Question 1. Are there different types of bankruptcy filings?
Answer: The various bankruptcy filings are as follows:
- Chapter 7 is for individual wage earners. Unsecured debt is discharged and the debtor gets to keep certain exempt assets.
- Chapter 13 is for individual wage earners. A repayment schedule is approved and supervised by the court.
- Chapter 11 is for business reorganization.
- Chapter 12 is for farm reorganizations.
Question 2. I can't pay all of my bills. Can my creditors have me thrown in jail?
Answer: Your creditors cannot have you thrown in jail if you are unable to pay your bills. However, if you fail to attend certain required court hearings or you fail to respond to a subpoena you could be held in contempt of court or have a warrant issued for your arrest.
Question 3. If I file bankruptcy, will I ever be able to get a house loan or a car loan in the future?
Answer: The fact that you filed bankruptcy does not prevent a financial institution from lending you money in the future. Filing bankruptcy does have an immediate negative effect on your credit rating. However, the reality is that if you are in a financial position that requires a bankruptcy filing, it is unlikely that a bank or credit union would lend you money with the existing debt load. After the bankruptcy filing you will be free from the debt load. There are several things you can do at that time to rebuild your credit rating.
Question 4. Can I just download forms and file my own bankruptcy petition?
Answer: There is no legal prohibition that prevents someone from filing their own bankruptcy petition. Some people have successfully navigated the bankruptcy filing requirements. However, the realistic impediment to doing so for many people is the old saying “that you don’t know, what you don’t know”. The bankruptcy code is complex. There are many variables that affect when or if a person or entity is eligible to file a bankruptcy petition. Some examples include whether the debt is business or consumer debt, income limitations of the debtor or their spouse (the means test), what payments have been made in the past 90 days (or year for some creditors) and what assets are owned by the debtor.
Question 5. What information should I bring to a bankruptcy consultation appointment?
Answer: Bring at least two years tax returns and either your last 6 months pay stubs, or at least your most recent paycheck if it shows year to date earnings and deductions. You should bring the same information for your spouse if you are married, even if they will not be filing bankruptcy with you. You should also bring either a copy of your current debts or a written summary. The actual amounts for each specific debt does not have to be precise, but can be a good faith estimate.
Question 6. What does filing bankruptcy cost?
Answer: Costs vary dependent upon the law office and the complexity of the issues. A good practice would be to inquire as to the cost of the initial consultation. Some offices such as ours offers a free initial consultation. At the end of the initial consultation, the attorney should be able to give you a better estimate of costs. Some attorneys charge an hourly rate and some charge a flat fee for handling bankruptcies. In most cases, an experienced attorney should be able to give you a range of costs for fees and expenses.