Know Your Bankruptcy FAQ’s
Benjamin “Skip” Martin
Law Offices of Benjamin “Skip” Martin receives a number of frequently asked questions regarding bankruptcy. Take a look at the questions and answers below. If you don’t see what you’re looking for, feel free to contact us and we’ll find the answer to your question.
Who can file for bankruptcy?
Any individual with debt who is residing, has domicile, or has property in the United States may file a bankruptcy. A corporation, company, or partnership may also file a bankruptcy. There is no minimum debt required to file, but usually it is not advisable to file a bankruptcy unless you have significant debt (at least $10,000).
Do I need an attorney to represent me in my bankruptcy case?
Although an individual has the right to represent himself in a bankruptcy case, bankruptcy can be a complex proceeding which impacts your legal and property rights. The use of an attorney is recommended in most cases. Ignorance of the law may cost more than an attorney’s fee. Use of a bankruptcy petition preparer is not recommended. By law, a corporation or company is required to have an attorney.
What are the filing fees for filing bankruptcy?
Currently the filing fee for a Chapter 7 is $338.00. The Chapter 13 filing fee is $313.00, and the Chapter 11 filing fee is $1,738.00
**Per September 2021**
Which Chapter is right for me?
For most individuals the choice is usually between Chapter 7 or Chapter 13. Chapter 13 is typically used in the following situations: you have too much property to file a Chapter 7; you are trying to save a home or car from foreclosure or repossession; or you are trying to pay IRS obligations. Chapter 11 is typically used by businesses which hope to restructure their debt and continue in business.
How much do attorneys charge for bankruptcy?
Legal fees for a Chapter 7 are typically low, but there is a substantial variation in Southwest Florida for typical Chapter 7 cases. As a guideline, however, if you pay more than $1,500.00 for legal fees, exclusive of costs, for a simple Chapter 7, you are paying more than you need to. Chapter 13 cases are more complicated and the legal fees are higher. Many attorneys, however, will require a retainer of approximately $2,000.00, in addition to the filing fee, to prepare and file a Chapter 13 case. The balance of attorney’s fees can usually be paid as part of the Chapter 13 payment plan.
Some attorneys include all routine services for a fixed fee amount. Others charge additional amounts for a joint filing (both husband and wife), for additional creditors beyond a certain amount, or for other routine services which are necessary for most bankruptcies.
How long must I live in Florida before I can file a bankruptcy?
The Bankruptcy Code says that your residence for purposes of filing bankruptcy is the place where you have lived the majority of 180 days preceding the bankruptcy filing. So you must live in Florida for at least 91 days in order to file bankruptcy here.
How is a debt classified as secured, unsecured, or priority?
A secured debt is debt that is collateralized by property. A creditor whose debt is “secured” has a right to foreclose or take property to satisfy a “secured debt”. Typically home mortgages or car loans will qualify as secured debts. In Bankruptcy a secured debt is treated differently than an unsecured debt.
An unsecured debt is debt owed for money loaned or otherwise owed, for which there is no property pledged as collateral.
A priority debt is debt which is given priority in payment ahead of other debts under the Bankruptcy Code. IRS taxes and student loans are examples of these kinds of debts.
Will I lose my home or automobile if a file bankruptcy?
In a Chapter 7, if your home qualifies as homestead you may keep it, but you must still continue to pay your mortgage payments. Any real estate which is not homestead usually must be surrendered in a Chapter 7. If your automobile is exempt, you may keep it in a Chapter 7, but if there is a lien on the car, the car payment must continue to be paid. If the car has equity which is not exempt, you must surrender it.
In Chapter 13 you are permitted to keep all the property you own, regardless of the exemptions.
What is a bankruptcy discharge?
The bankruptcy discharge is a court order which releases a debtor from personal liability for all effected debts. Thus, it prevents creditors from taking any further action against the debtor for those debts.
What debts are discharged in a bankruptcy?
Most debts can be discharged in a bankruptcy. The notable exceptions are: recent taxes, child support, alimony, and student loans. Also creditors who have been willfully injured or defrauded may be able to have the debt excepted from the discharge.
What is the difference between the denial of a discharge and a debt being declared non-dischargeable?
If a discharge is denied, then the debtor is still liable for all of his/her debts. If a specific debt is declared non-dischargeable, then only that particular debt is not included in the discharge, but the debtor is still released from his other debts.
What is the role of a Trustee in a Chapter 7 or 13 case?
In a Chapter 7 case, an impartial trustee is appointed to administer the case by collecting and liquidating any of the debtor’s non-exempt property. This is done in such a manner as to maximize the payment that can ultimately be made to the creditors in that case.
In a Chapter 13 case, the trustee’s role to determine whether the payment plan meets the requirements of Chapter 13. He or she then collects the payments made by the debtor and disburses them to the creditors in accordance with the Bankruptcy Court’s orders.
Will I have to go to court after I file my bankruptcy?
In most cases you will not have to actually appear in front of a Bankruptcy Judge in a Chapter 7 or Chapter 13 case. You will have to attend the “meeting of creditors” which is conducted by the trustee.
What is a 341 meeting?
This meeting is also referred to as the “meeting of creditors”. All creditors are notified so that they may attend. However, the attendance of creditors is not required and most creditors do not attend. The debtor is required to attend to and answer questions under oath. Generally, this meeting takes place approximately 30 to 40 days after the bankruptcy paperwork is filed.
How long does a bankruptcy filing remain on my credit report?
A Chapter 7 bankruptcy filing may remain on your credit report for 10 years. A Chapter 13 bankruptcy may remain for 7 years.
What is a reaffirmation agreement?
A reaffirmation agreement is an agreement to pay for a loan even after the bankruptcy is effective. Such an agreement should only be entered into with the careful advice of your attorney.
Can I lose my job or be discriminated against for filing bankruptcy?
Under the Bankruptcy Code it is illegal for an employer to fire you or discriminate against you because of the fact that you filed for bankruptcy
What can I do if a creditor tries to collect a debt after I file bankruptcy?
If a creditor tries to collect a debt after you file bankruptcy, you should contact your attorney. This may be an innocent misunderstanding, or it may be an intentional violation of the automatic stay or order of discharge. Your attorney will be able to determine which course of action is most appropriate.
If I file a bankruptcy, will it stop a garnishment?
Yes. When a bankruptcy petition is filed, an automatic stay takes effect which stops any pending garnishments.
If I file a bankruptcy, will it stop a foreclosure?
Yes. When a bankruptcy petition is filed, an automatic stay takes effect which stops any pending foreclosures.
If I file a bankruptcy, will it stop a lawsuit?
Yes. When a bankruptcy petition is filed, an automatic stay takes effect which stops any pending lawsuits.
If I file a bankruptcy, will it stop a repossession?
Yes. When a bankruptcy petition is filed, an automatic stay takes effect which stops any pending repossessions.
If I file a bankruptcy, will it stop a tax levy?
Yes. When a bankruptcy petition is filed, an automatic stay takes effect which stops any pending tax levies.
A company has filed a bankruptcy and owes me money, what should I do?
It is advisable to obtain the services of an attorney if you are owed significant money, or are a secured creditor, as there are several important deadlines which may affect your rights as a creditor.