Get answers to your common bankruptcy questions from an experienced bankruptcy attorney like Michael Alan Siddons, Esquire.
United States federal law allows you to file for bankruptcy relief from your creditors. Bankruptcy is a legal proceeding in which an individual can obtain immediate relief from creditors and get a fresh financial start. However, bankruptcy should be looked upon as the option of "last resort". All other legal options to deal with your creditors should be thoroughly exhausted before filing for bankruptcy protection. For this reason, it is important that your attorney has a solid background in other areas of law besides just bankruptcy.
This is also called a fresh start bankruptcy or liquidation. Your debts are discharged (canceled), but you must give up any nonexempt property to the trustee to pay to your creditors. You can keep secured property if you are current on the payments and continue making the payments regularly.
This is also called reorganization or wage earner plan. Chapter 13 allows you to keep valuable property such as your home or car, which you might otherwise lose due to past due payments. You can keep this type of property in Chapter 13 if you are able to make the necessary payments. Usually, that will be the regular monthly payments plus a payment toward the arrears. In Chapter 13, you can have between three and five years to pay back the arrears.
In Chapter 7 bankruptcy, the trustee must take your non-exempt property and use it to pay your creditors. In Chapter 13, you can keep all property, even non-exempt property, so long as your unsecured creditors get the value of the non-exempt property through your Chapter 13 plan.
Tax refunds and earned income credits are not exempt and can be taken by the bankruptcy trustee, depending on the time when you file your bankruptcy case. For this reason, the timing of your bankruptcy filing may be very important.
If you have property which is non-exempt, you could sell it before filing bankruptcy and use the money to purchase things which are exempt - such are food, furniture, or clothing. However, you cannot give property away to friends or relatives, and have them give it back to you after the bankruptcy. Any transfers of property without receiving fair value for it within one year before filing bankruptcy is called a fraudulent transfer. The property could be taken by the bankruptcy court and sold to pay some of your debts. If the court finds you have been dishonest in your bankruptcy, you could be denied your discharge. You could also be charged with federal or state crimes, which carry serious fines and jail sentences.
Also, you cannot prefer one creditor over another by making payments on the debt within 90 days before filing bankruptcy (one year if the person paid is an insider (family, friend, etc.) If you do so, the bankruptcy court can take that money away from the person you paid. This is to insure that all creditors are treated equally. This does not apply, however, to regular monthly payments such as your car payment, house payment, rent, or utilities.
In most cases, you will only have to go to one hearing called a 341 meeting or meeting of creditors. Usually, this will be short and simple. The trustee will ask you a few questions such as your name, address, whether you have had a bankruptcy discharge before, and confirm that it was your intention to file for bankruptcy. Creditors are permitted to attend and ask you questions. Your case will most likely be completed within several months from the date you filed for bankruptcy.
The Court charges a filing fee to file a bankruptcy petition. The filing fee for a Chapter 7 and 13 varies among the U.S Bankruptcy Courts and firm practices. However, to provide you with an idea of what those fees are, the U.S. Bankruptcy Court Eastern District of Pennsylvania charges $306.00 for Chapter 7 and $281.00 for Chapter 13. You may be eligible to have your filing fee paid in installments. Please call our firm for our bankruptcy fee schedule.
Bankruptcy will be on your credit report for 10 years. However, if you have a lot of debt and are behind on it, then your credit probably isn't very good anyway. Late payments and unpaid debts will stay on your credit rating for 7 years. Filing bankruptcy doesn't necessarily mean you won't be able to get credit during the 10 years afterward. Many companies will lend to people who have filed bankruptcy, but they may charge you a higher interest rate than if you had not.
Law prohibits employers or government agencies from discriminating against you because you have filed for bankruptcy.