Answers To Your Bankruptcy Questions
Every situation is unique and I understand that you will likely have questions about how the bankruptcy process works. At The Law Office of Paul W. Rea, I strive to educate my clients about their options and provide answers to the questions that matter to their lives. Call my office today for personalized answers to your situation, or review the list below to find an answer to your preliminary questions. I’m here to help you.
Common Bankruptcy Questions and Answers
- Can I make payments on the Attorney Fees and Court Costs?
- Will I lose my . . . house, car, retirement savings or other property?
- I am being garnished for a consumer debt. When will the garnishments stop?
A: Nothing. The first appointment is free. There is NO obligation to hire me at any time. We will sit down together and look over your documents and analyze your case. Once I understand your entire situation I will then give you my best advice on how to proceed and I will give you an exact quote of what I would charge for my services. At that time you can decide if you want to hire me or not. But you will never be asked to pay for my time unless you decide to hire me for your case. Contact me online or at 402-858-1308 to schedule your free initial consultation.
Q: How much do you charge for a typical Chapter 7 Bankruptcy? How much do you charge for a typical Chapter 13 Bankruptcy?
A: The typical Chapter 7 fees are $1,100.00 and the standard Chapter 13 fees and expenses are a total of $4,200.00. For both Chapter 7 and Chapter 13 you are also required to complete two sets of counseling which, if you utilize the on-line counselors I recommend, will cost $20.00 per session for a total of $40.00 of these charges. There are also filing fees charged by the Bankruptcy Court which are currently $338.00 for a Chapter 7 and $313.00 for a Chapter 13. You will not be charged for the initial interview and you will have an exact quote of my charges before you decide whether to hire me or not.
A:If you decide to hire me as your attorney you will have to pay an initial retainer for the case, usually $100.00.If you are filing a Chapter 7 Bankruptcy, your case will not be filed with the Bankruptcy Court until the entire balance is paid.If you are filing a Chapter 13 Bankruptcy, a smaller “up front” amount is paid to file the case and the remaining balance is paid through the Chapter 13 Plan of Reorganization payments.There are no set payment requirements; all that I ask is that you pay whatever amount you can afford as soon as you can afford to do so.
Once I am retained for either type of Bankruptcy you can tell all creditors that you have hired an attorney and you are instructed by me to no longer discuss your case directly with them; if they have questions they need to contact me at 402-858-1308. While this generally stops the telephone calls it will not stop any lawsuits or garnishments. Only the filing of the case will stop those collection activities.
A: The short answer is that almost all of my clients are able to keep all of their assets.When you file Bankruptcy you have to give a list of all the things you own.You then are allowed an opportunity to “claim as exempt” (keep for yourself) the property you listed.The simplified answer is that in Nebraska we have certain amounts of different types of assets that we are allowed to keep.Generally speaking, there are usually enough “exemptions” to allow a Debtor to keep all the things they own.
But there are a couple sets of circumstances where you could lose some property:
1) You owe a debt against an asset that you cannot afford to pay, and
2) You have too much equity in an asset that you are not allowed to keep.
An example of #1 is where you have a car payment of $425.00 per month but due to a reduction in income you can no longer afford to make the car payment anymore. You can get rid of the payment obligation in the Bankruptcy, but the lien holder will be able to repossess the car. An example of #2 is where you own a house that is worth $150,000.00 that you only owe $50,000.00 to the mortgage company. In Nebraska we are only allowed to keep $60,000.00 of Homestead Real Estate, and as such you would likely have to sell the house if you filed a Chapter 7 Bankruptcy.
But, again, in most cases if you are current on your monthly payments for your house and your car, and you can afford to maintain those payments if we get rid of the other unsecured debts, then you should be able to keep your assets.
A: If you have been sued on a consumer debt and your paychecks are being garnished or your bank accounts are being seized, the very second we file your Bankruptcy all collection activities must cease immediately. This includes the garnishments that are already coming out of your paychecks when the Bankruptcy is filed. Now, as a practical matter, your payroll office may continue to take out the garnishment until the garnishing court issues a release of garnishment order, but all monies taken out after you have filed the Bankruptcy have to be returned to you.
A: Generally you should stop paying your DEBT obligations but should continue paying your monthly living expense BILLS. This may be a bit confusing. You should continue to pay rent, utilities and other monthly living expenses, but you should stop paying outstanding debts like credit cards or personal loans. The only DEBT obligations you should continue to pay would be for an asset that you intend to keep (house mortgage, car loan, etc.) or which will not be discharged in the Bankruptcy (student loans, child support, etc.). If you are not certain what you should be doing, please call me at 402-858-1308 and we can discuss your situation.
A: As soon as you file the case you automatically receive protection from your creditor’s collection activities (Letters, Telephone Calls, Lawsuits and Garnishments). There are exceptions, such as for collection of delinquent Child Support payments, but generally speaking everyone you owe will have to “back off” as soon as you file the case. Chapter 7 typically lasts 3.5 to 4 months and then a discharge is entered. Chapter 13 lasts between 3 to 5 years.
A: Most people file a Chapter 7 Bankruptcy, but there are some circumstances that require clients to file a Chapter 13 case. Chapter 13 is the best choice where you are delinquent on your mortgage payments, cannot bring the loan current in a short period (4-6 months) but you still want to keep the house. Another example is where you have certain discharge rights that are available only in Chapter 13 (such as stripping off an unsecured lien on real estate or “cramming down” the debt owed on other property—call me for an explanation of these terms at 402-858-1308). Lastly, though rare, there are some people whose incomes are too high to be allowed to file for Chapter 7 and are forced into a Chapter 13. Generally speaking, unless there is a compelling reason to do so, most people can and should file a Chapter 7 Bankruptcy. It is less expensive and is completed in a much shorter time frame allowing debtors to “get on with their lives.”
A: Yes. Any further use may be considered fraudulent and you would be forced to pay for the new charges you incur.
A: That choice MAY be up to you. I generally discourage my clients from keeping ANY credit cards. Please note also that the decision may not be up to you. If you owe a balance on the account when you file the case you must list the credit card company in your Bankruptcy. Also, your credit card company will check your credit report and see that you filed even if you were not required to list them in your case. Once they find out that you filed, even if you have not caused them a loss on your account, the credit card company can (and usually will) cancel your charging privileges. Lastly, if you are in a Chapter 13 Bankruptcy, you are not allowed to incur any additional debt without prior permission from the Bankruptcy Court.
A: Yes. Every debt must be listed, but if there is a particular debt that you want to pay you may do so after your case is filed. Most people want to maintain their car or house payments and they may do so by Reaffirming the debt in their Bankruptcy. Talk with your attorney about what this means and what you will need to do.
A: Chapter 7 is a “straight liquidation” where you make a list of your debts and discharge those that can be discharged. Chapter 13 “reorganization” is where you try to make a different payment arrangement on some of your debts, usually for a lower monthly payment total, and stop paying monthly payments all together on others. Chapter 7 usually lasts between 3.5 and 5 months while Chapter 13 usually lasts between 3 and 5 years.
A: You will first need to gather up all of your outstanding debts’ monthly billing statements. If there is any debt that you know you owe, but you just cannot find a monthly billing statement for it (even an old one will be fine, but if you have nothing), then you will need to write up a list for those additional debts. The list will need to show the creditor’s name, mailing address, account number (if any), and the amount owed. The exact dollar amount is not that important, it is the name and address that is critical. Next you will need to gather up your pay stubs for the prior 6 months. You must have every one of these. If some are missing ask your payroll officer for a reprint of the missing stubs. Lastly you will need to have a copy of your last two years of Federal Tax Returns.
A: An individual can file a Chapter 7 if it has been more than EIGHT years since they filed a prior Chapter 7. The rule is SIX years to do a Chapter 7 after a Chapter 13, with other rules and restrictions. An individual can file a Chapter 13 if it has been more than FOUR years since they filed a prior Chapter 7 and TWO years after filing a prior Chapter 13. To be certain if you can or cannot file you should contact an attorney who will need to ask you questions about your prior case.
A: Yes, you can file a single/individual Bankruptcy even though you are married. However, you will still need to provide all of the same information for your spouse as you will provide for yourself (income, living expenses and debts the spouse owes, though not listed in the individual Bankruptcy case and not to be affected by the discharge).
A: For almost all Bankruptcy filers there are no tax consequences. You will need to consult with a tax specialist, but the general rule is that debt that is discharged in Bankruptcy does not result in a tax obligation. If your creditor issues a “Form 1099-C” for the debt discharged in Bankruptcy, you can file a “Form 982” to inform the Internal Revenue Service that the amount listed on the creditor’s 1099-C should be excluded from your taxable income. But, again, you MUST consult with a tax specialist to receive a proper analysis of your particular situation.
A: Generally speaking, the answer is no, but there are exceptions. If your circumstance is like most where you have one or two checks at a check cashing company you should be alright. When a check “bounces” there are two types of court actions that can be brought against you – Civil and Criminal. The Civil action is where you are sued by the company for the amount of money you owe them on the check cashing contract. The Criminal action is where the County Attorney’s office brings a criminal complaint against you for the crime of issuing a non-sufficient-fund check (i.e. writing a check for an amount that you do not have funds in the bank account to cover). Currently the “NSF Check” cases involving check cashing companies are not generally being prosecuted.
The Civil action ends as soon as the Bankruptcy is filed.
The Law Office of Paul W. Rea is recognized as being a debt relief agency under 11 U.S.C. Sec. 528. This office helps people file for bankruptcy relief under the Bankruptcy Code.