At Resides & Resides we realize that every client is different and has different needs, our experienced attorneys and staff can help you determine the best bankruptcy solution for you and start you back on the path to financial recovery and stability.

We realize that bankruptcy is not a matter to be taken lightly. The process can seem confusing and complicated. At Resides & Resides we pride ourselves on offering the best possible legal advice given by experienced and confident legal professionals.

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Frequently Asked Questions

Our team has compiled a short list of frequently asked questions to help explain the bankruptcy process.

Q: What is a chapter 7 bankruptcy?

Chapter 7 bankruptcy, sometimes call a straight bankruptcy is a liquidation proceeding. The debtor turns over all non-exempt property to the bankruptcy trustee who then converts it to cash for distribution to the creditors. The debtor receives a discharge of all dischargeable debts usually within four months. In the vast majority of cases the debtor has no assets that he would lose so Chapter 7 will give that person a relatively quick “fresh start”.

Q: What happens when I file a chapter 7 bankruptcy?

Under the federal bankruptcy statute, a discharge is a release of the debtor from personal liability for certain specified types of debts. In other words, the debtor is no longer required by law to pay any debts that are discharged. The discharge operates as a permanent order directed to the creditors of the debtor that they refrain from taking any form of collection action on discharged debts, including legal action and communications with the debtor, such as telephone calls, letters, and personal contacts. Although a debtor is relieved of personal liability for all debts that are discharged, a valid lien (i.e., a charge upon specific property to secure payment of a debt) that has not been avoided (i.e., made unenforceable) in the bankruptcy case will remain after the bankruptcy case. Therefore, a secured creditor may enforce the lien to recover the property secured by the lien

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Q: What is chapter 13 bankruptcy?

In a chapter 13 case you file a plan showing how you will pay off some of your past-due and current debts over a period of three to five years. The most important thing about a chapter 13 case is that it will allow you to keep valuable property, like your home or car, even if you are behind on payments or you have equity not covered by your exemptions. Your payments on these secured debts will generally be your regular monthly payments plus some extra amount if you need to get caught up because you are behind when you file.

Q: What property can I keep after I file bankruptcy?

In a chapter 7 case, you can keep all the property which is exempt from the claims of creditors. In determining whether property is exempt, you must keep a few things in mind. The value of property is not the amount you paid for it, but what it is worth now. Generally the trustee is interested in the resale value of your property so for most personal effects this is the garage sale value of your property.
You also only need to look at your equity in property. This means that you count your exemptions against the full value minus any money that you owe on mortgages or liens. For example, if you own a $50,000 house with a $40,000 mortgage, you count your exemptions against the $10,000 equity you have in the home. While your exemptions allow you to keep property even in a chapter 7 case, your exemptions do not make any difference to the right of a mortgage holder or car loan creditor to take the property to cover the debt if you are behind. If you are behind in payments and can afford to make the loan payment and to make the amount you are behind over a period of three to five years you should consider a chapter 13 bankruptcy.

In a chapter 13 case, you can keep all of your property if your plan meets the requirements of the bankruptcy law. In most cases you will have to pay the mortgages or liens as you would if you didn’t file bankruptcy.

Q: Can I keep my home and/or car after I file bankruptcy?

You will not lose your home or car during your bankruptcy case as long as your equity in the property is fully exempt. Even if your property is not fully exempt you may still be able to keep your property by filing a chapter 13 bankruptcy instead of a chapter 7 bankruptcy. In a chapter 13 plan you will be required to pay at least the equivalent of the non-exempt equity you have in your home or car and any amount you are behind on your home or car loan over the course of the three to five plan. You also will be required to continue making the regular monthly payments.

Q: What debt will bankruptcy not erase?

  1. money owed for child support or alimony, fines, and some taxes;
  2. debts not listed on your bankruptcy petition;
  3. loans you got by knowingly giving false information to a creditor, who reasonably relied on it in making you the loan;
  4. debts resulting from “willful and malicious” harm;
  5. student loans owed to a school or government body, except if:– the court decides that payment would be an undue hardship;
  6. mortgages and other liens which are not paid in the bankruptcy case (but bankruptcy will wipe out your obligation to pay any additional money if the property is sold by the creditor).

Q: Who can file under Chapter 11 of the Bankruptcy Code?

Anyone who can file under Chapter 7 can file under Chapter 11 with the exception of a stockbroker or a commodity broker. Although a railroad cannot be a debtor under Chapter 7, it may be a debtor under Chapter 11.

Q: Who can file under Chapter 12 of the Bankruptcy Code?

Only a family farmer with regular annual income (as defined by the Bankruptcy Code) may be a debtor under Chapter 12.

Q: How does a Chapter 7 bankruptcy differ from a Chapter 11, 12 or 13 bankruptcy?

Under Chapter 7 (straight bankruptcy or liquidation) a trustee will be appointed. If the trustee determines that there are assets to be distributed to creditors all of the debtor’s nonexempt property will be sold and distributed among the debtor’s creditors. Chapter 7 does not involve a plan.
Under Chapter 11, the debtor has the exclusive right for 120 days to file a reorganization plan.
Under Chapters 12 and 13, the debtor has 15 days from the date of the filing of the bankruptcy petition to file a plan showing how part or all of the allowed claims will be repaid. Generally, payment will be from future earnings. Occasionally, there may be a surrender of collateral or transfer of a certain asset to satisfy a certain creditor. The payment period under a Chapter 12 or 13 plan may not exceed three years unless the court, for cause, approves a longer period (although this period may not exceed five years).

Q: What must be filed in a Chapter 7?

The debtor must file with the bankruptcy court clerk’s office:

  1. the filing fee
  2. the debtor’s petition
  3. the Clerk’s notice (if an individual consumer debtor)
  4. the disclosure of attorney’s compensation statement
  5. the matrix (which serves as the list of creditors)
  6. the Schedules that list all real property, personal property, property claimed as exempt, creditors holding secured claims, creditors holding unsecured priority claims, creditors holding unsecured nonpriority claims, executory contracts and unexpired leases, co-debtors, current income of individual debtor(s), current expenditures of individual debtor(s), schedule of income and expenditures of a partnership or a corporation, declaration concerning the debtor’s schedules (signed by the debtor(s)
  7. the statement of financial affairs.

Q: What must be filed in a Chapter 13?

The filing in a Chapter 13 will include the same items as would be filed for a Chapter 7 (with the exception of the Clerk’s notice). The debtor will also file a Chapter 13 plan.

Q: How often can a debtor receive a discharge?

A Chapter 7 debtor will not be granted a discharge from dischargeable debts if granted a Chapter 7 discharge in a case filed within six years before the date of the filing of this Chapter 7 petition.
A Chapter 7 debtor will not be granted a discharge from dischargeable debts if granted a Chapter 13 discharge in a case filed within six years before the date of the filing of this Chapter 7 petition unless the payments under the Chapter 13 plan totaled at least:
(a) 100 percent of the allowed unsecured claims; or
(b) 70 percent of the allowed unsecured claims and the Chapter 13 plan was proposed by the debtor in good faith and was the debtor’s best effort.
A debtor may file Chapter 13 at any time after receiving a discharge under Chapter 7.
A debtor may file a second Chapter 13 petition at any time after receiving a Chapter 13 discharge.


BANKRUPTCY CHECKLIST

When scheduling an appointment to meet with one of our attorneys, we ask that you please bring the following documents with you to your first meeting:

  • _____ The previous 6 months of pay stubs/pay advices (Needed to calculate the income
    based means test. Determines whether you are eligible to file a chapter 7)
  • _____ List of all (i.e. furniture, jewelry, vehicles and real (i.e. home, land) property that you own
  • _____ List of all debts owed with amounts and creditor addresses (copies of bills will be fine) (Credit Report)
  • _____ Copy of your driver’s license
  • _____ Copy of your social security card
  • _____ Copy of any recent domestic order, support order or divorce decree
  • _____ Copies of the last months statements for any and all checking, savings, credit union, or brokerage accounts you have or had at any financial institution for the last 3 month
  • _____ Copies of all loan agreements with any creditor that has a lien on your home, a car or boat, or any household furniture and appliances
  • _____ Copies of all titles to vehicles, boats, motors, manufactured homes, motor homes, 5th wheels, and appliances
  • _____ Copy of deed to home
  • _____ 2008 Federal Tax Return and State Tax Return
  • _____ 2007 Federal Tax Return and State Tax Return