FAQ
A: Bankruptcy may make it possible for you to:
- Eliminate the legal obligation to pay most or all of your debts. This is called a "discharge" of debts. It is designed to give you a fresh financial start.
- Stop foreclosure on your house or mobile home and allow you an opportunity to catch up on missed payments. (Bankruptcy does not, however, automatically eliminate mortgages and other liens on your property without payment.)
- Prevent repossession of a car or other property, or force the creditor to return property even after it has been repossessed.
- Stop wage garnishment, debt collection harassment, and similar creditor actions to collect a debt.
- Restore or prevent termination of utility service.
- Allow you to challenge the claims of creditors who have committed fraud or who are otherwise trying to collect more than you really owe.
A: A debtor cannot obtain a discharge in a Chapter 7 case if the debtor obtained a discharge in (a) a Chapter 7 case filed within the past 8 years, or (b) a Chapter 13 case filed within the past 6 years. The time periods in either case are measured from the commencement dates of the respective cases. The dates of discharge have no bearing on the disqualification.
A debtor cannot obtain a discharge in a Chapter 13 case if the debtor obtained a discharge in (a) a Chapter 7 case filed within the past 4 years, or (b) a Chapter 13 case filed within the past 2 years. The time periods in either case are measured from the commencement dates of the respective cases. The dates of discharge have no bearing on the disqualification.
In addition to these changes in how often a debtor can obtain a discharge in bankruptcy, Congress also enacted changes intended to reduce or eliminate the effect of the bankruptcy stay for serial filers. To oversimplify the changes, the stay will last for just 30 days if a bankruptcy case of the debtor was pending within the preceding year but was dismissed. The stay will simply not come into existence at all if two or more cases were pending within the preceding year but were dismissed. If a Chapter 7 case is dismissed for abuse and the debtor files under a new chapter (such as Chapter 13), however, the stay has its normal duration.
Notwithstanding the above, you can be barred from filing a new case for 180 days after a case is dismissed, if the dismissal (a) is because you willfully failed to abide by an order of the court or to properly prosecute the case, or (b) was at your request after a creditor requested relief from the automatic stay.
A: It now costs $299 to file for bankruptcy under chapter 7 and $274 to file for bankruptcy under chapter 13, whether for one person or a married couple. The court may allow you to pay this filing fee in installments if you cannot pay all at once. If you hire an attorney you will also have to pay the attorney's fees you agree to.
A: Yes, but your spouse will still be liable for any joint debts. If you file together you will be able to double your exemptions. In some cases where only one spouse has debts, or one spouse has debts that are not dischargeable then it might be advisable to have only one spouse file. If the spouses have joint debts, the fact that one spouse discharged the debt may show on the other spouses credit report.
A: Yes. Once a petiton is filed there is an automatic "stay". The automatic stay prevents bill collectors from taking any action to collect debts.Once a creditor or bill collector 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. This usually takes a couple of weeks. Creditors will also stop calling if you inform them that you filed the bankruptcy petition, and supply them with your case number. In some cases, you or your attorney should contact the creditor immediately upon filing the bankruptcy petition, especially if a law suit is pending. If a creditor continues to use collection tactics once informed of the bankruptcy they may be liable for court sanctions and attorney fees for this conduct.
A: Student loans are no longer dischargeable in any chapter of bankruptcy
unless you can prove that repaying the loan creates an undue hardship on you or your family. Prior law allowed their discharge once they had been in pay status for 7 years. The law changed in the fall of 1998.
Proving hardship usually requires showing that you can't provide a minimum standard of living for yourself and your dependents if you have to repay the loan. Some courts will discharge part of the loan on a showing that repaying it all would be a hardship.
Student loans are sometimes unenforceable due to school closures, fraud, etc. Chapter 13 can provide a way to cure defaults on student loans, or to pay them off over the course of the plan.
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