Frequently Asked Bankruptcy Questions

Bankruptcy is a federal court process designed to help consumers and businesses eliminate their debts or repay them under the protection of the bankruptcy court.

In Southern California, almost any individual, partnership, or corporation may file a chapter 7 bankruptcy petition if he or she resides, has a domicile, a place of business, or property in the United States.

If you were granted or denied a Chapter 7 discharge in a prior case within the last 8 years, you might not be entitled to receive a discharge in a subsequently filed Chapter 7 bankruptcy in California.

In Southern California, filing a petition with the bankruptcy court commences a Chapter 7 bankruptcy proceeding. The person filing a Chapter 7 is referred to as the "debtor."

The debtor is required to disclose to the court all of his or her property and debts and turn over all nonexempt property to the bankruptcy trustee, who then converts it to cash for distribution to the creditors. The debtor then receives a discharge of all dischargeable debts.

In a Chapter 7 bankruptcy case, we will file several forms with the bankruptcy court disclosing your personal and real property, your income and expenses, debts and property transactions. The Bankruptcy Court will appoint a person called a "Trustee", who is assigned to oversee your case.

About 30 days after your case is filed, we will accompany you to the "Meeting of Creditors" where the trustee reviews your case, verifies your identity, and may have a few basic questions.

Despite the name, creditors rarely attend. The meeting lasts only a few minutes. A couple of months later, you should receive a notice from the court that "all debts that qualified for discharge were discharged."

1. A List of Creditors setting forth a pretty good idea of who your creditors are and how much you owe. If bankruptcy is the right option for you, we will help you get a copy of your credit report.

2. A copy of your most recent pay stub showing net and gross income and year-to-date earnings. Additionally the attorney will ask you for your gross earnings for the prior two (2) years. If you are self employed, then a month-to-month Profit and Loss statement will be required for the past six (6) months.

3. The payoff amount on any automobiles that you are financing. Information as to mileage on the vehicles.

4. Copies of all judgments and lawsuits and liens pending against you. If your wages are being garnished, a copy of the wage garnishment order and your employer's fax number will expedite our office stopping this action.

5. Any and all information you have regarding student loans, tax obligations or co-signed obligations, if applicable.

6. A payoff amount on any real property that you are financing.

7. A copy of any Trust instrument in which you have a beneficiary interest.

8. If you are married and filing a separate case, a copy of your spouse's paycheck stub showing net and gross income.

When we help you file for bankruptcy, we ensure that an "automatic stay" goes into effect and is enforced. The automatic stay prohibits virtually all creditors from taking any action to collect the debts you owe them unless the bankruptcy court lifts the stay and lets the creditor proceed with collections.

Most importantly, once you have retained an attorney, the creditor will be referred to your bankruptcy attorney, and then, by law, the creditors will cease their harassing calls.

Once a creditor 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 few days. Creditors will also stop calling if you inform them that you filed the bankruptcy petition, and supply them with your case number.

In urgent cases, we will contact the creditor immediately upon filing the bankruptcy petition, especially if a lawsuit is pending. If a creditor continues to use collection tactics once informed of the bankruptcy, it may be liable for court sanctions and attorney's fees for this conduct.

After the bankruptcy petition is filed, the court mails a notice to all the creditors listed in the schedules. This usually takes a few days.

We will deal with your creditors once you officially retain our office for representation.

Bankruptcy petitions are public records. However, under normal circumstances, unless your employer or landlord is a creditor, it will not know you filed a bankruptcy petition.

If your employer or landlord is a creditor, it must be listed as a creditor on the schedules and will receive notice of the bankruptcy proceeding.

No. The law prohibits government units and private employers from discriminating against you because you filed a bankruptcy petition or because you failed to pay a dischargeable debt.

No, unless you are willfully evading your tax debts.

No. In some cases where only one spouse has debts, or one spouse has debts that are not dischargeable, it might be advisable to have only one spouse file.

Under some circumstances you may be able to keep some credit cards if the creditor agrees.

There are many factors that must be considered, including the credit card balance at the time of the bankruptcy, what terms the credit card company is willing to accept and your ability to pay the present and future credit card debt.

Filing bankruptcy means filling out forms. We will ask you to fill out forms to provide us with the information needed to prepare the bankruptcy petition. We will use the information you provide to complete the official forms.

Not exactly. About 30 to 40 days after filing the bankruptcy petition, you will have to attend a hearing presided over by a bankruptcy trustee. This hearing is called the First Meeting of Creditors. The trustee is not a judge, but an individual appointed by the United States Trustee to oversee bankruptcy cases.

At the First Meeting of Creditors, the trustee will ask you questions under oath regarding the content of your bankruptcy papers, your assets, debts and other matters. Creditors will also be permitted to ask you questions, although in the majority of cases creditors do not attend the meeting. Don't let the name confuse you. Most creditors never attend the hearing.

If we are retained to represent you, we will appear at the First Meeting of Creditors with you.

After the initial meeting, you normally do not need to return to court. However, if a creditor or the trustee files a motion or an adversary action, you may have to appear in court.

Yes. Sometimes payment plans can be negotiated with creditors. Obtaining loan extensions, compromises and workout agreements require negotiation skills and experience.

These alternatives may alert your creditors to the existence of nonexempt property that the creditor could reach and can involve considerable expense. You also have the option of doing nothing.

In any event, you should seek professional advice in dealing with most of these alternatives.

First, you should consult with a bankruptcy attorney. An attorney can help you plan for the bankruptcy, decide when to file a bankruptcy petition, or even avoid filing for bankruptcy. A few specific items are worth mentioning.

1. If you intend to file bankruptcy, you should stop using your credit cards. If you borrow money with the specific intent of discharging the debt in bankruptcy instead of paying it back, the debt may not be dischargeable.

2. Don't transfer your assets to friends, family and business associates to protect the assets from your creditors. The transfer may be considered a fraudulent conveyance. If it is, you may lose both the property and your right to a bankruptcy discharge.

3. Don't destroy any business or financial records. You can lose your right to a bankruptcy discharge as a result.

4. Carefully choose the creditors you pay. Some creditors, such as landlords, secured creditors, and some utilities should be paid under most circumstances. If you pay a credit card debt that eventually will be discharged, you may be throwing money away. We can advise you on what debts should and should not be paid while you prepare to file a bankruptcy petition.

No.

The Rules of Bankruptcy Procedure require you or your attorney to certify that your petition is not filed "for any improper purpose, such as to harass or to cause unnecessary delay."

Bankruptcy is intended as a tool for dealing with debts that can not otherwise be paid. You should not file a bankruptcy petition for the sole reason of delaying a creditor's actions.

Yes. If you knowingly and fraudulently conceal an asset from the court you have committed a felony and can be fined up to $500,000 imprisoned for up to five years, or both.

In addition, the court can deny you your discharge, or dismiss or convert your bankruptcy proceeding.

Credit reports are compiled by credit bureaus - private companies that gather information about your credit history and sell it to banks, mortgage lenders, credit unions, credit card companies, department stores, insurance companies, landlords and even a few employers.

Credit bureaus get most of their data from creditors. They also search court records for lawsuits, judgments, bankruptcy filings, and recorded liens (legal claims). To create a credit file for a given person, a credit bureau searches its computer files until it finds entries that match the name, Social Security number and any other available identifying information.

Credit reports include non-credit data such as names you previously went by, past and present addresses, Social Security number, employment history, marriages and divorces. Credit data includes the names of your creditors, type and number of each account, when each account was opened, your payment history for the previous 24-36 months, your credit limit or the original amount of a loan, and your current balance. The report will show if an account has been turned over to a collection agency or is in dispute.

There are three major credit bureaus: Equifax, TransUnion and Experian.

The federal Fair Credit Reporting Act (FCRA) entitles you to a copy of your credit report, and you can get one for free if:

1. You've been denied credit because of information in your credit report and you request a copy within 60 days of being denied credit;

2. You're unemployed and looking for work;

3. You receive public assistance; or

4. You believe your file contains errors due to fraud.

The law says that if you don't qualify for a free report, you should pay no more than $8.50 to obtain a report from

Equifax
P.O. Box 740241
Atlanta, GA
30374
800-685-1111

TransUnion
P.O. Box 1000
Chester, PA
19022
800-888-4213

Experian
P.O. Box 2104
Allen, TX
75013
888-397-3742

When requesting a copy of your credit report, be sure to provide the following information:

• Your full name (including generations such as Jr., Sr., III)
• Your birth date
• Your Social Security number
• Your spouse's name (if applicable
• Your telephone number
• Your current address and any other addresses used in the previous five years.

As you read through your report, make a list of everything that is out-of-date. The credit bureaus should remove this information from your credit report.

• Lawsuits, paid tax liens, accounts sent out for collection, criminal records, late payments and any other adverse information older than seven years.
• Bankruptcies older than ten years from the discharge or dismissal.
• Credit inquiries (requests by companies for a copy of your report) older than two years. Next, look for incorrect or misleading information, such as:
• Incorrect or incomplete name, address, phone number, Social Security number or employment information.
• Bankruptcies not identified by their specific chapter number.
• Accounts not yours or lawsuits in which you were not involved.
• Incorrect account histories -- such as late payments when you paid on time.
• Closed accounts listed as open -- it may look as if you have too much open credit
• Any account you closed that don't say "closed by consumer."

After reviewing your report, an attorney can help you contact the credit bureau and launch an investigation on incorrect items. Once it is confirmed that certain items are incorrect, or the creditor who provided the information can no longer verify it, the credit bureau must remove the information from your report.

Often credit bureaus will remove an item on request without an investigation if rechecking the item is more bother than it's worth.

Yes. Under new bankruptcy legislation enacted in October, 2005, before you can file a petition under the bankruptcy code under either Chapter 7 or Chapter 13, you must seek Credit Counseling first. The process takes about a 30 minute phone interview.

Yes. Under new bankruptcy legislation enacted in October, 2005, before the court will sign off on your discharge, you must attend a course on financial management.