The Law Office of Helen Allen does not charge a fee for an initial bankruptcy consultation. The attorney you meet with will provide you with a retainer agreement outlining the fees and costs for handling your bankruptcy matter should you decide to proceed, depending on its complexity.
When you meet with an attorney at The Law Office of Helen Allen, we ask that you bring copies of your last five pay stubs, your last two state and federal tax returns and W-2s, a recent mortgage statement (if you own real estate), a rough idea as to the value of your assets (including any real estate you might own), and a rough idea as to the amount of credit card, medical, tax and/or student loan debt you may have.
Bankruptcy is a remedy provided by federal law that permits individuals or businesses to completely eliminate their legal obligation to pay certain debts, or to pay a portion of certain debts over a period of time, after which the bankruptcy court discharges their legal obligation to pay the balance.
Bankruptcy can eliminate (discharge) your legal obligation to pay most unsecured debt. If you are behind in your mortgage payments, you may be given time in a bankruptcy proceeding to bring your mortgage current. Under certain circumstances, you can remove a second or third mortgage or judgment liens from your real property and obtain a discharge of your obligation to pay them.
As the name implies, secured debt is money you owe that is secured by collateral of some sort. Common examples are car loans and real estate liens and mortgages. If you default on these debts, your creditor has the right to take the collateral (repossess the car, foreclose on the mortgage) to satisfy the debt. Unsecured debt is debt that is not secured by collateral. Common examples are credit card debts, medical debts and unsecured personal loans.
Generally speaking, unsecured debt is dischargeable in bankruptcy, while your secured creditors usually retain any rights they may have to satisfy the debt you owe them by taking steps to seize the collateral securing their debt. What this means is that, for example, a mortgage holder or automobile lender usually retains the right to foreclose a mortgage or repossess a car, with or without a bankruptcy, although they may have to wait until the bankruptcy is concluded before they can take steps to take the house or vehicle. Your obligation on any amount you owe above and beyond the value of the collateral is discharged once the creditor takes the collateral. If you wish to keep the collateral, you need to remain current in your payments on the secured debt. Your secured creditors usually retain their rights as to the collateral securing their debt. An attorney at The Law Office of Helen Allen can discuss these issues with you in greater detail.
Certain unsecured debts are not dischargeable in bankruptcy. These vary depending on the chapter of bankruptcy, but in general they include:
- Most taxes
- Debts that were not listed on your petition
- Debts for outstanding court-ordered alimony or child support
- Student loans, except in the case of undue hardship
- Debts for injuries caused by driving under the influence
- Debts for luxury items bought shortly before the bankruptcy filing, or under a line of credit that was fraudulently obtained
Chapter 7 bankruptcy is sometimes called “liquidation.” Provided your income is below a certain level, your assets are protected or exempt to certain dollar limits. The vast majority of Chapter 7 cases are “no asset” cases, meaning the filer does not have property that is worth more than their allowable exemptions. If you do have property that is worth more than the allowable exemptions, a Chapter 7 trustee can seize it, sell it and distribute the money among your unsecured creditors. If you have given away property or sold it for less than fair market value during the time period prior to filing your bankruptcy, the trustee may be able to get that property back and distribute the money to your creditors. Your legal obligation to pay any balance remaining after this process is concluded is eliminated (discharged). The Chapter 7 process generally takes approximately three and a half months from filing to discharge, not including the time the trustee may take to liquidate and distribute assets.
Chapter 13 bankruptcy is sometimes called “reorganization.”If your income is above a certain level, you may not qualify for a Chapter 7 bankruptcy. In that case, you can enter into a plan to pay a portion of your income to a Chapter 13 trustee for a period of 36 or 60 months, depending on your goals and/or income level. The trustee then distributes those payments to your creditors. When the plan is concluded, the court discharges your legal obligation to pay the balance of your dischargeable debt. Certain remedies and objectives are available in a Chapter 13 that are not available in a Chapter 7.
Your attorney at The Law Office of Helen Allen will analyze your financial circumstances and objectives to determine which chapter is right for you.
You are required to list ALL of your assets and ALL of your debts on your bankruptcy petition. Once the bankruptcy court notifies your creditors of your bankruptcy filing, the creditors customarily close the accounts. Accounts with no outstanding balances due learn of the bankruptcy filing through the credit reporting agencies, and they generally close the accounts as well. In some circumstances you can reaffirm certain debts, continue to pay them and retain the accounts. Your attorney at the Law Office of Helen Allen will explain the pros and cons of reaffirmation agreements when you meet.
Exemptions permit you to keep property to a certain dollar amount. Your attorney at The Law Office of Helen Allen will review your assets with you and compare them to the available exemption limits to determine what asset exposure you might have in a Chapter 7. Generally speaking, if you want to keep your house and/or car, they are not worth more than the applicable exemptions, and you are willing and able to stay current in the mortgage or auto loan payments, you can keep them. Tax-qualified retirement accounts (for example, 401(k)s, IRAs, 453(b)s, 457s) are exempt to a very high value.
Yes, cosigners (including a spouse) who do not file bankruptcy themselves remain liable for the debt even if you have been discharged in bankruptcy.
Your attorney at the Law Office of Helen Allen will review with you the information and documentation she needs to prepare and file your petition. Once you’ve gathered these materials, you can drop them off at our office at your convenience. We will begin to prepare your petition, and will contact you if it appears we need further information from you. Once the petition is complete, you will come in to review and sign the petition. We will file it and obtain an assignment for a meeting with the trustee, known as a 341 meeting. The 341 meeting is generally scheduled about five weeks from the filing date.
A Chapter 7 341 meeting is a meeting with a Chapter 7 trustee who has been assigned to administer your case. The meeting usually lasts no longer than 10 minutes. The trustee will ask you a series of questions to determine whether you have assets that are worth more than your available exemptions or have made certain transfers of assets out of your name that he or she can recover and distribute among your creditors. If the Chapter 7 trustee determines that there are no assets that exceed your permissible exemptions, and there are no transfers that he can call back for the benefit of your creditors (which is the vast majority of the time), he or she will file a Report of No Distribution. Conversely, if there are assets or avoidable transfers, the trustee will file a Report of Assets, and you then deliver the assets to him or her for distribution to your creditors. The vast majority of the time, we receive the document discharging your legal obligation on your debts in a Chapter 7 case by email roughly 60 days after the 341 meeting, and that concludes the Chapter 7 case, except if there are assets to be administered.
When a Chapter 13 bankruptcy is filed, the debtors file a Chapter 13 plan proposing what their monthly payments to the Chapter 13 trustee will be for the length of the plan. Debtors must start making these payments within 30 days of filing the petition. In a Chapter 13 bankruptcy, a 341 meeting is also scheduled approximately five weeks after filing. In a Chapter 13, the trustee is more interested in your income and your ability to pay a sufficient amount into your Chapter 13 plan for the benefit of your creditors. Your creditors are given a period of time in which to submit claims to the Chapter 13 trustee. The bankruptcy court sets a hearing date to confirm the Chapter 13 plan. Once the plan is confirmed, you make your monthly payments for the duration of the plan. The plan may be modified along the way if changes in circumstances warrant it. When you’ve finished your plan payments, the court issues a discharge eliminating your legal obligation to pay the balances of your dischargeable debts.
Generally, no, unless they are listed on the petition as a creditor, a cosigner or a party to an existing contract you may have. However, bankruptcy filings are matters of public record but are not usually published in the paper.
Bankruptcy may appear on your credit report for anywhere between seven to 10 years. There’s nothing you can do to remove it, although you can contact the credit reporting agency if you believe something is reported inaccurately. You are free to apply for credit at any time following your discharge, but lenders are not required to give you credit or to extend you credit at attractive interest rates.