Bankruptcy is a federal court process where a person or business legally declares an inability to pay its creditors. There are two types of bankruptcies: liquidation and reorganization. In a liquidation bankruptcy, a trustee is appointed to manage the bankruptcy case. The trustee may sell some of the debtor’s property and distribute the proceeds to pay off creditors. Every state has laws which allows people who file bankruptcy to keep some of their assets/property. Therefore, in many liquidation bankruptcies, the person who files for bankruptcy may be able to keep some or all of their property. In a reorganization bankruptcy, the person or business that files for bankruptcy agrees to pay back a portion or all of its debt over time. In reorganization bankruptcies, the person or business filing for bankruptcy is also able to keep some or all of its property.

A secured debt is a claim that is secured by a lien on property (e.g. collateral). Some examples of common secured debts are home mortgage(s), which are usually secured by a lien on your home; and your car loan, which is usually secured by a lien on your car. Furniture that is being paid by installment payments may also be a secured debt. Creditors that have secured claims are better protected in bankruptcy, because bankruptcies do not automatically remove liens on property.

Bankruptcy is a legal process that allows you to “discharge” your debts. When a debt is “discharged,” it means that you no longer have to pay that debt. The creditor then takes the loss and you are given a “fresh start.”

There are several different bankruptcy chapters. Most consumers will file under Chapters 7, 11 or 13.

• Chapter 7 – provides relief through bankruptcy liquidation, which is when the United States Trustee sells the debtor’s non-exempt property, and distributes the sale proceeds to the debtor’s creditors.

• Chapter 13 – provides relief through bankruptcy reorganization for individuals with regular income. Debtors filing a Chapter 13 bankruptcy will repay all or part of their debts through a payment plan that last between 3 to 5 years.

• Chapter 11 – provides relief through bankruptcy reorganization for business and individuals who have a large amount of debt and/or assets.

The remaining bankruptcy chapters are as follows: • Chapter 9 – Chapter 9 provides for the reorganization of municipalities (i.e. cities, towns, counties, etc.) • Chapter 12 – Chapter 12 provides relief for farmers or fishermen. • Chapter 15 – Chapter 15 provides relief for foreign entities.

Chapter 7 bankruptcy is a liquidation bankruptcy. When a debtor files a petition for bankruptcy under Chapter 7, the United States Trustee may sell property that the debtor owns at the time when the petition is filed. The Trustee will then distribute the sale proceeds to the debtor’s creditors. In many Chapter 7 bankruptcies, there is no property for the Trustee to sell after the debtor has claimed his or her “exemptions”. Exemptions are property or the value of particular property that the law permits the debtor to keep during and after the bankruptcy.

Most Chapter 7 debts are usually discharged 3 to 6 months after the bankruptcy petition is filed. Some debts are non-dischargeable in bankruptcy, usually including student loans, domestic support payments, and taxes.

Chapter 13 is a reorganization bankruptcy, where the debtor repays creditors over time. When a debtor files a petition for bankruptcy under Chapter 13, the debtor’s attorney and the debtor will create a payment plan that is completely unique to the debtor’s circumstances. The payments are made to the United States Trustee, who then distributes the money to creditors. Chapter 13 plans usually last 3 to 5 years. The debtor receives a discharge when the plan is completed. Some debts are non-dischargeable in bankruptcy, usually including student loans, domestic support payments, and taxes.

Most consumers will typically file a Chapter 7 bankruptcy or a Chapter 13 bankruptcy. In a Chapter 7 bankruptcy, all of the debtor’s non-exempt property will be sold and the proceeds will be distributed to the debtor’s creditors. In a Chapter 13 bankruptcy, the debtor pays back some or all of his or her debts over 3 to 5 years.

Generally, courts allow for converting a case from one chapter to another chapter. However, each chapter of bankruptcy has different financial consequences. It is very important for you to understand what those consequences will be before making a decision to convert your case from one chapter to another.

Creditors can never force you into a Chapter 13 bankruptcy, where debtors repay part of their debts, but it is possible for creditors to force you into Chapter 7 or Chapter 11 bankruptcy if certain requirements are met. Involuntary bankruptcies are rare because creditors usually do not have much to gain from forcing someone into bankruptcy.

Generally, any person or business may file a petition for bankruptcy.

You may file a Chapter 7 petition eight years after a previous Chapter 7 discharge, and four years after a previous Chapter 13 discharge.

You may file a Chapter 13 petition four years after a previous Chapter 7, and two years after a previous Chapter 13 discharge.

There are consequences to debtors who have filed multiple bankruptcy petitions during the course of 12 months. If you have recently filed a petition that was dismissed by the Court, make sure to inform our attorneys so that we can effectively represent you in your current case.

There are no minimum debt requirements to filing for bankruptcy. However, filing a petition for bankruptcy will have important legal and financial consequences. Even if you have a lot of debt, your situation may not warrant filing for bankruptcy.

Credit bureaus will report a Chapter 7 bankruptcy for 10 years; and a Chapter 13 bankruptcy for 7 years. Having a bankruptcy listed on your credit report does not mean that you will be unable to rebuild your credit. At first, creditors and lenders may want to charge you a higher interest rate after filing for bankruptcy. However, after you start to consistently make payments to your creditors it may be possible for you to refinance your loan at a lower rate or renegotiate your credit terms.

Yes. As soon as you file your bankruptcy petition with the Bankruptcy Court, the Court will issue a Court Order to all your creditors which requires creditors to stop contacting you to collect on your debts. If a creditor knows that you have filed for bankruptcy and continues to attempt to collect on your debt, that creditor is breaking the law.

As soon as you become our client, you may direct creditors to not contact you, and to contact our offices instead.

Not likely. Bankruptcy laws allow each person who files for bankruptcy to keep a certain amount of their property. These are called “exemptions”. Each state has its own exemption laws. Typically, exemption laws will allow the debtor to keep their clothes, household goods, and equipment necessary for employment, among other things. A debtor may also exempt a portion or all of the equity in their home (the homestead exemption).

Yes. Once you file for bankruptcy, any garnishment of your wages must stop. After filing for bankruptcy you are also entitled to any money that has been collected by the Sheriff Department, but has not yet been sent to the creditor.

If the foreclosure sale has not yet taken place, a bankruptcy can stall a foreclosure proceeding. Once the foreclosure sale has taken place, a bankruptcy will not stop a home foreclosure. After you have filed for bankruptcy, creditors holding a lien on your home must ask the Court for permission to continue the foreclosure sale. Generally, Bankruptcy Courts will not allow a debtor to keep a piece of real property that they are not making payments on.

Depending on your financial circumstances, a bankruptcy could be the right financial choice that will allow you to get out from underneath your debt and continue to stay current on your mortgage payments. A creditor can still foreclose on your home after bankruptcy, if you are behind on your payments.

Not necessarily. There are a lot of factors that contribute to the possibility of losing your home in bankruptcy. Many debtors are able to file for Chapter 7 bankruptcy and keep their homes. Filing for bankruptcy does not automatically mean that you will lose your home. Filing for bankruptcy will not allow you to keep you home if you are not making payments on your loan.

Yes. Please visit our Bankruptcy and your Auto/Car page for more details.

No, most debts are discharged, but there are some debts which are generally not discharged in bankruptcy. For example, debts for child support and alimony will not be discharged in bankruptcy. Student loan debt and taxes are usually not discharged, but can be discharged under limited circumstances. Secured debts are also not discharged in bankruptcy, unless you are willing to give up the property that is used to secure the debt (usually real property or a vehicle).

Generally speaking, student loans are considered to be “non-dischargeable debts,” which means that they will not go away in bankruptcy. However, there are limited circumstances where it may be possible for a person to discharge his or her student loan. This is something that would need to be discussed on a case-by-case basis.

Yes. Generally speaking, all income you earn after filing for bankruptcy is yours to keep. Any wage garnishments must also cease once you file a petition for bankruptcy with the Bankruptcy Court.

No. Social security benefits are protected in bankruptcy. A creditor or the Bankruptcy Trustee cannot take your social security benefits.

Generally speaking, you can keep your retirement account(s) if you file for bankruptcy. State bankruptcy laws usually allow you to exempt retirement accounts (meaning that the trustee cannot take the retirement account).

The first step in any bankruptcy is to evaluate your financial situation so that you can make the best decision for your future. You will some time with our attorneys discussing your current financial situation and possible solutions. Bankruptcy may not be the right solution for you. Our office is focused on giving you enough information so that you can make the right decision for your financial future.

If you decide that bankruptcy is the right choice for you and your family, we will ask you to gather the necessary financial documents so that we may prepare your bankruptcy petition to be filed with the Bankruptcy Court. The bankruptcy laws also require you to complete a course in credit-counseling before filing your petition. The credit-counseling course usually takes a couple of hours, and may be done over the phone or online. Once we have received all of the required documents, we will prepare your bankruptcy petition. After your petition is prepared, you will come into our offices to review and sign the petition before we file it with the Bankruptcy Court.

Once the petition is filed with the Bankruptcy Court, the Court will notify your creditors of the bankruptcy. Creditors must stop all collection efforts against you. Approximately 30-45 days after filing your bankruptcy petition, you will be required to attend the Meeting of the Creditors (also known as the “341a Meeting”). This is a meeting between you and the United States Trustee who will be overseeing your case. The Trustee may ask you some questions to clarify information in your bankruptcy petition. The Trustee is also looking for fraud. Creditors are invited to attend this meeting, but rarely do. We will attend this meeting with you and prepare you for what to expect in the meeting.

If you choose to file a Chapter 7 bankruptcy, there are usually no additional steps for you to take after the attending the Meeting of the Creditors. The Court will issue an Order discharging your debts around 3 to 6 months after filing your petition.

If you choose to repay some of your debts through a Chapter 13 bankruptcy, the Court will schedule a date after the Meeting of the Creditors where the Court will approve your proposed repayment plan. Chapter 13 plans usually last between 3 to 5 years. Your debts will be discharged once the plan is completed.

The amount of time that the bankruptcy process will take will depend on the complexity of bankruptcy case and on the individual client. The amount of time it takes for a person to file an actual petition with the bankruptcy court will depend on how quickly a client can gather together all the financial materials necessary to file their case, and the complexity of the client’s financial situation. Once a case is filed, the length of time before debts are discharged will depend on which chapter of bankruptcy the debtor is filing. Generally speaking, chapter 7 bankruptcies usually take 4-6 months to discharge; where as chapter 13 bankruptcies usually take about 3-6 years to discharge. These time frames will change depending on your individual case. Our Attorneys will let you know what to expect after filing your petition.

About 30-45 days after your petition is filed, you will be required to attend the Meeting of the Creditors (also known as the “341a Meeting”). This is a meeting between you and the United States Trustee who will be overseeing your case. The Trustee may ask you some questions to clarify information in your bankruptcy petition. The Trustee is also looking for fraud. Creditors are invited to attend this meeting, but rarely do. We will attend this meeting with you and prepare you for what to expect in the meeting. There is no judge present at the Meeting of Creditors. Depending on which court you file your petition with, the Meeting of the Creditors could be held at the Bankruptcy Court or it could be held at an alternative location.

If you file a Chapter 13 bankruptcy, additional court appearances before a judge may be required, but our attorneys will attend these appearances on your behalf.

Yes, there are court filing fees. Currently, the fee to file a Chapter 7 petition is $299, and the fee to file a Chapter 13 petition is $274. These fees must be paid to the Bankruptcy Court or the Court will not process your bankruptcy petition. With Court approval, some debtors may pay their court fees in installments.

As soon as you realize that you have forgotten to list a debt or creditor in your bankruptcy petition, you should contact our office. Our office will then ask the Court to allow the creditor to be added to your bankruptcy petition.

No, you must list all of your creditors in your bankruptcy petition. Bankruptcy does not allow you to pick and choose which debts you would list in your bankruptcy. You are not required to list creditors that you do not owe money to, in other words, creditors that you have a zero balance with. It is possible to take a certain debt out of your bankruptcy by “reaffirming” a particular debt. But any debt that you choose to reaffirm must still be listed in your bankruptcy petition.

A reaffirmation agreement is an agreement between you and a creditor agreeing to continue to pay off a particular debt that you would have been able to get rid of in bankruptcy. A reaffirmation agreement is voluntary. You are never required to sign one. Reaffirmation agreements can be for any debt, but are most commonly seen with vehicles. In some cases, reaffirmation may allow you to renegotiate the terms of your original loan.

Generally, the Bankruptcy Court will send out written notices to all creditors that are listed in your bankruptcy petition about a week after your petition is filed. However, as soon as your case is filed, you will receive written confirmation of its filing and a case number (which is issued by the Court). If any creditor contacts you after you have filed for bankruptcy, you should let the creditor know you have filed for bankruptcy and give them your case number. Creditors are not allowed to contact you to collect a debt after you have filed for bankruptcy.

If you file a Chapter 7 bankruptcy, the discharge of your debts will usually occur between 3 to 6 months after you file your petition with the Bankruptcy Court.

If you file a Chapter 13 bankruptcy, the discharge of your debts will not occur until you have completed your repayment plan. It usually takes 3 to 5 years for debtors to complete their repayment plan.

The United States Trustee is the person the Court will appoint to administer your bankruptcy case. The Trustee’s key duty is to look for bankruptcy fraud. In addition to monitoring the bankruptcy process for fraud, the Trustee’s job is to maximize the amount of money available to pay your creditors. In Chapter 13 cases, the Trustee will also collect any payments you make to your repayment plan.

No. Your spouse is never required to file with you. However in community property states (like California), if the debt was acquired during the marriage, the debt belongs to both spouses, regardless of who actually incurred the debt. Therefore, in some cases although it may not be required for both spouses to file, it may be in your best interests to have the spouses file a joint-petition for bankruptcy. Everyone’s financial situation is unique; therefore it is important to seek legal advice before deciding if both spouses should file for bankruptcy.

In California, and other community property states, if the debt was created during the marriage, then the debt likely belongs to both spouses. Therefore, if one spouse files for bankruptcy, it is possible that the other spouse may be responsible for repaying the debt. It is important to understand the effect that filing for bankruptcy will have on your non-filing spouse, so that you and your spouse can have a meaningful fresh start after filing for bankruptcy.

If you co-signed a debt with your former spouse while you were married, you may still be responsible for the debt if your former spouse files for bankruptcy.

If you file a Chapter 13 bankruptcy petition, co-signers are generally not at risk for collections if certain conditions are met and you are current on your repayment plan payments.

If you file a Chapter 7 bankruptcy, creditors will be able to pursue your co-signer for the remaining debt.