Frequently Asked Questions

Q?What is the difference between the bankruptcy chapters?
A.

Chapter 7: Often called the ‘liquidation chapter,’ Chapter 7 bankruptcy is used by individuals, partnerships or corporations who have no hope for repairing their financial situation. In Chapter 7 bankruptcy, the debtor’s estate is liquidated under the rules of the Bankruptcy Code. Liquidation is the process through which a trustee sells the debtor’s non-exempt property for cash. The cash is then distributed to creditors.

Chapter 13: An individual who is in debt, but believes that he or she can pay off the debt over time, may file under Chapter 13 of the Bankruptcy Code. Chapter 13 lets the debtor file a plan to pay a certain percentage of future income to the Bankruptcy Court for payments to creditors. If the court approves the plan, the debtor will be under the court’s protection while repaying such debts.

Q?What is a 341(a) creditors meeting?
A.

Debtors have a duty to appear, testify under oath and be questioned by creditors at the 341(a) meeting. This meeting is presided over by the trustee who has been assigned to the case, and is held approximately 40 days after the new petition is filed. Failure to appear at the meeting may result in dismissal of the case. If a continuance or change in the hearing date, time or location is sought, the trustee assigned to the case must be contacted. Such requests are not filed with the court.

Q?What is an automatic stay?
A.

An automatic stay is an injunction that automatically stops lawsuits, foreclosures, garnishments and all collection activity against the debtor, the moment that a bankruptcy petition is filed.

Q?What are the consequences of filing for bankruptcy?
A.

Depending on a debtor’s financial situation and reasons for filing, the consequences of filing for bankruptcy protection may outweigh the benefits. Those who are considering bankruptcy should be aware of the following. Not all debts are dischargeable. (Example: 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.)

Q?What is a discharge?
A.

A discharge is the release of a debtor from personal liability for certain debts. The creditors who are owed money are forbidden from taking any action against the debtor in order to collect. Creditors are prohibited from communicating with the debtor in regards to the debt. This includes telephone calls, letters and/or personal contact.

If a case is not dismissed and the court enters a discharge, the debtor is prohibited from being granted another discharge in Chapter 7 within eight years from the initial filing date.

Q?What if I don’t have the filing fee?
A.

The U.S. Bankruptcy Court allows you to pay the filing fee in full or in several installments. In some instances, the court will waive the filing fee, but this is on a case-by-case basis.

Q?What if I have lots of cash, but don’t want to lose it in bankruptcy?
A.

Federal law allows you to keep a certain amount of cash. The amount of cash that will be exempt in your bankruptcy will depend on the way you have it saved in your bank. You may be able to keep some of it.

Q?What is an exemption?
A.

This about it like this — when you file for bankruptcy, a huge net comes down on your assets (your house, you car and your cash). At that point, a bankruptcy trustee is appointed to examine your assets and decide what he or she can sell to pay off your debts. But certain items cannot be sold because they are exempt by law. These items are taken out from under the net and will not be sold.

Q?If I have a question, whom can I talk to?
A.

At the Law Office of Bennett Cunningham, P.C., you can always talk to a lawyer about your case — not a sales person and not a paralegal.

Q?Can I convert or re-file my case to a different bankruptcy chapter?
A.

At the Law Office of Bennett Cunningham, P.C., we know how to make this happen. You may be able to convert or re-file a Chapter 7 case to a Chapter 13 case, and vice versa.

Q?Can I dismiss my case?
A.

In certain circumstances in a Chapter 7 bankruptcy, you can request a dismissal. But it is not always granted. In a Chapter 13 bankruptcy, you have an absolute right to dismiss your case.

Q?If I file for bankruptcy, can creditors keep calling me?
A.

At the Law Office of Bennett Cunningham, P.C., we know how to deal with those annoying and pesky debt collectors. Remember, once a bankruptcy petition is filed and your creditors are notified, they are no longer allowed to communicate with you about collecting a debt. Period! No exceptions!

Q?I am afraid of the court system and I don’t want to go to court. Do I have to?
A.

Normally, you rarely go into a courtroom in a bankruptcy case. At the Law Office of Bennett Cunningham, P.C., you will never go into a courtroom alone — EVER! After filing a bankruptcy petition, we will go to a Section 341 meeting. This meeting, also known as the Meeting of Creditors, is a hearing to allow creditors to discuss your bankruptcy petition. Rarely do creditors show up, but a lawyer will be with you to protect your rights.

Q?I “fudge the numbers” in my bankruptcy filing, but tell my lawyer the truth. Will I get in trouble?
A.

As you might imagine, this would be considered fraud and would be prosecuted by the U.S. Attorney’s Office.

Q?I want to hide money. Is bankruptcy a good idea?
A.

No. The trustees are smart. If they find the money, you will be prosecuted by authorities.

Q?I want to file for bankruptcy on my own. Is it easy?
A.

Yes. But remember the old adage, a person who represents themselves has a fool for an attorney.

Q?I want to keep my house, but what if I change my mind after I file?
A.

You can change your mind. We can work with the bank to surrender your house or even sell it, if you desire.

Q?What is a reaffirmation agreement?
A.

This is an agreement that you make with a creditor to repay a debt after your bankruptcy is discharged. It is used mostly to cure a default on your mortgage, to prevent the bank from foreclosing on your house because you filed for bankruptcy.

Q?How do I get the bankruptcy removed from my credit report?
A.

The Fair Credit Reporting Act (15 U.S.C. Section 1681) is the law that controls consumer reporting agencies. The law states that reporting agencies may not report a bankruptcy case on a person’s credit report after 10 years from the date that the bankruptcy case was filed. Generally, most negative credit information is removed after eight years.

Q?What is a Means Test?
A.

Shockingly, this test is very antiquated and, in my opinion, gives a false portrayal of a debtor’s financial picture. Regardless, it is law. And when filing for bankruptcy, this complicated formula is used to determine if an individual Chapter 7 filing is presumed to be an abuse of the Bankruptcy Code, requiring either dismissal or conversion of the case, generally to a Chapter 13 filing.