Commonly Asked Questions about Bankruptcy

1. Will I lose my property if I file for personal bankruptcy?

Generally, you may file a bankruptcy and retain all of your personal belongings, including your house, your car and all household goods. Even if your property is worth more than what is owed on it, usually you can use the state bankruptcy exemptions to protect these items.

You may be more at risk of losing property if you don't file bankruptcy, as creditors can sue you and attach your bank accounts, garnish your wages and attach and seize your property. As a result, you may miss rent, mortgage or car payments, making it difficult to provide even your most basic necessities.

2. Do I need an attorney to file for bankruptcy?

You may file a bankruptcy petition on your own if you are an individual, but not if you are a corporation or partnership. Although having an attorney is usually a benefit, if you cannot afford one or feel comfortable in completing your own paperwork, this site provides a step-by-step approach with all the resources you will need to complete your own bankruptcy. At any time if you feel that you would rather have an attorney represent you, we have a link to attorneys across the country, who will credit any fees you paid for using this website.

3. What are the different "Chapters" in bankruptcy for consumers?

The majority of consumers will file for bankruptcy qualify for Chapter 7. It is the liquidation chapter of the Bankruptcy Code. Chapter 7 cases are often referred to as "straight bankruptcy" or "liquidation" cases. Under Chapter 7, a trustee is appointed to collect and sell all property that is not exempt and to use any proceeds to pay creditors. In the case of an individual, the debtor is allowed to claim certain property as exempt pursuant to federal bankruptcy law or their state law. An individual debtor gets a discharge, which means the debtor does not have to pay certain types of debts. This site allows you to answer a few short questions to see if you will likely qualify for a Chapter 7 bankruptcy. If you do not qualify and need to file a Chapter 13 bankruptcy, we can provide an immediate link to an attorney who your community that can help you prepare it.

Chapter 13 is the debt repayment chapter for individuals with regular income whose debts do not exceed $1,347,550 ($336,900 in unsecured debts and $1,010,650 in secured debts), including individuals who operate businesses as sole proprietorships. Corporations and partnerships cannot file under Chapter 13. Chapter 13 generally allows a debtor to keep property by repaying creditors out of future income. Each Chapter 13 debtor proposes a repayment plan which must be approved by the Court. The amounts set forth in the plan must be paid to the Chapter 13 Trustee, who distributes the funds for a small fee. Some nondischargeable debts can be paid over time in a Chapter 13 plan. After the completion of all the plan payments, over three to five years, Chapter 13 debtors receive a discharge of most debts.

4. What steps are followed to file for bankruptcy?

The particular steps in a bankruptcy are different based on the Chapter you file. However, all bankruptcy cases start as follows:

a) First you must decide whether you will prepare the bankruptcy yourself or use an attorney. This site provides a step-by-step approach to preparing and filing your own bankruptcy. However, if at any time you decide that you prefer to have an attorney represent you, this site has links to bankruptcy attorneys in your community who will credit the fee you pay for this do-it-yourself service towards their attorney fees.

b) Next, you should begin to accumulate the documents and information needed to complete the bankruptcy paperwork.

Completing the bankruptcy paperwork requires debtors to provided detailed information about their assets (consisting of a list of the assets and the fair market value of the assets), liabilities (including the names, addresses and account numbers for each creditor), income (during the three years prior to the bankruptcy, and month to month beginning 6 months before the bankruptcy is filed), and expenses.

You will need to have month to month records of your gross income and payroll deductions for the 6 months prior to your bankruptcy filing, and will need to have copies of all paystubs and other evidence of wages of salaries received within 60 days of the bankruptcy filing.

c) A precondition to the bankruptcy filing is a mandatory credit counseling briefing by an agency which has been approved by the Office of the United States Trustee. This site will link you directly with an agency that can provide the briefing over the phone and internet. If you have not undergone a briefing during the 180 days prior to your bankruptcy filing your case will be dismissed. You must file a certificate of completion (provided by the counseling agency) with your Bankruptcy Paperwork.

d) After the case is filed all debtors must attend a first meeting of creditors (also called the "Section 341 Meeting"). A trustee will preside at the meeting. The Trustee uses the meeting to ask you questions about your bankruptcy paperwork, to determine if you have assets which exceed the amount of allowable exemptions. In addition, all your creditors receive notice of the meeting and can attend and question you about your financial condition and the bankruptcy, although creditors seldom appear.

5. What is a Joint Bankruptcy Petition?

A joint bankruptcy petition is the filing of a single petition by a husband and wife. Only a couple who is married (including common law marriage) on the date of filing may file a joint petition. Unmarried people, corporations, and partnerships must file separate petitions.

6. Does my spouse have to file if I file?

No. Married individuals can choose to file a joint petition, but one spouse can file alone. However, information about assets and wages of the non-filing spouse must appear in your statements and schedules, to give a complete picture of your financial situation.

7. Where do I file my case?

You file your case at the United States Bankruptcy Court nearest to where you live. A list is included on this site. You may not fax pleadings to the Court and only electronic filing qualified attorneys may submit pleadings via the Court's Electronic Case Filing system.

8. What are the Court's hours of operation?

Bankruptcy Courts generally are open Monday through Friday from 8:00 am to 5:00 pm, except for federal holidays. New petitions submitted for filing after 4:00 pm will be accepted for filing that day, but may not be processed until the following morning.

9. What documents do I need to submit to file bankruptcy?

The following documents must be filed in all bankruptcies filed on and after October 17, 2005. Additional documents may be necessary depending upon your chapter and your individual situation. Clip (do not staple) the following forms together in this order for a petition packet:

a) Voluntary petition - Form 1 and any necessary exhibits required by the Form.

b) Statement of Financial Affairs - Form 7

c) Summary of Schedules A-J - Form 6-Summary

d) Schedules A, B, C, D, E, F, G, H, I, and J - Forms 6A through 6J

e) Declaration Concerning Debtor's Schedules - Form B6

f) For each debtor, copies of all payment advices, paycheck stubs, or other evidence of all salary, commissions or income received within 60 days before the bankruptcy case was filed, copied on 8 1/2 by 11 paper with the debtor's first and last name printed on top of each page (and bankruptcy case number, if a number has been assigned); or, if applicable, complete T.L.B.F. 1007-1 ("Statement Concerning Payment Advices Due") for each debtor.

g) Verification of Creditors' Matrix

h) Creditors' Matrix (verify with your local bankruptcy court as to how to file)

i) Additional Items due from Individual Debtors:

Social Security Number Statement - Form 21

Statistical Summary of Certain Liabilities - Form 6-

Exhibit D Individual Debtor's Statement of Compliance with Credit Counseling Requirement (Official Form 1 Exhibit D)

Certificate of Credit Counseling showing that each debtor completed credit counseling from an approved counselor within the 180 days BEFORE they filed the case. If each debtor did not receive the counseling, then, each debtor must file a request with the voluntary petition that states sufficient facts to justify an extension of time to get counseling.

For Chapter 7 Individual Debtors:

Statement of Current Monthly Income and Means Test Calculation Form 22A (unless the nature of debts are from the operation of the debtor's business)

Statement of Intention - Form B8 (due thirty days post-petition) (the failure to comply with your stated intentions and file reaffirmation agreements or motions to redeem personal property that the debtor does not intend to surrender has ramifications beginning 45 days after the first scheduled meeting of creditors.

Exhibit D, Individual Debtor's Statement of Compliance with Credit Counseling Requirement

10. What is the mailing matrix?

It is a list of the creditors in your case which must be filed in the proper format so that it can be used by the Court's automated noticing system. Check with your local bankruptcy court as to the format they use for filing your mailing matrix.

a) Generally, the matrix must be prepared as follows- Do NOT include page titles, headers, or page numbers One single column per page Five (5) lines per address maximum Special characters such as @#$%^&*()_+? are not permitted City, state and zip code must be on one (1) line City, state and zip code must be on the last line of the address Triple space between each creditor's address (see example below) Maximum of forty (40) characters per line

b) Do NOT include the names and addresses for the following people as they will be retrieved automatically by the system for noticing:

• Debtor and/or joint debtor
• Attorney for the debtor
• Any 341Trustee
• U.S Trustee

c) The form, Verification of Creditor Matrix must be prepared and filed.

d) A supplemental or amended creditor(s) matrix shall include ONLY new creditor(s) NOT PREVIOUSLY SUBMITTED. If you wish to change the address of a creditor already submitted, file a completed Change of Address form and DO NOT file an amended matrix.

11. What is the filing fee?

The current fee for filing a Chapter 7 petition is $299.00. The current fee for filing a Chapter 13 petition is $274.00. The Court does not accept personal checks or credit cards from debtors for the payment of these fees.

12. Are there forms for credit counseling and personal financial management instruction-and what is the difference between the two?

Credit counseling is the counseling that you obtain before you file bankruptcy from a credit counselor authorized by the United States Trustee. It is required for ALL individual debtors. When you complete your credit counseling from a credit counselor, the credit counselor will issue a certificate that must be filed with the Bankruptcy Court. If you are filing jointly with your spouse, both of you must complete credit counseling. The failure to timely file a properly issued credit counseling certificate will result in the dismissal of your bankruptcy case in almost all circumstances. The credit counselor may develop a proposed budget and repayment plan if it appears that you could afford such a plan (if one is prepared, it is to be filed along with the certificate).

Personal Financial Management Instruction is the instruction that you obtain after you file bankruptcy from an agency authorized by the United States Trustee. It is only required for Chapter 7 and 13 individual debtors. Once you complete the instruction you are to file Official Form B 23 and if a certificate was provided, it should be attached. In Chapter 7 cases, the certificate of completion of a course in financial management must be filed within 45 days of the first scheduled 11 U.S.C. § 341 Meeting of Creditors. In Chapter 13 cases, the certificate of course completion is due prior to the completion of all plan payments so that a discharge may be obtained. The failure to timely file the certificate of course completion in either a Chapter 7 or Chapter 13 case could result in your case being closed without the issuance of a discharge. If this happens, you will need to pay a filing fee to reopen the case to file the certificate so that a discharge may be obtained.

You will be linked directly to an approved agency from this site as a part of the service we provide or you can visit http://www.usdoj.gov/ust/ for the most recent information on approved credit counseling agencies and approved personal financial management instructional course providers.

13. What is the means test?

The means test is used in cases where the Chapter 7 individual debtor's(s') current monthly income exceeds the state's median family income. It is used to determine if a debtor has the ability to repay a minimum level of general unsecured debt after the payment of allowable monthly expenses. If the means test shows a debtor has such an ability to repay, there is a "presumption of abuse." In other words, if the debtor(s) receive(s) a Chapter 7 discharge, this would be an abuse of the bankruptcy process, because the debtor(s) may have the ability to repay debts outside of bankruptcy or through a Chapter 13 repayment plan over time. The analysis involves application of certain IRS guidelines for expenses in determining the ability to repay as well as a review of income from the previous six months to determine if the debtor(s) is/are above the median income for the state where they reside. All of this is explained in the step-by-step procedures in this site. The links to the IRS guidelines and median income information are also found on the United States Trustee's website at http://www.usdoj.gov/ust/ under Means Testing Information.

14. How can I change or correct information in the petition, statements, and schedules I have filed?

The information contained in your petition, statements, and schedules is submitted under penalty of perjury. Accordingly, one who intentionally submits such information that is inaccurate or misleading may have committed a serious crime. Therefore, you must be certain this information is correct when you sign these documents. If you later discover something is inaccurate, you must correct the documents by filing an amendment with the Clerk's Office. If a schedule is amended, an appropriate amended schedule must be filed showing the correction, along with an Amended Summary of Schedules. If you are adding a creditor or changing a creditor's address, you must also submit another diskette showing only the changes (see question on Creditor's Matrix for instruction on making a diskette). A fee of $26.00 must be paid to amend schedules of creditors or lists of creditors for the purpose of adding a creditor. The debtor must include the debtor's full taxpayer identification number in the notice mailed to the added creditor, but only include the last 4 digits of the identification number in the notice or certificate of service filed with the Court. The debtor must give notice to the creditor(s) impacted, changed or added by the amendments by mailing them a copy of the Notice of meeting of Creditors. A Certificate of Service evidencing such must be filed with the court.

15. What is a Meeting of Creditors? What happens there?

The meeting of creditors is a hearing all debtors must attend in any bankruptcy proceeding. It is held outside of the presence of the judge and usually occurs between 20 and 40 days after the filing of the petition. The meeting permits the trustee or the representative of the U.S. Trustee to review the debtor's petition and schedules face-to-face with the debtor. The debtor is required to answer questions under penalty of perjury (swearing or affirming to tell the truth) about the debtor's conduct, property, liabilities, financial condition, and any other matter that may affect the administration of the case or the debtor's right to discharge. In addition, the trustee or U.S. Trustee's representative will ask questions to ensure that the debtor understands the bankruptcy process.

The meeting is referred to as a "meeting of creditors" because creditors are notified that they may attend and ask the debtor questions pertaining to assets or any other matter pertinent to the administration of the case. It is also referred to as a "341 meeting" because it is mandated by Section 341 of the Bankruptcy Code. Creditors are not required to attend these meetings and do not waive any rights if they do not attend. The meeting usually lasts only about ten to fifteen minutes and may be continued if the trustee or U.S. Trustee's representative is not satisfied with the information presented.

If the debtor fails to appear and provide the information requested, the trustee or U.S. Trustee's representative may request that the case be dismissed, or may seek other relief against the debtor for failure to cooperate. If the case involves spouses filing jointly, both spouses must appear at the meeting of creditors.

16. What kinds of debts are not discharged?

Nondischargeable debts include: certain tax obligations (including taxes due within three years of the bankruptcy filing); debts resulting from fraudulent conduct on the part of the debtor; debts owed to unlisted creditors; debts resulting from breaches of fiduciary duties; support obligations; debts resulting from willful and malicious conduct; fines, penalties and restitution obligations; student loans (unless such an exception would impose an undue hardship on the debtor or a dependent); and domestic obligations.

In addition, a debtor may be denied discharge as to all debts if, among other things, the debtor: transfers or conceals property within a year of the bankruptcy filing with the intent to hinder, delay or defraud a creditor; fails to keep or preserve relevant records; makes a false oath with respect to, among other things, information provided in the bankruptcy paperwork or to the bankruptcy trustee; or refuses to cooperate with the trustee in the administration of the estate.

17. How do I know if a debt is secured, unsecured, priority, or administrative, so I can fill out my schedules correctly?

Secured Debt: A secured debt is a debt that is backed by a mortgage, pledge of collateral, or other lien, including a properly recorded judgment lien. It is a debt for which the creditor has the right to pursue specific pledged property upon default. Typically, things like a car or a house are used as collateral to secure consumer loans. Unsecured Debt: If you have simply promised to pay someone a sum of money at a particular time and have not pledged any property, it is an unsecured debt. This may include a judgment that is not secured by a lien. Typically, things like medical bills and gas or electric bills are unsecured debts.

Priority Debt: These are debts that are entitled to be paid ahead of most other unsecured debts. These are called priority debts. Examples of priority debts are some taxes, wage claims of employees, debts related to goods and services provided to a debtor's estate during the bankruptcy case, and alimony, maintenance, or support or a spouse, former spouse, or child.

Administrative Debt: An administrative debt is a type of priority debt and arises when someone provides goods or services to the bankruptcy estate during the case. In some cases, attorney's fees are an example of administrative debt, as are trustee's fees and costs.

18. What are exemptions?

The Bankruptcy Code allows an individual debtor to hold back from the bankruptcy process certain property. Such property is called an exempt asset. Exempt assets are protected by state law from distribution to creditors. Examples of exempt assets include vehicles up to a certain value, equity in a home up to a certain value, and tools of your trade. Exemptions must be claimed or lost and they are claimed on Schedule C. If no one objects to the claimed exemptions within a specified time, the assets may not be part of your bankruptcy estate.

The Bankruptcy Code allows states to choose to use their own exemptions rather than the Federal exemptions listed in 11 U.S.C. §522. A full list of state and Federal exemptions is included in the service on this site.

19. What happens after I file my bankruptcy case?

When you file your petition, an "automatic stay" will usually take effect. The automatic stay prohibits creditors from taking collection action against you or your property. The Court issues a notice to all creditors advising them of the filing, the case number, the automatic stay, and the name of the trustee assigned to the case. The notice also tells creditors the date of the meeting of creditors (the "341 meeting") the deadline for filing objections to the debtor's discharge or to the dischargeability of certain debts, and whether and where to file claims. All debtors must appear at the meeting of creditors or the case may be dismissed.

In an individual's Chapter 7 case, creditors generally have 60 days from the first date set for the meeting of creditors to object to the debtor's discharge or the dischargeability of certain debts. If the deadline passes without any objections to the debtor's discharge being filed, the Court may issue the discharge order. Other matters that may prevent or delay the discharge are: certain pending reaffirmation agreements, if a hearing is required and has not been held, the failure to file the verification of completion of an Instructional Course in Personal Financial Management. If any objections to the dischargeability of debts are filed, they will be heard by the Court, but will not stop the entry of the discharge as to other debts. Only an individual debtor receives a discharge.

20. What is a discharge?

A discharge order issued by the Court permanently prohibits creditors from taking action against a debtor personally to collect debts incurred before the filing of the bankruptcy petition. The discharge does not prevent secured creditors from seizing collateral if payments are not kept up. The discharge does not prevent collection of debts incurred after the filing of the bankruptcy. Some debts are not dischargeable, and some debts are not dischargeable under certain circumstances.

Some examples of debts that may not be discharged include: certain taxes and fines, debts not listed in your bankruptcy, alimony, child maintenance or support, debts from willful and malicious injury to another, debts created through fraudulent conduct or by providing false information to a creditor.

21. What is a Reaffirmation Agreement?

A reaffirmation agreement is an agreement between the debtor and a creditor by which a debtor becomes legally obligated to pay all or a portion of an otherwise dischargeable debt. Such an agreement should be filed within 45 days after the first date set for the meeting of creditors. A debtor who signs a reaffirmation agreement has 60 days after the agreement is filed, or until the discharge date, whichever occurs later, to change his mind and inform the creditor that the agreement is rescinded. Debtors entering into a reaffirmation agreement without counsel representing them will need to attend a hearing before a judge to determine if the agreement will be valid. Since a reaffirmation agreement takes away some of the effectiveness of your discharge, you are strongly advised to consult legal counsel before agreeing to a reaffirmation of a debt.

22. What can I do if a creditor keeps trying to collect money after I have filed a bankruptcy?

If you do not have an attorney, you can write the creditor and provide them your case name and number or a copy of your petition and your discharge order. If the collection efforts continue, you may be entitled to take further legal action, which would normally require representation by a qualified bankruptcy attorney.

23. Can the Court waive the filing fee?

Federal law, 28 U.S.C. §1930, requires a fee to file a bankruptcy petition. If you cannot pay the full fee at the time of filing, you may apply to pay the fee in installments. A form, which is available from the bankruptcy clerk's office, must be completed to make that application. If your application to pay in installments is approved, you will be permitted to complete paying the fee over the course of four months. Chapter 7 debtors in certain specific circumstances may request a waiver of the initial filing fee upon showing that they meet certain criteria. If the Court denies the request, you will be required to pay the fee in installments.