1. How Often Can I file for bankruptcy? The short answer is: Chapter 7= Eight years between filings. Chapter 13= Two years between filings. If that answer does not please you, read on. As a rule of thumb, some form of bankruptcy protection will always be available to you. Technically speaking, you can file bankruptcy as often as you like. Your debts will not be discharged in a Chapter 7 case if you received a discharge in either: (a) a chapter 7 bankruptcy filed within the last 8 years, or (b) a Chapter 13 bankruptcy filed within the last 6 years. You can file a Chapter 13 bankruptcy and receive a discharge at the end of your bankruptcy two years after completing a prior 13 with a discharge. Filing bankruptcy may still be beneficial even if it does not result in a discharge of your debts. If you are trying to save your home from foreclosure, for instance, a bankruptcy filing will still protect your home from sale for the period during which the automatic stay is in place.
2. Can I keep my house if I file bankruptcy? Whether or not you can keep your house depends on how much equity you have in the house. If you are filing Chapter 7 bankruptcy, you are allowed $15,000.00 of equity in your home which the court cannot touch. In the real world, a trustee will only be interested in selling your home if there is enough excess equity to make a sale worth the trustee’s time and effort. Your attorney can help you ensure that your home is protected before you file. In a Chapter 13 bankruptcy you are allowed to keep all of your assets. Chapter 13 bankruptcy will also allow you time to repay mortgage arrears. Many people file Chapter 13 bankruptcies to save their homes from foreclosure and caught up on their mortgages. As of January 1st, 2010, if you have more than $1,010,650.00 in secured debt you cannot file a chapter 13 bankruptcy.
3. Can I keep my car if I file bankruptcy? Whether or not you can keep your car depends on the amount of equity you have in your car. You can keep multiple cars if your equity is low enough. Equity is determined by subtracting the amount you owe on the car from the value of the car. If your car is worth $5,000.00, and you owe $3,000.00, you have $2,000.00 in equity. An individual filing chapter 7 can protect $3,000.00 of equity in a car or cars, and a married couple filing jointly can protect $6,000.00 of equity. If you have more equity in your car than is allowed, you may be able to protect that equity with other bankruptcy exemptions. You attorney can guide you through the process.
4. How much does Chapter 7 bankruptcy cost? Every case is different and fees vary with each client. We offer a free consultation so that we can assess your case and quote you a price you can depend on. Chapter 7 filing fees are currently $306.00. Legal fees are in addition to the court filing fee. Our fees are very reasonable compared to competitors and we accept flexible payment plans.
5. Can I afford a bankruptcy attorney? If you are facing overwhelming debts, and need to file bankruptcy, hiring a good attorney should take first priority after paying for the bare essentials of living. Once you decide to file bankruptcy, you may be able to put money previously paid toward various debts toward your attorney fees. We will work with you to ensure you have the basics covered and can still afford to file bankruptcy. Filing bankruptcy is not free and it is not a public service. A better question is whether you can afford not to hire a good bankruptcy attorney. Emerging from bankruptcy debt free lifts a terrible weight from your shoulders and provides great peace.
6. What is the difference between a Chapter 13 and a Chapter 7 bankruptcy? Chapter 7 bankruptcy is a traditional liquidation bankruptcy. You give up any assets above certain limits, and all of your debts are eliminated. There are some exceptions such as student loans and certain taxes which are not dischargeable in bankruptcy. The great majority of our Chapter 7 clients keep all of their property. Chapter 13 bankruptcy is more like a debt restructuring plan, where you will make affordable monthly payments to the court for 3-5 years, keep your property, and receive a discharge of any unpaid debts at the end of your plan period. Chapter 13 bankruptcy is usually best for individuals with higher than average salaries (therefore they are not eligible to file Chapter 7), or who have individuals who have significant equity in a home which they wish to keep.
7. What state exemptions should I use? If you have lived in Missouri for the past 2 years, you will use Missouri’s state exemptions to protect exempt property. If you recently moved to Missouri, you will need to consult with your attorney to determine which state’s exemptions will apply.
What happens to my tax refund when I file bankruptcy? In our experience, if you file bankruptcy between the months of October and February (prior to receiving your tax refund), the bankruptcy trustee may seek to claim your tax refund as part of the bankruptcy estate. This means the court will take your tax refund and split it up between your creditors if it is not covered by an exemption. We sometimes counsel clients to wait and file bankruptcy after they receive their tax refund if they are due a large refund, but it depends on the individual situation.
8. Can I file bankruptcy by myself? You may file bankruptcy without the assistance of an attorney but it is usually not wise. The bankruptcy code is complex and navigating it properly requires extensive knowledge and expertise. If you wish to file on your own, you should contact the court clerk for the Bankruptcy Court of the Eastern District of Missouri.
9. Do I have to go to court when I file bankruptcy? Everyone who files bankruptcy is required to attend a Meeting of Creditors, which is different from court. It is more relaxed than a courtroom setting, and it is presided over by a bankruptcy trustee instead of a judge. Although it is called a “Meeting of Creditors”, the meeting is really a small meeting between you, your attorney, and the bankruptcy trustee. It is extremely rare for a creditor to send an attorney. The meeting takes place approximately one month after your bankruptcy is filed, and is relatively short. You will be treated respectfully, and the bankruptcy trustee will ask you some questions about your assets and income to verify your eligibility and ensure that there has been no fraud. The time you spend with the trustee is usually about five minutes.
Which bankruptcy court is closest to me? The bankruptcy court for the Eastern District of Missouri is located in the Eagleton Building at 111 S. 10th Street in the City of St. Louis. If you live in St. Louis County, your Meeting of Creditors will take place there. There are satellite locations where creditor meetings are held for residents of other counties still within Missouri’s Eastern District. Those locations can be found on the court’s website: http://www.moeb.uscourts.gov/341_locations.htm
10. Who files for bankruptcy?Former Presidents Abraham Lincoln, Thomas Jefferson, and Ulysses S. Grant have all gone bankrupt in their lives. Auto-maker Henry Ford, candy-maker Milton Hershey, ketchup-maker H.J. Heinz, TV Personality Larry King, comic book creator Stan Lee, football star Johnny Unitas, musician Tom Petty, musician MC Hammer, and actor Burt Reynolds have all filed bankruptcy at times in their lives. Many good and honest people file for bankruptcy when faced with deep financial difficulty. When debts become too large to repay, bankruptcy must be considered.
11. Should I file for bankruptcy? If your debts have become too large to repay, if you are facing a wage garnishment, if you are facing a home foreclosure, or if you have large tax debts you may want to consider bankruptcy.
12. What is an unsecured debt? An unsecured debt is a debt that is not attached to a specific asset as collateral. For example, credit card debt and medical bills are common forms of unsecured debt.
13. What is a secured debt? A secured debt is debt which is attached to a specific asset as collateral. For example, a mortgage loan is attached to a home. If you fail to make your payments, the lender can take your home and sell it to recoup the money you owe. A car loan is often made with the car as collateral.
14. What does a bankruptcy trustee do? A bankruptcy trustee is appointed by the court to administer the bankruptcy estate. This may include collecting unexempt property from the debtor, converting that property into cash, and making appropriate distributions to unsecured creditors. The trustee typically verifies a debtor’s identity, reviews the bankruptcy petition for accuracy, asks questions regarding the debtor’s income and assets, and ensures that there is no fraud upon the court.
15. Will my creditors show up in court when I file bankruptcy? It is very rare for creditors to appear at your creditor meeting. If a creditor does have a valid objection to your bankruptcy, they will typically send an attorney to represent their interests. You will be treated respectfully.
16. Do I have to file bankruptcy with my spouse? No, a married person may file bankruptcy separately from their spouse.
17. Will my name be in the paper if I file bankruptcy? No, names of persons who file bankruptcy are not published in the paper to shame them. Your bankruptcy will appear on your credit report. Bankruptcy records are accessible, but most likely no one will learn of your bankruptcy if you do not tell them that you filed.
18. Will my employer find out if I file bankruptcy? Perhaps. If you are concerned that a bankruptcy would negatively affect your employment, you should consult with your attorney before filing bankruptcy.
19. Will I be able to get student loans after filing bankruptcy? Bankruptcy will not affect your ability to get federal student aid. Furthermore, federal law prohibits federal agencies from discriminating against a person who has filed bankruptcy. Private loans are another matter. Many private loan programs have credit criteria that require a co-signer for individuals who have filed a bankruptcy within 7 to 10 years of the loan application.
20. How long will it take to rebuild my credit after filing bankruptcy? Generally speaking, if you manage your credit well after bankruptcy you should be able to re-establish good credit within 2 to 2 ½ years.
21. Do I have to include all my bills when I file bankruptcy? Yes, you need to list all of your creditors when you file your bankruptcy. You can choose to reaffirm certain debts, which means you can elect to keep your contract. When you reaffirm on a car loan, you keep the car and continue making your payments.
22. Can a creditor object to me filing bankruptcy on them? A creditor must have grounds to make a valid objection to your bankruptcy. Typically your attorney can help you avoid any potential objections before you file bankruptcy. A valid objection may be raised if you are hiding assets, for example.
23. Can I rent an apartment or buy a house after filing bankruptcy? Yes, you can rent an apartment or a home after filing bankruptcy. You may have more difficulty renting with a bankruptcy on your credit report than otherwise, but typically having a bankruptcy on your credit report is better than having unpaid debts. I have yet to have client complain of being turned down for a property rental due to their bankruptcy. In order to borrow money to buy a house, you will likely need to re-establish your credit first or offer a large down-payment. A government backed loan typically requires a two year wait post-bankruptcy.
24. How much debt to I need to file bankruptcy? There is no amount of debt you required to have before you can file bankruptcy. Whether bankruptcy makes sense for you is a personal decision. If you cannot afford to repay your debts, bankruptcy should be considered.
25. Can I file bankruptcy on student loans? Student Loans are generally not dischargeable through bankruptcy. You will still be protected from collection actions for the period of the bankruptcy. Only in extreme cases where courts find an “undue hardship” can student loans be discharged. The bar for a finding an “undue hardship” has been set very high.
26. Can bankruptcy stop foreclosure? Yes, bankruptcy can stop foreclosure. As soon as a bankruptcy is filed, the court issues an “Order for Relief”. This triggers a law known as the “automatic stay” which prevents all collection and repossession activities. Chapter 13 bankruptcy allows you to get caught up on missed mortgage payments and become current again. Bankruptcy can also be used to disrupt a sale date and provide you with more time to negotiate modified repayment terms with your lender.
27. Can bankruptcy stop wage garnishments? Yes, bankruptcy stops wage garnishments. As soon as the bankruptcy is filed, the court issues an “Order for Relief”. This triggers a law known as the “automatic stay” which prevents all collection and repossession activities. If your wages are being garnished, bankruptcy is usually the only way to fight back and find relief short of paying the debt off in full. If your debts are discharged, that creditor can never garnish your wages again for the debt in question.
28. Can I file bankruptcy on income taxes owed? Income taxes are dischargeable in bankruptcy if they meet certain criteria. For the taxes to be discharged, they must be: (1) income taxes; (2) with a return filed; (3) with an original return due date at least three years prior to the bankruptcy; (4) additional tax assessments must be at least 240 days old; (5) at least 2 years must have passed since the tax return was filed; (6) there must have been no fraud. The treatment of taxes in bankruptcy is relatively complicated. The most simplistic rule is that if the income taxes are old and you have not neglected to file returns, you can probably wipe them out in the bankruptcy.
29. How do I file bankruptcy? Meeting with a well-qualified bankruptcy attorney should be your first step. Most bankruptcy attorneys offer a free initial consultation. Your attorney will prepare your bankruptcy petition and file it with the court, along with other necessary paperwork. You have the right to represent yourself and file your own bankruptcy. Bankruptcy law is complicated and do-it-yourself filers often get frustrated and sometimes find themselves in legal trouble they did not intend.
30. How long does it take to file bankruptcy? A bankruptcy can be filed the same week as the client’s initial visit. It is best to have an attorney prepare your bankruptcy well in advance of any deadline. The time required to file a bankruptcy varies according to the debtor’s needs, how organized the debtor is, and the availability of the attorney and his or her staff.
31. What is the means test? The bankruptcy means test is a method of determining who qualifies to file a Chapter 7 bankruptcy. If you make less than the median income for your household size, you pass. If you make more than the median, a more detailed examination of your income and expenses is required. The means test is a formula that was devised by lawmakers to prevent individuals with high incomes, who could perhaps pay off much of their debt, from filing Chapter 7 bankruptcy. If you do not pass the means test, and cannot overcome a presumption of abuse based on your circumstances, you are limited to a Chapter 13 bankruptcy.
32. Is bankruptcy right for me? Whether bankruptcy is right for you is a question you can best answer yourself. I typically advise clients to consider bankruptcy if they cannot reasonably foresee being able to repay their debts based on their current income. Bankruptcy is not the end of the road, it marks a new beginning and a chance to start fresh financially.
33. Will filing bankruptcy hurt my credit? The conventional answer is yes. Bankruptcy is a big negative on your credit report, but if your credit is already bad, clearing out the negative accounts through bankruptcy may help your credit score. A bankruptcy will remain on your credit report for 10 years. Typically, good credit can be re-established within 2 to 2 ½ years after bankruptcy.
34. What is the role of a bankruptcy attorney? A bankruptcy attorney prepares your bankruptcy petition and files that petition with the court. A good bankruptcy attorney assesses whether bankruptcy is the best move for the client, alerts the client to any potential pitfalls, and helps the client plan within proper ethical boundaries to get the most from their bankruptcy. The attorney supplies the bankruptcy trustee with required paperwork in advance of the Meeting of Creditors and represents the debtor at the creditor meeting. The attorney may also prepare reaffirmation agreements allowing a debtor to keep a home and/or car.
35. Did the bankruptcy laws change? In 2005, congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). The new law was intended to curb abuse. Prior to BAPCPA, debtors of all incomes could file Chapter 7 bankruptcy. Under the new law, abuse is presumed if a Chapter 7 debtor’s income exceeds the state median income for an equivalent household size. The presumption of abuse can be rebutted with proper evidence. Other key changes include a requirement for debtors to take an approved credit counseling course prior to filing bankruptcy, and an extension of the waiting period between Chapter 7 discharges from 6 years to 8 years.
36. Do I make too much money to file bankruptcy? There is no income limit for filing bankruptcy, but you can make too much money to file a Chapter 7 bankruptcy. If you fail the means test, you are limited to a Chapter 13 bankruptcy in which case you would need to make monthly payments toward your debts over a 3-5 year period. At the end of that period, any debts remaining would be discharged.
37. Is filing bankruptcy moral? I believe that bankruptcy is moral as long as it is not done with an intent to defraud. The United States Bankruptcy Code was modeled in part after biblical law, as found in chapter 15 of the Book of Deuteronomy. God’s covenant people were commanded to forgive all debts held between one another every seven years. Ordinarily a man should repay his debts as he agrees, but allowance is made for mercy through the bankruptcy code.
38. What is medical bankruptcy? Medical bankruptcy is not official terminology. It is a term used to describe a bankruptcy that is prompted primarily by large medical debts that are too large to repay.
39. What is tax bankruptcy? Tax bankruptcy is not official terminology. It is a term used to describe a bankruptcy that is prompted primarily by large income tax debts the debtor cannot afford to repay. Many individuals with large income tax debts can benefit enormously by filing bankruptcy.
40. What will the bankruptcy trustee ask? Typical questions include:
-Did you sign your bankruptcy petition and schedules before your attorney filed them?
-Did you list all of your assets?
-Did you list all of your debts?
-Have you made any payments to relatives in the past year?
-Do you owe any domestic support obligations?
-Does anyone owe you money?
-Are you currently a party to any lawsuits?
-Did you value your assets fairly and accurately?
-Are there any errors or omission on your bankruptcy schedules that you would like to correct?
41. What assets can I keep when I file bankruptcy? If you are filing a Chapter 13 bankruptcy, you are allowed to keep all of your assets. In a Chapter 7 bankruptcy you are allowed to keep all assets protected by your applicable bankruptcy exemptions. Key Missouri Chapter 7 bankruptcy exemptions for a single filer include:
-Motor Vehicle/ Car- $3,000.00
-Household Goods and Furnishings- $3,000.00
-Wedding Ring- $1,500.00
-Tools of the Trade- $3,000.00
-Wild Card (applicable as needed)- $600.00
42. Who can file bankruptcy? Generally speaking, any person or business can file for bankruptcy. There is no minimum amount of debt required to file. There is no requirement that you be a U.S. citizen to file bankruptcy.
43. What is a redemption agreement? Bankruptcy laws allow you to buy back property on which you owe a loan (a car, for example) for the “fair market value” of the property. This may be much less than the amount you owe. You can pay the lender the “fair market value”, and the lender must release their lien. A formal redemption agreement must be filed with the bankruptcy court. Few debtors have the cash on hand to redeem property, but a generous friend or relative could assist. There are also companies which offer loans for redemptions. A redemption loan can result in a lower payment if you wish to keep the property. Redemption of personal property that has been used to secure a debt is provided for in section 722 of the bankruptcy code.
44. What’s a reaffirmation agreement? A reaffirmation agreement is a contract between you and a lender which reaffirms the terms of your contract and your obligation to pay. Reaffirmation agreements allow you to keep property you intend to keep making payments on such as your car or home, but these agreements are usually not necessary to keep your property. A debtor can normally keep a car or home simply by continuing to make scheduled payments. Reaffirmation agreements do help to re-establish credit. You should carefully review a reaffirmation agreement with your attorney before deciding to sign. Reaffirmation agreements must be approved by the bankruptcy court, and you have the option to revoke a reaffirmation agreement within 60 days of filing the agreement with the court.
45. Can I file bankruptcy on payday loans? Yes. There only a few kinds of debt which you cannot include in a bankruptcy. The most common types of debt which cannot be discharged in a bankruptcy are student loans, child support obligations, property taxes, spousal support or alimony, and criminal fines. Most all ordinary consumer debts are dischargeable in bankruptcy.
46. Can I add debts that I forgot to include in my bankruptcy? Yes, you may still add creditors after your case has been filed as long as the case remains open. In some situations, your attorney can petition to re-open your case after it has closed in order to add additional creditors.
47. Do I have to include all my bills when I file bankruptcy? Yes, you need to list all of your creditors when you file your bankruptcy. You can choose to reaffirm certain debts, which means you can elect to keep your contract. When you reaffirm on a car loan, you keep the car and continue making your payments.
48. Which bankruptcy court is closest to me? The bankruptcy court for the Eastern District of Missouri is located in the Eagleton Building at 111 S. 10th Street in the City of St. Louis. If you live in St. Louis County, your Meeting of Creditors will take place there. There are satellite locations where creditor meetings are held for residents of other counties still within Missouri’s Eastern District. Those locations can be found on the court’s website.
49. What is a 341 meeting? A “341 Meeting” is a term used to denote a creditor meeting required by section 341 of the bankruptcy code. Each debtor is required to attend a creditor meeting during which the bankruptcy trustee gathers information regarding the debtor’s assets and income. Creditors are allowed to attend and ask questions as well. In practice, creditors rarely appear at creditor meetings. A “341 Meeting” or “Meeting of Creditors” takes place approximately one month after a person files bankruptcy. Your attorney will accompany you and represent you at the creditor meeting. Although it often creates anxiety for debtors, creditor meetings are usually brief and painless.
50. How much does Chapter 13 bankruptcy cost? Chapter 13 bankruptcy fees vary less from case to case. $4,000.00 is the standard price for a Chapter 13 bankruptcy, a large portion of which is paid over the course of your plan and is deducted from money that would have gone to your creditors. Do not be intimidated by the price of a Cahpter 13 bankruptcy. Chapter 13 bankruptcies are designed to be affordable for your budget. Typically a portion of the chapter 13 fees are paid up front, and a portion is paid over the course of the plan. The Chapter 13 court filing fee is $274.00.