Bankruptcy FAQ
What is bankruptcy?
Bankruptcy is a way for people or businesses who owe more money than they can pay right now (a “debtor”) to either work out a plan to repay the money over time under Chapter 11, 12 or 13, or for most of the bills to be wiped out (”discharged”), as in a chapter 7 case. While the debtor is either working out the plan or the trustee is gathering the available assets to sell, the Bankruptcy Code provides that creditors must stop all collection efforts against the debtor. When the bankruptcy petition is filed, you are immediately protected from your creditors.
What are the consequences of filing for bankruptcy?
Depending on a debtor’s financial situation and reasons for filing, the consequences of filing for bankruptcy protection may outweigh the benefits. The following information is intended as a summary only. You are strongly encouraged to consult with an attorney in order to determine the rights and obligations that apply to your individual situation. Those considering bankruptcy should be aware of the following:
1. Filing for bankruptcy protection is not free. How much does it cost?
The filing fee for a Chapter 7 is $299.00
The filing fee for a Chapter 13 is $274.00
Not all debts are dischargeable. Ex: Secured creditors retain some rights which
may permit them to seize property, even after a discharge is granted. Spousal and
child support obligations and most tax debts are not dischargeable.
2. Within 15 days of the filing of a bankruptcy petition, schedules of the
debtor’s assets and liabilities must be filed. Failure to timely file the
appropriate schedules may result in dismissal of the bankruptcy and the barring of the
debtor from filing again for 180 days (six months).
3. If a case is not dismissed and a discharge is entered by the court, the debtor is
prohibited from being granted another discharge under chapters 7 and 11 within eight years.
Fraudulent information or acts by the debtor are grounds for denial of a discharge and may be punishable as a criminal offense.
Do I need an attorney to file for bankruptcy or can I file on my own?
While it is possible to file a bankruptcy case “pro se,” that is, without the assistance of an attorney, it is extremely difficult to do so successfully. Hiring an attorney is recommended. The court is not able to give legal advice or help you fill out the forms.
What is a discharge?
The discharge order is issued by the court and permanently prohibits creditors from taking action to collect dischargeable debts against the debtor personally. This does not prevent secured creditors from seizing collateral if payments are not kept up or other creditors from pursuing property of the estate. The following information is intended as a summary only. You are strongly encouraged to consult with an attorney in order to determine the rights and obligations that apply to your individual situation.
Some debts are not dischargeable, and others may be found to be non-dischargeable depending on particular circumstances.
In a chapter 7 case, the bankruptcy court will order that the debtor be discharged of all dischargeable debts once the time for filing complaints objecting to discharge has expired unless:
- a. the debtor is not an individual;
b. a complaint objecting to the debtor’s discharge has been filed; or
c. the debtor has filed a waiver of discharge.
In chapter 12 and chapter 13 cases, the court will order that the debtor is discharged of dischargeable debts after the debtor has completed all payments under the plan, or prior to plan completion, after notice and hearing, if the requirements of 11 United States Code §§ 1228(b) or 1328(b) have been met.
The granting of a discharge does not automatically result in the closing of a case. All contested matters, adversary proceedings, and appeals must be resolved and the appointed trustee or debtor-in-possession must file a final report and account and request entry of a final decree before the Clerk’s Office will close the case.
Copies of a discharge after February of 2002 are available through the clerk’s office for free.
What can I do if a creditor keeps trying to collect money after I have filed bankruptcy?
If a creditor continues to attempt to collect a debt after the bankruptcy is filed in violation of the automatic stay, you should immediately notify the creditor in writing that you have filed bankruptcy. Provide them with either the case name, number, and filing date, or a copy of the petition that shows it was filed. If the creditor still continues to attempt to collect, the debtor may be entitled to take legal action against the creditor to obtain a specific order from the court prohibiting the creditor from taking further collection action, and if the creditor is willfully violating the automatic stay, the court can hold the creditor in contempt of court and punish the creditor by fine or incarceration. Any such legal action brought against the creditor will be complex and will normally require representation by a qualified bankruptcy attorney.
How many years will a bankruptcy show on my credit report?
7 to 10 years
How do I get a bankruptcy removed from the credit report?
The bankruptcy court has no jurisdiction over credit reporting agencies. The Fair Credit Reporting Act, 6 United States Code Section 605, is the law that controls credit reporting agencies. The law states that credit reporting agencies may not report a bankruptcy case on a person’s credit report after ten years from the date the bankruptcy case is filed. Other bad credit information is removed after seven years. The larger credit reporting agencies belong to an organization called the Associated Credit Bureaus. The policy of the Associated Credit Bureaus is to remove chapter 11 and chapter 13 cases from the credit report after seven years to encourage debtors to file under these chapters. You may contact the Federal Trade Commission, Bureau of Consumer Protection, Education Division, Washington, D.C. 20580. The telephone number is (202) 326-2222. That office can provide further information on reestablishing credit and addressing credit problems. For information on credit practices, contact 202.326.3224.
For more information, contact Joel K Uher at 916.686.9414 or visit the website of the United States Bankruptcy Court – Eastern District of California at http://www.caeb.uscourts.gov/