Joseph E. Spires, Attorney At Law
GENERAL BANKRUPTCY QUESTION & ANSWERS
What is bankruptcy? The Bankruptcy Code in most consumer cases is Chapter 13 and Chapter 7. Generally, Chapter 13 is known as debt consolidation or simply putting your bills into one payment plan. The bills can cover a range of debt from back due mortgage payments, back due rent payments, back due taxes, back due child support, behind in automobile or truck payments, credit card debt, hospital debt, finance company debt and cash advance debt. A Chapter 13 is designed to lower your monthly payment on these debts. Secured debt like cars can be paid back over time at a lower interest rate and sometimes lowering the amount of debt. If the vehicle is over two and a half years from the date of purchase, the vehicle can be paid back at the NADA value at generally a low interest rate. The unsecured debt would normally get paid back at a low percentage or nothing based on your income and equity you may have in a house or car.
A Chapter 7 is basically asking the court to allow you to continue to pay your mortgage or rent, your car payment and furniture payment, but discharging (destroying) the unsecured debt that was described above. In most instances, you need to be current with your mortgage payment and car payment(s) to consider a Chapter 7
In most Chapter 13 cases, the filing fee of $310 can be put inside the bankruptcy fee together with attorney's fees which means you do not have to have a large sum of money to get the Chapter 13 filed. A chapter 7 filing fee of $335 must be paid up front together with a retainer fee for the attorney to get the Chapter 7 filed.
In all cases, I sit down with you and discuss the bankruptcy process and your options. You will decide how you desire to proceed. But, you will have all the information and calculations in front of you before you decide.
How long does it take for the bankruptcy process to take effect? It is immediate. The bankruptcy process is now electronic filing. Once you come in and sign your bankruptcy petition and corrections are made, the petition is filed and a Notice immediately is sent to your creditors telling them they can have no contact with you at all via telephone or mail. All communication must come through my office. The automatic stay of 11 USC Section 362 stops creditor collection attempts.
Do I have to go to Court? Yes. Chapter 13 has 2 court hearings. A 341 meeting meeting (first meeting of creditors) and a confirmation hearing. The 341 meeting gives the Chapter 13 Trustee a chance to review your petition and go over it with you to make sure it is accurate. The confirmation hearing is set to allow all contested matters to go before the Judge. A Chapter 7 general has just the 341 meeting. The Chapter 7 Trustee will review your petition with you to make sure it is accurate. Creditors have a right to attend the meeting to ask you general questions. I will be with you at all the hearings.
What if I miss a Chapter 13 payment? Generally, the Chapter 13 Trustee will file a motion to dismiss your case for non-payment. I will file a response to the motion to allow a hearing date to be set to allow us to work out the matter with the court. Generally, with good cause, your case will not be dismissed but a consent order will be entered which promises you will continue making your payments. In some instances, your case payments will have to increase to cover the amount of money you missed sending into the Trustee.
How long does a Chapter 13 or Chapter 7 last? Prior to filing, you will have to obtain 6 months of pay stubs if you were employed, you must have filed your tax returns (all of them) to be eligible to file a bankruptcy, and you must obtain a consumer credit counseling certificate. My office will assist you with obtaining the counseling certificate. So, once you have brought in all the required information and your case is filed, a Chapter 13 can last from 3 to 5 years. You will decide with me how long you are in the Chapter 13. The shorter the period (36 months) the higher the payment. We will go over your budget and decide which length of time is best for you and your family. A Chapter 7 generally takes around 6 months to obtain your Discharge. A Discharge is simply what they call a Court Order that wipes out your debt. A Discharge is your goal in a Chapter 13 as well as a Chapter 7.
Does it matter how much I make in wages to qualify for bankruptcy? Yes. The Bankruptcy Code (known as BAPCPA) has a Means Test that you must pass to determine if you are eligible for a Chapter 7. Each county in Georgia has different amounts a family income can be to determine if you are eligible. That is why you must provide the 6 months of pay check information so I can average out the income to determine if you qualify for a Chapter 7. Additionally, if you decide to be in a Chapter 13, the same pay check stubs will let me know if you pass the Means Test. If you do, you get to decide if you want to be in a 3, 4 or 5 year case. If you fail, you must be in a 5 year case. Again, I will do all the math for you so we can determine your choices.
Does bankruptcy stop a foreclosure, a repossession or a lawsuit that was filed against me? Yes. If you file the bankruptcy petition prior to the foreclosure, it is stopped immediately. If you file prior to the repossession of your vehicle, the repossession is stopped. I will contact the creditor and let them know to stay (stop) the foreclosure or remove your vehicle from the repo list. Additionally, the bankruptcy filing will stop the ongoing collection of the debt by way of a lawsuit. Please note certain situations exist such as with child support and alimony that will not be stopped.
Do I meet with an attorney at your office? YES.
If I file Chapter 13, can I pay my case off early? Generally, the answer is no. Most cases are filed paying your creditors at a lower amount than their actual debt. So, unless you want to pay them 100% of their debt to get out of bankruptcy early, you must simply make your monthly payments. After 36 months (3 years) in the case, you would have a right to see if you qualify to pay off your case at the lower amount. But remember, this is a lump sum payment.
Can I buy anything on credit while I am in bankruptcy? Yes, but with Court permission. Generally, you must be current with your bankruptcy payment in Chapter 13 cases to first qualify. Then a letter will be submitted to the Trustee to see if she will approve your request without the need of a court hearing. It usually takes about 7 days to obtain a response. If the request is denied, a hearing is scheduled within 40 days of the request. Most reasonable requests are approved without the need for a hearing.
Does my spouse have to file with me? No.
What do I need to bring with me to your appointment? Picture ID, Social Security Card, Copies of most recent tax returns, all bills, and 6 months of pay check stubs. If you receive disability and do not have to file tax returns, I will file an affidavit for you with the Court regarding not having to file income tax returns and not having pay check stubs.
