action to recover a judgment against you for the difference between the amount due on the loan and the amount the property brought after it was sold by the creditor.Will I lose my home if I file bankruptcy?

If you file a Chapter 7 bankruptcy, you could lose your home if the equity is more than the law allows you to protect.  The equity is the extent to which the fair market value of the home exceeds the total of all debts and mortgages against the property.  You could also lose your home if you are unable to maintain your mortgage payments. 

If your mortgage loan is delinquent, you can stop a foreclosure and save your home by filing a Chapter 13 bankruptcy and creating a repayment plan that spreads the missed payments over the three to five year length of the plan which upon successfully completing the plan will leave your mortgage loan current.  You must keep your reorganization plan payments current or your case can be dismissed and you could lose your home.

Whether you will be able to keep your home in bankruptcy is best answered by a competent attorney. Call Gary Miller at 812-282-6697 to make an appointment and together we can review your needs.What debts may be discharged?

In a Chaper 7 bankruptcy most debts can be eliminated, including credit cards, medical bills, personal loans, balances left after a repossession and most judgments.  The types of debts that cannot be eliminated include most student loans, child support, certain debts arising from domestic relations orders, debts incurred by fraud, most taxes and certain debts arising from personal injury to others.  The bankruptcy law is very complex and this list is not intended to be exhaustive.  Whether certain debts can be discharged is best answered by a competent attorney. Call Gary Miller at 812-282-6697 to make an appointment and together we can review your situation.If I file bankruptcy, will my creditors stop harassing me?

Yes, This is one of the reasons that people file bankruptcy. Once the bankruptcy petition is filed, an automatic stay goes into effect.  The automatic stay legally prevents your creditors from taking further collection actions including calling and contacting you.  Once you receive your discharge at the end of your bankruptcy case, your creditors cannot legally attempt to collect any discharged debt.Can filing bankruptcy stop a wage garnishment?

The automatic stay goes into effect whether you file a Chapter 7 bankruptcy or a Chapter 13 bankruptcy.  An automatic stay causes all collection activities to immediately cease, including most bank and wage garnishments. An exception is a garnishment for child support which is not stopped by the automatic stay. Once the garnishment is stopped your creditor can no longer take up to a quarter of your disposible income. How does filing bankruptcy affect my credit?

Filing bankruptcy will affect your credit rating.  How much your credit rating is affected depends on many factors such as the type, age and amount of delinquent accounts.  If you are contemplating filing bankruptcy, your current credit rating has likely already been affected because you have most likely been missing required payments. A discharge of your current debt may provide an opportunity to rebuild your credit within a few years.  Credit reporting agencies may not report a bankruptcy case on a person’s credit report after ten years from the date the bankruptcy cae is filed.  Other bad credit information is removed after seven years.What papers do I need to file for bankruptcy?

The requirements vary depending on the chapter in which the bankruptcy is filed, and upon individual circumstances. Generally you will need: an account statement or other document for each debt you owe showing the name of the creditor, address of the creditor, account number, the date incurred and the balance due ; pay stubs from the six months immediately before the meeting for you and your spouse whether they are filing bankrupty with you or not; federal and state income tax returns for the last two years; W-2 forms and 1099s from any source of income for the last two years; a list of monthly living expenses; a list of all personal and real property including vehicles along with the reasonable replacement value expected to be paid to a dealer in similar property of a similar age and condition.  Whether you need any other documents is best answered by a competent attorney. Call Gary Miller at 812-282-6697 to make an appointment and together we can review your needs.How much does it cost to file bankruptcy?

The Court charges a filing fee for Chapter 7 of $306.00 and a filing fee of $281.00 for Chapter 13.  In most cases this fee must be paid at the time of filing the case.  In the case of an emergency or a hardship, a Chapter 13 petition can sometimes be filed for less than the full amount up front.  The amount of your legal fees and payment arrangements are based on the facts of your situation.  Call Gary Miller at 812-282-6697 to make an appointment and together we can discuss payment options and review your needs.How long does the bankruptcy case take?

How long your case takes to be completed depends on several factors.  Most Chapter 7 cases take between 90 and 120 days from the date of filing the petition to the date the Discharge Order is granted.  The time the case takes can vary depending on whether non-exempt assets such as tax refunds are taken by the trustee to divide among your creditors. A Chapter 13 bankruptcy case can take from three to five years to be completed depending on the length of the repayment plan.Will I need to go to court?

You will need to attend what is called a 341 Meeting or First Meeting of Creditors.  This is not court and you do not see a bankruptcy judge.  Your attorney will attend the 341 meeting with you at the federal courthouse.  At the meeting you will be asked questions by the bankruptcy trustee about the accuracy of your filing paperwork, your income, expenses, property and debts.  You may be asked questions by any creditors as well.  Typically creditors who attend are ones with a debt secured by your property and who have not explored reafirmation of the debt with your attorney before the date of the meeting. You will have to go to court for a hearing before the bankruptcy judge only in the event a motion is filed that requires a hearing or if the judge requests a hearing to satisfy the the court that a reaffirmation agreement is in your best interests and does not constitute a hardship for you and your family.Do I have to complete mandatory credit counseling before I file bankruptcy?

Yes. Before you can file bankruptcy you have to complete credit counseling with an approved debt-counseling agency.  This can be done either in person, over the phone or by internet.  The pre-filing bankruptcy counseling generally takes between 45 minutes and 1 hour to complete.  This is the first step in filing bankruptcy.  You will get a certificate of completion which must be filed with your bankruptcy petition.  Your attorney must be proided a copy of the certificate of competion so it can be filed with the court.  You may choose any agency so long as it is approved by the U.S. Trustee.  Here is a link to the list of approved credit counseling providers. 

Do I have to complete a debtor eduction course before my bankruptcy can be finished?

Yes. Before your bankruptcy can be completed and yuor debts are discharged, you must complete a debtor education course.  This is course is also called a personal financial management course.  As with the pre-filing credit counseling, this can be done either in person, over the phone or by internet. The pre-discharge counseling cannot be taken until your case is filed and you have a case number. You will again get a certificate of completion which must be filed with the court in order to get your bankruptcy discharge. Your attorney must be provided a copy of the certificate of competion so it can be filed with the court. You may choose any agency so long as it is approved by the U.S. Trustee. Here is a link to the list of approved debtor education providers.