Bankruptcy Attorneys

Retainer - Chapter 7                                Retainer - Chapter 13

Bankruptcy Questions and Answers

Q.        How often can I file for bankruptcy?

A.        A debtor cannot obtain a discharge in a Chapter 7 case if the debtor obtained a discharge in a Chapter 7 case filed within the past 8 years, or a Chapter 13 case filed within the past 6 years. The time periods are measured from the filing date. The dates of discharge are not relevant. A debtor cannot obtain a discharge in a Chapter 13 case if the debtor obtained a discharge in a Chapter 7 case filed within the past 4 years, or a Chapter 13 case filed within the past 2 years. The time periods are measured from the filing dates. The dates of discharge are not relevant.

Q.        Do I really need an attorney to file for bankruptcy?

A.        Attorneys do much more than complete and file a bankruptcy petition. Attorneys attend the 341(a) Meeting of Creditors which is presided over by the Bankruptcy Trustee, negotiate with creditors, and provide legal advice.  Paralegals can only complete the forms based upon the information provided by the petitioner.  Paralegals cannot provide legal advice and certainly cannot represent the petitioner in the Bankruptcy Court.

           If you are confident that you need no legal advice and can represent yourself in dealing with the Bankruptcy Trustee and creditors, you can represent yourself without an attorney.  We do not recommend it.  Bankruptcy law is complex. If you make a mistake, it can cost you money.

Q.        Will I be required to go to court?

A.       You will always be required to attend a 341(a) Meeting of Creditors.  With a Chapter 13 Bankruptcy, you will be required to attend a Confirmation Hearing.  In addition, if not all questions are answered to the full satisfaction of the Bankruptcy Trustee, or he or she requests additional documentation or information, you may be required to attend one or more additional hearings.

Q.        What happens if my Bankruptcy Petition is not accurate?

A.         If it is discovered that an inaccurate Petition has been filed with the Bankruptcy Court, it must be amended immediately.

            The FBI investigates bankruptcy fraud.  You do not want the Bankruptcy Court or FBI to bring any inaccuracies to your attention.

Q.        Can I keep a credit card?

A.         It cannot be guaranteed.  However, sometimes it is possible to negotiate the retention of one or more credit cards.

Q.        Can I get a credit card after bankruptcy?

A.        Yes. It is not unusual for credit card companies to solicit business from people who have recently had their debts discharged through bankruptcy because people with no debt are perceived to be good credit risks. Notwithstanding, you can always obtain a secured credit card which is a card backed up with security you have deposited with the financial institution issuing the card. For example, you deposit $1,000 and receive a card with a $1,000 limit. Over time, the limit will be increased and the security released as you build your credit history.

Using a secured credit card is a fast way to rebuild credit after bankruptcy because the credit card company will report your payment history to the credit bureaus every month. As you make timely payments, your history improves every month.

Q.        Will you be able to stop creditors from calling my home and business?

A.         Absolutely.

Q.        Is it really possible for a creditor to seize up to 25% of my take home pay?

A.         Yes.  That is why debtors should investigate the option of bankruptcy.

Q.        Will my spouse be affected by my bankruptcy?

A.        Your spouse will be affected if he or she signed a contract for one or more of your debts or if you contracted on behalf of the community.  This is a complex area of the law.

Q.        Can my employment be terminated because I filed for bankruptcy?

A.        No.  Federal law makes it unlawful to terminate the employment of an employee or to discriminate in hiring a person because a person has sought protection under the Federal Bankruptcy Act. 

Q.        Can I keep my bankruptcy confidential?

A.       Bankruptcy filings are public records and all creditors will be notified of the filing.  Notwithstanding, most people will not be aware of a filing unless they do a public record search which is unlikely.  Credit bureaus will record the information for ten years.  Petitioners will also receive some mail with a return address indicating it is from the U.S. Bankruptcy Court or Bankruptcy Trustee.

Q.        How do I know whether I should file for bankruptcy?

A.        A consultation with a bankruptcy attorney is the best way to determine if you have other alternatives.  However, if your credit card debt exceeds 30% of your gross annual income, you are probably a candidate for bankruptcy.

Q.        Will using a credit counselor save me money and avoid a bankruptcy filing? 

A.        Most people are not aware of the fact that most credit counselors are owned or backed by the credit card and banking industries.  They exist to discourage people who should extinguish their debts in bankruptcy from doing so.  The result is that credit card companies and banks end up getting paid more than they would otherwise receive and the debtor is delayed in getting a fresh start.  A bankruptcy attorney can advise you on whether a credit counselor can assist you or whether you are better off extinguishing your debts in bankruptcy.

Q.        Does bankruptcy eliminate all debts?

A.        There are some debts that are not dischargeable through bankruptcy.  These include back child support, back spousal support, most taxes and court judgments resulting from fraud.  Contact us to discuss this subject as it is complex.  Most importantly, credit card debts, medical debts, installment debts, real estate loans and most court judgments are dischargeable with few exceptions. 

Q.        What is an emergency bankruptcy filing? 

A.         An emergency bankruptcy filing is a filing with limited documents, commonly referred to as a "Skeletal Petition".  With an emergency filing, all required remaining documents must be filed within 15 days from the filing of the petition or the case will be subject to dismissal.  Contact us immediately for a no cost consultation if you are facing an emergency situation.

Q.        What is the Means Test?

A.        As of October 17, 2005, individual debtors must overcome a presumption of abuse in order to be eligible for relief under Chapter 7 Bankruptcy.  Debtors seeking to file Chapter 7 Bankruptcy are required to complete a form entitled Statement of Current Monthly Income and Means Test Calculation.  If the Chapter 7 Bankruptcy filing is determined to be presumptively abusive by the Bankruptcy Trustee, the debtor may try to rebut the presumption by showing special circumstances.  Unless the debtor overcomes the presumption of abuse, the Court may convert the case to Chapter 13 Bankruptcy or dismiss the case. 

           Current bankruptcy law provides two definitions of abuse.  Abuse may be found when there is an unrebutted presumption of abuse arising out of the means test or through a finding of bad faith determined by the totality of the circumstances.

Q.        I feel very uncomfortable with the idea of filing for bankruptcy because I don't think its right not to pay my debts.  What is your response? 

A.        While your feelings are commendable, you must think first of your family and your own future.  Your creditors are looking out for their own interests and you must do the same.  Most creditors (such as banks and credit card companies) are commercial enterprises that have taken a risk with the thought of earning a profit.  Sometimes risk takers earn a large profit and sometimes they don't.  Most don't hesitate to charge late fees, penalties and even attorney's fees when they file lawsuits to collect money.   Our opinion is that you should do what is legally allowable to protect your interest and the interest of your family.  Your creditors are not looking out for your future. 

Q.       Can I obtain a free credit report? 

A.        Yes. AnnualCreditReport.com is a website jointly operated by the three major credit reporting agencies. Under the Fair Credit Reporting Act (FCRA), the credit reporting agencies must provide, upon request, a free credit report every twelve months. Credit scores are provided for an additional cost. Using the service does not lower a consumer's credit score.

AnnualCreditReport.com is the only federally mandated and authorized source for receiving a free credit report. There are many websites with similar services that charge a fee or require a paid membership. Do not be misled.

Consumers can actually obtain a free credit report every four months by rotating among the three credit reporting agencies. 

Q.       Should I obtain a free credit report before filing for bankruptcy? 

A.        Yes. Unless you are 100% certain that you have a comprehensive list of creditors, it makes sense to obtain a free credit report before filing for bankruptcy.

Q.       Will a bankruptcy filing stop the foreclosure of my home?

A.        If it is filed on time, it will stop the foreclosure for a period of time.

Q.       Will a bankruptcy filing stop a wage garnishment?

A.        Absolutely.

Q.       My wages are being garnished due to a judgment against me. I understand that the garnishment will stop when a bankruptcy is filed. Is there anything else I should know?

A.        Yes. An emergency bankruptcy filing may make sense. An emergency filing may stop the sheriff from seizing money that you will need for you and your family.

Q.       Can I save my pension if I file for bankruptcy?

A.        Yes. Nearly all pension and 401K plans that are qualified under ERISA, the Federal Pension Savings Act, are protected because they do not become property of the bankruptcy estate.

IRA’s and some other retirement savings plans may be property of the estate but are usually fully exempt.

Q.       Can I include my corporation bankruptcy with my personal bankruptcy?

A.        No. A corporation is a separate legal entity. It must file a separate corporate bankruptcy petition.

Q.       How long must I have lived in California to qualify for the California exemptions?

A.        You must live in a state for two years to use the exemptions of that state. If you don’t meet the two-year test, generally the exemptions of the state in which you previously lived will apply. You should always consult an experienced bankruptcy attorney regarding the application of exemptions. Remember, only an attorney can provide you with such advice.

Q.       If I utilize a credit counseling service to consolidate and reduce my debts, will I be able to rebuild my credit faster than if I file for bankruptcy?

A.        Almost never. Bankruptcy will always result in a drop in your credit standing, but once you receive a discharge, your credit standing will almost always improve each month since you will probably be starting out free of all debt. With a consolidation and reduction, it is likely to take many years to eliminate all of your debts and build back your credit. Be very cautious if you use a credit counseling company that wants to negotiate for a consolidation and reduction of your debts. They may be owned or backed by your creditors! This is not unusual.

Q.       I recently hired an attorney to represent me in an auto accident case because I was injured and my car was severely damaged. How does this affect my bankruptcy?

A.        You must provide your bankruptcy attorney with copies of the complaint so that it can be evaluated. Depending upon the circumstances, it may have an impact on your case. Only an experienced bankruptcy attorney can provide you with advice after all of the facts are evaluated.

Q.       My home is listed with a real estate broker and is currently in escrow. How will this affect a bankruptcy filing?

A.        You must make an absolutely accurate disclosure on your bankruptcy petition regarding the status of the sale. Only an experienced bankruptcy attorney can help you with this important disclosure. Failure to make a proper disclosure could cause your case to be dismissed or worse. Start by providing your bankruptcy attorney with the listing agreement, purchase – sale agreement, and escrow instructions.

For Debtors Without an Attorney

Although individuals may represent themselves and file for bankruptcy without an attorney, the bankruptcy process is complex and confusing.  Court staff, judges, trustees, petition or document preparers and paralegals are not permitted to provide legal advice.  Only an attorney can provide legal advice.  Individuals representing themselves are responsible for knowing the requirements the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure and the Local Rules for the District.  Missing a deadline, failing to perform a required task, or failing to respond properly to a pleading or court order could result in the dismissal of the bankruptcy case, denial of a discharge, or the loss of property.

Beware of bankruptcy petition preparers who do not comply with all legal requirements.  The role of non-attorney petition preparers is solely to type information on bankruptcy forms.  Petition preparers are barred by law from providing legal advice - they cannot explain how to answer legal questions or assist in bankruptcy court.  Petition preparers must sign all documents they prepare; print their name, address, and social security number on such documents; and furnish copies to the debtor.  They cannot sign a document on the debtor's behalf or receive payment from the debtor for court fees. 

The following constitute legal advice:

Bankruptcy Abuse Prevention

The purpose of the Bankruptcy Abuse Protection and Consumer Protection Act of 2005 was to make it more difficult for consumers to file for bankruptcy under Chapter 7 of the Bankruptcy Act where debts are forgiven or discharged.  It was intended to force debtors to file under Chapter 13 of the Bankruptcy Act where debtors are forced to repay some of their debts. 

Under the new law, debtors seeking to file Chapter 7 Bankruptcy are required to complete a form entitled Statement of Current Monthly Income and Means Test Calculation.  If the Chapter 7 Bankruptcy filing is determined to be presumptively abusive by the Bankruptcy Trustee, the debtor may try to rebut the presumption of abuse by showing special circumstances.  Unless the debtor overcomes the presumption of abuse, the Court may convert the case to a Chapter 13 Bankruptcy or dismiss the case. 

The BAPCPA provides two definitions of abuse.  Abuse may be found when there is an unrebutted presumption of abuse arising out of the means test or through a finding of bad faith determined by the totality of the circumstances.

Credit Counseling Briefing - Debtor Education for
Chapter 7 and Chapter 13 Bankruptcies

The Credit Counseling Briefing and the Debtor Education Course are both requirements for bankruptcy, but are completely separate.  Each requires completion of a different program and a separate certificate for proof of completion.  The proof of completion for the Credit Counseling Briefing must be obtained before a bankruptcy petition is filed with the court with some very limited exceptions.  The Debtor Education Course must be taken after the bankruptcy petition is filed, but before a discharge can be obtained. 

Both the Credit Counseling Briefing and Debtor Education Course are available online for a small fee.  Contact us for further information about these requirements.

Once the decision has been made to file for bankruptcy, it is important that the petitioner avoid making any serious mistakes. Following is a list of mistakes to be avoided. Bankruptcy Mistakes.

You Are Not Alone

Over the course of history, many people have found it necessary to exercise their right under federal law to file for protection from their creditors including many famous people. In addition, many formerly large United States business enterprises are now defunct businesses.

If you are like most people, you are not happy about having to consider the filing of a bankruptcy petition in order to become free of your debts.  Following are statistics released from the Administrative Office of the Bankruptcy Court for non-business and business bankruptcy filings:

* Approximately one-third of the non-business bankruptcy filings included a husband and wife, substantially increasing the total number of people filing.  For example, increasing the 1,074,225 bankruptcy filings by one-third, means that approximately 1,432,264 people filed for protection under the federal bankruptcy laws.

Approximately 80% of the people forced to file for bankruptcy protection have either lost a job or have had their business or other income reduced due to economic conditions.

Bankruptcy Crime - Fraud

Bankruptcy fraud includes filing a bankruptcy petition or other document in a bankruptcy case for the purpose of committing fraud. Bankruptcy fraud also includes making a false representation, claim or promise in connection with a bankruptcy case, either before or after commencement of the case, for the purpose of committing fraud. Bankruptcy fraud is punishable by a fine, or by up to five years in prison, or both.

Knowingly and fraudulently concealing property of the estate from a custodian, trustee, marshal, or other court officer is a separate criminal offense, and may be punishable by a fine, or by up to five years in prison, or both. The same penalty may be imposed for knowingly and fraudulently concealing, destroying, mutilating, falsifying, or making a false entry in any books, documents, records, papers, or other recorded information relating to the property or financial affairs of the debtor after a case has been filed.

Bankruptcy crimes are prosecuted by the United States Attorney, usually after a reference from the United States Trustee, the case trustee, or a bankruptcy judge.