FREQUENTLY ASKED QUESTIONS ABOUT BANKRUPTCY

1) What is Bankruptcy?

Bankruptcy was created to give individuals and entities an opportunity to have get financial relief and potentially get a fresh start and resolve their serious debt issues.  For example, by filing Chapter 7 you could eliminate all of your credit card debt which would allow you to get out from under the heavy debt burden that has limited you financially for so long.

2) How much does it costs?

The filing fee for Chapter 7 bankruptcy is $306 and to file Chapter 13 is $274.  The court may let you pay the fee in installments if you cannot pay all at once.  You will also have attorney fees, and we charge $690 in Chapter 7 cases.  If you are not able to pay the filing fee in Chapter 7 and your household income is less than one and a half times the poverty guidelines then you may request that the court waive the Chapter 7 filing fee.  This fee cannot be waived in Chapter 13, but it can be done in installments.

3)  Will anyone know I have filed bankruptcy?

Other than the creditors and persons you tell, it is unlikely others will know that you filed.  It is public record, but not easily accessible by the general public.  Some possible exceptions to this would be if local papers report bankruptcy filings or if in Chapter 13 you are required to have payroll deductions (which inform your employer).

4)  Will you lose your property?

Alabama law allows certain exemptions for equity in real and personal property.  If the exemptions cover the amount of equity in the assets that you want to keep, then you can keep them in Chapter 7 filing.  If not, then you might have to file Chapter 13 and abide by a payment plan to keep your property.

5)  Will my spouse have to file too?

It is not a requirement, but if joint debt is involved then it is highly recommended that both of you file.  If there is no joint debt then one spouse filing will not affect the others credit.

6)  If I have filed bankruptcy before, can I file again?

You can only file Chapter 7 once every 8 years and Chapter 13 once every 2 to 4 years after a prior bankruptcy (depending on which type you previously filed).

7)  Do I have to pay on property that I owe on and want to keep?

Yes, if you own your house and car you will have to continue paying for them to keep them.  In Chapter 7 you usually need to be current on payments in order to reaffirm the debt, allowing you to keep your property.  In Chapter 13 your plan will pay for the backed amounts that you owe on your home and balance owed on your vehicle.  However, you will be required to resume monthly payments the month after you file Chapter 13.  If you surrender your assets, then you will not have to pay for them.

8 )  Must I list all of my assets and debts when filing bankruptcy?

Yes, you will be swearing to this under oath when you sign the bankruptcy forms and at the meeting of creditors.  If you failed to list all of your assets/debts then your bankruptcy case can be dismissed and you could face possible criminal charges if you intentionally did not list them.

9)  Can my creditors still contact and harass me after I file bankruptcy?

No, upon filing bankruptcy an Order is entered by the Court called an automatic stay.  This Order forbids all attempts by creditors to collect any debt from you once they become aware that you have actually filed a bankruptcy case.  If they do attempt to collect the debt or harass you further during the automatic stay, they can be held in contempt of court and fined.

10) What do I do before filing bankruptcy?

You must do budget and credit counseling from an approved credit counseling agency 180 days before your bankruptcy case is filed.  This should be done through your Birmingham Bankruptcy Attorney, who can help you find an approved agency.  The agency will help you in looking over your budget and reviewing the options available to you.  The counseling can be done over the phone, in person, or online depending on the agency.

11)  Will bankruptcy wipe out all of my debt?

Generally yes, but here are some exceptions:  1) child support or alimony; 2) most fines and penalties owed to the government; 3) most taxes; 4) debts not on your petition; 5) student loans, unless you can prove that repaying them will be an undue hardship (this is very difficult to prove currently); 6) Loans you received by knowingly giving false information to creditors, who relied reasonably on this when loaning the money to you; 7) debts totaling more than $1000 obtained within 90 days of filing; 8 ) debts obtained while intoxicated; 9) mortgages and other liens not paid in bankruptcy case.

12) Will I have to go to Court?

You will have to go to what is called a meeting of creditors.   Usually, this meeting is fairly short and you are only asked a few questions about your forms and your financial situation.  It is rare for creditors to actually show up to this meeting, but the trustee will be there.  As long as no complications arise (such as your challenging any debt or any creditor challenging debt or some other reason) then this is the only meeting that you will have to attend with the trustee and you will not have to actually have to go before a bankruptcy judge.  In Chapter 13 cases, you may have to appear at a hearing where the judge will decide whether your plan should be approved.  However, if the trustee agrees to the plan then you will usually not have to go to any additional hearings in Chapter 13 cases too.