Frequently Asked Questions About Bankruptcy
Below are some of the most frequently asked topics and questions concerning bankruptcy. If you have a question that is not listed below, please view the rest of our site for further information or contact us.
General Information:
- What is Bankruptcy?
- Will filing bankruptcy stop bill collectors calling or garnishing me?
- Should I feel ashamed to file bankruptcy?
- How much does it cost to meet with you?
- What documents should I bring with me to my first consultation?
- Do I have to pay my bills during the bankruptcy?
- How long does a bankruptcy take?
- Does bankruptcy ruin my credit?
- Will I have to give up any of my property to my creditors?
- Do I have to list all of my assets in my case?
- Can I keep any of my existing credit cards?
- Will everyone find out that I filed?
- Can I be fired for filing bankruptcy?
- Can I be rejected for student loans for filing bankruptcy?
- Where is the U.S. Bankruptcy court located?
Chapter 7:
- What is a Chapter 7 bankruptcy?
- Who can file Chapter 7 bankruptcy?
- May I file jointly with my spouse under Chapter 7?
- Are some of my debts non-dischargeable?
- How much do you charge to file a Chapter 7?
- What should I do if I move during the life of the case?
- Can a Chapter 7 case be converted to Chapter 13?
Chapter 13:
- What is a Chapter 13 bankruptcy?
- How does filing a Chapter 13 affect impending foreclosure sales, repossessions or collection proceedings?
- What will it cost to file for a Chapter 13 bankruptcy?
- May I file jointly with my spouse under Chapter 13?
- When is a Chapter 13 a better alternative than a Chapter 7?
- How is Chapter 13 different from a debt consolidation service?
- What is a Chapter 13 Plan?
- Who is the Chapter 13 Trustee?
- What debts may be paid under a Chapter 13 Plan?
- Must all of my debts be paid in full under a Chapter 13 Plan?
- How much of my income must be paid to the Chapter 13 Trustee under the Chapter 13 Plan?
- When must I begin making payments to the Chapter 13 Trustee?
- How long does a Chapter 13 Plan last?
- How are cosigned or guaranteed debts handled in Chapter 13?
- Must all unsecured creditors be treated alike in the Chapter 13 Plan?
- Can a Chapter 13 case be converted to Chapter 7?
- Is my employer notified when I file a Chapter 13?
- What happens if I am temporarily unable to make the Chapter 13 payments?
- What should I do if I move during the life of the case?
- What should I do if I change jobs during the life of the case?
- What if I decide to get out of my Chapter 13 case?
- Can I sell or refinance my property while in a Chapter 13 case?
General Information:
- What is Bankruptcy?
Bankruptcy is a legal method of eliminating debt and providing a way to get a "fresh start." In many cases, bankruptcy means the elimination of the debt that you owe to your creditors. There are two main types of bankruptcy, Chapter 7 and Chapter 13. - Will filing bankruptcy stop bill collectors calling or garnishing me?
Yes. When you file bankruptcy, federal law imposes an "automatic stay" which precludes your creditors from taking any action to collect debts against you including court judgments and tax debts during the bankruptcy. For example, if one of your creditors has taken you to court over a debt, the bankruptcy filing will stop this lawsuit.
Any wage garnishments or repossession efforts are also stopped. However, once the bankruptcy is over, a creditor holding a claim that was not discharged may still collect on the debt. - Should I feel ashamed to file bankruptcy?
There is a lot to think about before filing bankruptcy, however feeling ashamed should not be among them. Bankruptcy no longer seems to have the stigma attached to it that it once did. This could be one of the reasons that the number of filings has been dramatically increasing over the last several years. Long term, you have to do what’s best for you and your future financial situation. - How much does it cost to meet with you?
Our initial consultation is free. At that time we can provide you with your best options and advise you as to how to proceed if you choose to file bankruptcy and discuss our reasonable fees. - What documents should I bring with me to my first consultation?
You should bring copies of your bills or at least a list of all of your creditors (with mailing addresses), both secured and unsecured, and the amount owing to each. If necessary, we can order a credit report for you to get a more detailed list of creditors. You should bring your last two years tax returns (state and federal); proof of income information, such as pay stubs, retirement benefits, rent, etc.; mortgage, installment loan, and automobile payment books or stubs; and evidence of child support payments and alimony, if applicable.
If an emergency filing is necessary (such as before an impending foreclosure), we can file just the Voluntary Petition, but we still need a list of all of your creditors and attorneys who are looking to collect debts from you. If we do have to do an emergency filing, the additional documents must be filed within 15 days of the filing or your bankruptcy will be dismissed. - Do I have to pay my bills during the bankruptcy?
For the most part, the answer is no. For specific property (usually secured), such as your mortgage and your car loan that you plan on keeping, you should continue to make payments. Also, for expenses such as rent and utilities you should keep making payments. - How long does a bankruptcy take?
For a typical Chapter 7 case, the discharge of your debts usually takes about 3 and a half months. A Chapter 13 takes from 3-5 years, depending on your Plan. Note, a Chapter 13 can be paid off at any time and dismissed at anytime. - Does bankruptcy ruin my credit?
By making payments on time subsequent to your bankruptcy on new credit (loans acquired after you file), you can rapidly improve your credit rating. Our firm has seen clients who have purchased a home within 1 to 3 years of filing bankruptcy.
As a matter of fact, in many cases filing bankruptcy may actually help your credit rating because discharging your debts greatly improves your debt-to-income ratio, which is a major factor creditors look at when judging your "creditworthiness". - Will I have to give up any of my property to my creditors?
Most filers may get all or most of their debts discharged (wiped-out) without giving up any of their own property. This happens when you are eligible in utilizing federal as well state laws provide exemptions for your property. Exempted property is property such as household goods and personal belongings, which you are allowed to keep despite your bankruptcy. Issues concerning assets are very technical and an attorney would need to review your circumstances to offer advice. - Do I have to list all of my assets in my case?
Yes. You are under penalty of perjury when you fill out your bankruptcy petition. Knowingly and fraudulently hiding your assets from the bankruptcy court is a federal offense and the court has the power to deny you a discharge. - Can I keep any of my existing credit cards?
Any credit card accounts that have a zero balance at the time of filing are not technically creditors and thus are not discharged in bankruptcy. Usually these creditors will allow you to keep your credit with them. However, some do not. This is based on their individual policies. - Will everyone find out that I filed?
While bankruptcy filings are public record, most people will not find out unless you tell them or they check the public records. Therefore the only people who usually find out that you are in a bankruptcy are creditors whose debts you have listed on the petition or who you apply for credit with. - Can I be fired for filing bankruptcy?
No. If your employer finds out about your bankruptcy, it is against federal law to discriminate against someone for filing bankruptcy. - Can I be rejected for student loans for filing bankruptcy?
No. It is against federal law to deny someone a student loan because they filed bankruptcy. However, just as if you did not file, you need to keep the loans current. - Where is the U.S. Bankruptcy court located?
IN VIRGINIA:
Eastern District of Virginia - Alexandria Division
U.S. Bankruptcy Court
200 S. Washington St.
Alexandria, VA 22314
Eastern District of Virginia - Richmond Division
U.S. Bankruptcy Court
1100 E. Main Street
Richmond, VA 23219
IN MARYLAND:
If you live in Allegany, Calvert, Charles, Frederick, Garrett, Montgomery, Prince George's, St. Mary's, or Washington Counties:
United States Bankruptcy Court
U.S. Courthouse
6500 Cherrywood Lane
Greenbelt, MD 20770
If you live anywhere else in Maryland (e.g., Baltimore City, Baltimore County, Carroll County, etc.):
United States Bankruptcy Court
U.S. Courthouse
101 W. Lombard Street
Baltimore, MD 21201
IN THE DISTRICT OF COLUMBIA:
United States Bankruptcy Court
333 Constitution Ave, NW
Washington, D.C. 20001
Chapter 7:
- What is a Chapter 7 bankruptcy?
Chapter 7 is the most common form of bankruptcy. This Chapter is also called liquidation bankruptcy. Most consumer or business debts are dischargeable (may be eliminated) under Chapter 7 bankruptcy. You will be able to stop creditor calls, lawsuits, and garnishments. You can use the Chapter 7 to get a fresh start with your finances. Click here for more information. - Who can file Chapter 7 bankruptcy?
You must reside or have a domicile, a place of business, or property in a jurisdiction in the United States. You must not have received a Chapter 7 discharge within the last 6 years. You must not be restricted from filing another case by the bankruptcy court (an example of such restriction is when a case is dismissed with prejudice for a period of time). It must not be a “substantial abuse” of bankruptcy to grant the debtor relief. For the most part, if after you pay reasonable monthly expenses for necessities there is not enough money to pay the remaining monthly debts, then granting a discharge would not be an abuse of Chapter 7. - May I file jointly with my spouse under Chapter 7?
Yes. A husband and wife may file a joint petition under Chapter 7. If a joint petition is filed, only one petition is filed and only one filing fee is charged. - Are some of my debts non-dischargeable?
Some kinds of debts are not dischargeable, which means that you will remain obligated to repay them even after you complete your personal bankruptcy. Some examples of non-dischargeable debts are certain state and federal taxes (issues concerning discharging taxes are very technical and require an attorney to review the specific circumstances of your case to offer advice), child support and most student loans, unless there is undue hardship. Click here for more information. - How much do you charge to file a Chapter 7?
The court filing fee is $209 for either a single or a joint case. Our legal fees for handling the Chapter 7 case is in addition to the filing fee. The rates are usually set on a flat-fee basis, and are very reasonable for the services provided. Fees are normally set during the free initial consultation. Fees are based on the amount of debt, the complexity of the case, as well as other relevant factors. Installment payments are accepted to allow our clients more flexibility but before the case can be filed the courts have required fees to be paid in full. We are also willing to assist our clients in setting up automated installment payments if they so desire. - What should I do if I move during the life of the case?
The debtor must immediately notify us so that we can update the bankruptcy court and the Chapter 7 Trustee in writing of the new address. Most communications in a Chapter 7 case are by mail, and if the debtor fails to receive information mailed out by the court or the Trustee, the case may be dismissed. - Can a Chapter 7 case be converted to Chapter 13?
Yes. A pending Chapter 7 case can be converted to Chapter 13 at any time at the request of the debtor, if the case has not been previously converted to Chapter 7 from Chapter 13.
Chapter 13:
- What is a Chapter 13 bankruptcy?
Under a Chapter 13 bankruptcy, the debtor proposes a 3-5 year repayment plan to the creditors. This offers to pay off all or part of the debts from the debtor’s future income. The amount to be repaid is determined by several factors including the debtor’s disposable income. To file under this Chapter, you must have a "regular and stable source of income" and have some disposable income available each month. Click here for more information. - How does filing a Chapter 13 affect impending foreclosure sales, repossessions or collection proceedings?
The filing of a Chapter 13 automatically stays (stops) all foreclosures, repossession, lawsuits, attachments, garnishments and other actions by creditors against the debtor or the debtor's property. Soon after the case is filed, the court will mail a notice to all creditors of the filing. Certain creditors may be notified sooner, if necessary. Normally, creditors cannot proceed against the debtor during the entire course of the Chapter 13 case unless the court grants permission. - What will it cost to file for a Chapter 13 bankruptcy?
Our up front attorney fees to file the bankruptcy petition with the court generally range from $600.00 to $1,600, plus the court filing fee of $194.00. Fees are due at the time of filing. When less than $1,600 is charged upfront, additional fees are built in the plan to cover services up to the §341 Meeting of Creditors or Confirmation (depending on which jurisdiction the case is filed in). - May I file jointly with my spouse under Chapter 13?
Yes. A husband and wife may file a joint petition under Chapter 13. If a joint petition is filed, only one petition is filed and only one filing fee is charged. - When is a Chapter 13 a better alternative than a Chapter 7?
There are several situations where a Chapter 13 is preferable to a Chapter 7. A Chapter 13 bankruptcy is normally used by folks who are behind on their mortgage and file to stop the foreclosure of their home or property. Additionally, folks will file where they have too much income to file a Chapter 7 bankruptcy or have the kind of debt that is non-dischargeable in a Chapter 7 (e.g. certain taxes). A chapter 13 bankruptcy allows them to make up their overdue payments over time and to reinstate the original agreement. Also, where a debtor has valuable property that cannot be exempted and wants to keep it, a chapter 13 may be a better option.
However, for the vast majority of individuals who simply want to eliminate their heavy debt burden without paying any of it back, Chapter 7 provides the most attractive choice. - How is Chapter 13 different from a debt consolidation service?
In a Chapter 13, the bankruptcy court can help the debtor in ways that debt consolidation services cannot. For example, the court can prohibit creditors from foreclosing on the debtor's property, force unsecured creditors to accept a Chapter 13 Plan that pays only a percentage of their claims, and discharge a debtor from unpaid portions of debts. Additionally, interest on debts does not normally accrue during the Chapter 13 process, which can save the debtor significant amounts of money money (student loans may be an exception). - What is a Chapter 13 Plan?
It is a written plan filed with the bankruptcy court by a debtor and his attorney. The Plan sets how much money the debtor will pay to the Chapter 13 Trustee, how long the debtor’s monthly payments to the Trustee will last, how much money will be paid to each of the debtor’s creditors, and which creditors will be paid directly outside of the Plan, among other things. - Who is the Chapter 13 Trustee?
A Chapter 13 Trustee is a person appointed by the United States Trustee’s office to collect payments from the debtor, make payments to creditors as set out in the debtor's Plan, and administer the debtor's Chapter 13 case until it is concluded. The debtor must always cooperate fully and promptly with the Chapter 13 Trustee. - What debts may be paid under a Chapter 13 Plan?
Any debts, whether they are secured or unsecured. Even debts that are nondischargeable, such as debts for student loans, alimony or child support, may be paid under a Chapter 13 Plan. - Must all of my debts be paid in full under a Chapter 13 Plan?
Yes and no. Priority debts, (such as alimony, child support and certain taxes) and fully secured debts (such as mortgage arrears) must be paid in full under a Chapter 13 Plan. However, only an amount that the debtor can reasonably afford or as required by non-exempted assets must be paid on most unsecured debts. The unpaid balances of most debts that are not paid in full under a Chapter 13 Plan are discharged when the Plan is completed. - How much of my income must be paid to the Chapter 13 Trustee under the Chapter 13 Plan?
All of the disposable income of the debtor and the debtor’s spouse for the period of the plan must be paid to the Chapter 13 Trustee. Disposable income is income received by the debtor and his or her spouse over and above what is needed to pay for necessary monthly expenses for the household. - When must I begin making payments to the Chapter 13 Trustee?
Payments to the Chapter 13 Trustee must begin within 30 days after the debtor's Plan is filed with the court, and the Plan must be filed with the court within 15 days after the case is filed. - How long does a Chapter 13 Plan last?
A Chapter 13 Plan must last for three years, unless all debts can be paid off in less time. If necessary, a Chapter 13 Plan can last for as long as five years. - How are cosigned or guaranteed debts handled in Chapter 13?
If a cosigned or guaranteed consumer debt is being paid in full under a Chapter 13 Plan, the creditor may not collect the debts from the cosigner or guarantor. However, if a consumer debt is not being paid in full under the Plan, the creditor may collect the unpaid portion of the debt from the cosigner or guarantor. A consumer debt is a non-business debt. Creditors may collect business debts from cosigners or guarantors even if the debts are to be paid in full under the debtor's Plan. - Must all unsecured creditors be treated alike in the Chapter 13 Plan?
No. Though it is rare, if there is a reasonable basis for doing so, unsecured debts can be divided into separate classes and treated differently. As such, it may be possible to pay certain unsecured creditors in full, while paying little or nothing to others. Usually this is done if there is a co-debtor on the debt owed. - Can a Chapter 13 case be converted to Chapter 7?
Yes. A pending Chapter 13 case can be converted to Chapter 7 at any time at the request of the debtor. - Is my employer notified when I file a Chapter 13?
In most cases, yes. Many courts require a debtor's employer to make payments to the Chapter 13 Trustee by means of a wage order on the debtor’s income. - What happens if I am temporarily unable to make the Chapter 13 payments?
If the debtor is temporarily unemployed or otherwise unable to make the payments required under a Chapter 13 Plan, the Plan may possibly be modified to allow the debtor to resume payments when he or she is able to do so. If it appears that the debtor's inability to make required payments will continue for an extended period, the case may be dismissed or converted to Chapter 7. - What should I do if I move during the life of the case?
The debtor must immediately notify us so that we can update the bankruptcy court and the Chapter 13 Trustee in writing of the new address. Most communications in a Chapter 13 case are by mail, and if the debtor fails to receive information mailed out by the court or the Trustee, the case may be dismissed. - What should I do if I change jobs during the life of the case?
The debtor must immediately notify us so that we can update the bankruptcy court and the Chapter 13 Trustee in writing of the new employment information. Failure to do so will lead to a default on the Plan payments to the Trustee, and the case may be dismissed. - What if I decide to get out of my Chapter 13 case?
The debtor has the right to either dismiss a Chapter 13 case or convert it to Chapter 7 at any time for any reason. If you wish to do so, you should contact your attorney for assistance in doing so. - Can I sell or refinance my property while in a Chapter 13 case?
Yes, but you will need permission from the court to do so. It is helpful to give your attorney adequate notice to file the proper pleadings to obtain permission.
