What is the difference between Chapter 7 and Chapter 13 bankruptcy?

A Chapter 7 bankruptcy allows you to discharge or “wipe out” most of your debts. Certain debts cannot be readily discharged, such as student loans, some taxes, child support, alimony and debts procured by fraud—but there are exceptions to these common non-dischargeable debts, so consult with any attorney to fully discuss your options.

A Chapter 13 bankruptcy, however, creates a plan to you to repay all or a portion of your debts. Chapter 13 is often used to repay mortgage arrears to that you can prevent foreclosure on your home. Your bankruptcy attorney can review this with you and help determine which type of bankruptcy is right for you.

If I file bankruptcy, will I always have bad credit?

Most people are able to re-establish and build credit within 2-3 years after filing a bankruptcy. Pay your car and house payment on time, and your credit will come back. You should beware of attorneys or credit agencies who “promise” to rebuild your credit. There is no magic bullet for credit repair other than paying your bills on time following bankruptcy. Bankruptcy does not make your past credit disappear, but it is a step in the right direction to avoid any further decline. There are laws regarding credit reporting and your attorney can aid you in understanding them and how to protect your credit report.

Do I have to include my home and car in my bankruptcy?

You must list all assets (including house, car, personal jewelry and belongings, etc.) and all debts, including your mortgage and vehicle loans. This DOES NOT mean that you will lose any of your property. Bankruptcy was not designed to strip you of everything. You are allowed to retain property under “exemption” laws. Exemptions are important and, again, a full in-person discussion with an attorney is the best way to protect your assets. Finding out after your case is filed that your assets are going to be taken can be devastating. Full disclosure and honesty is essential.

Do I have to keep paying my bills once I file bankruptcy?

That depends. In a Chapter 7, you can usually stop paying your unsecured credit and loan debts. Unsecured debts are generally credit card debts, medical and personal loans. However, secured loans need to be paid if you want to keep the collateral such as your home and/or your car. Timing of you bankruptcy is important, so consult with an attorney for a full discussion of the types of debt involved in your case!

If I am married, does my spouse have to file bankruptcy with me?

No. One spouse can file for bankruptcy alone. Sometimes it is strategically more advantageous to have one spouse file at a time. At other times it is more cost efficient to have both file together (to avoid extra fees and court costs). Your bankruptcy attorney can help you decide which is best for you and your family.

Will you help stop creditor phone calls?

Yes. Once you retain our office and you become our client, we instruct you to tell your creditors the truth: you are filing bankruptcy and all debt collection calls are to be referred to our office.

Will creditor garnishments stop?

When your case is filed, the Bankruptcy Court begins a “stay” (a stop) of all creditor proceedings against you. In addition, our office notifies the creditors to cease the garnishment process. In some instances we can obtain a refund of funds that have been garnished from your pay checks or bank accounts. We will analyze your precise facts to determine if this can be accomplished.

I heard that I will lose my property if I file bankruptcy. Is this true?

An analysis of your assets is one of the first things a bankruptcy attorney should do. If bankruptcy will not work for you, we will tell you. You will know your answers in the privacy of our office, not minutes before your bankruptcy hearing. In most cases we can protect your house, vehicles and personal belongings.

Why should I meet face to face with any attorney? Can’t I do this on the internet?

This is the most intriguing question. Some attorneys believe they can give quality representation by having clients fill out forms on the internet. The Bankruptcy Court conducts in person questioning under oath of every person who applies for bankruptcy relief. Your attorney should do the same. A trustee’s questioning process involves more than simple yes and no responses and oftentimes a trustee changes their line of questioning based on how a debtor is responding and if they appear to be evasive. Subtle differences in answers leads to more questions and more analysis. Written questions do not always reflect the complete line of questioning and thereby cannot accurately reflect the optimum answer. Protect yourself; meet with an attorney who will resolve these issues before you get to court. The last time you want to find out there is a problem is five minutes before your hearing! Preventing problems is why you hire a professional.

Do I have to go to Court?

You are required to be questioned under oath by a United States Trustee as to the contents of your bankruptcy papers. Your attorney should have asked you all of these questions prior to the hearing so that there are no surprises at the hearing. Each trustee is different and has distinct expectations as to the questioning and the amount of paperwork required for the hearing. Your attorney needs to advise you of these expectations. Personal interviews with clients and thorough disclosure to your attorney have the best chance of eliminating problems at the hearing. As a citizen of the State of Maryland, your hearing will be in Baltimore, Salisbury (for most Maryland Eastern Shore cases), Greenbelt (for central Maryland), or Hagerstown (for Western Maryland).

What are the “10 Commandments” of Bankruptcy?

Don’t Be Afraid to Tell the Truth. You hired an attorney to help you! Let us do our job and do it well following full disclosure of your assets, income, interests and liabilities. If bankruptcy is not the choice for you based upon a full analysis of your case, we will tell you.

Don’t Be Just Another Number. Avoid being just another internet client “file number” if you expect quality representation.

Disclose All of Your Assets.We will protect your assets to the fullest extent of the law. Should there be any question of protecting assets, you will be fully advised.

Follow All Instructions. Your attorney knows what has to be done to successfully handle your bankruptcy. We only request that you produce documents that are required by the court, including pay stubs, tax returns, etc. During the interview you will receive a list of all such documents.

Read Your Mail. When facing financial problems, people are harassed by creditors and collection letters. It can be overwhelming and many people start to ignore their mail rather than open it. Bankruptcy solves that problem. Open all your mail after you retain your attorney. More importantly, read all your mail after the filing of your case. You do not want to miss court dates or document requests sent from the Court.

Keep Your Attorney Updated. Many things affect your bankruptcy between the time you hire/retain an attorney and the time your case is filed with the Court. Notify your attorney if your financial situation changes (you receive a raise, obtain a job, inherit money, withdraw from retirement account, buy or sell a car and many more that your attorney will discuss with you). Definitely consult with your attorney if you are contemplating big decisions like marriage or moving.

Attend the Court Hearings. In most cases you will only need to attend one hearing to complete your bankruptcy. This hearing is called the Meeting of Creditors. You will be notified of the date, location and time of the hearing by the Court and your attorney. Attendance is mandatory. In most cases you have three or more weeks’ notice of the hearing.

Complete the Required Sessions. You are required to receive certain counseling sessions prior to a successful completion of your bankruptcy. These sessions are in fact mandatory. For your convenience, we provide you with a list of counseling agencies approved by the United States Department of Justice whose sessions can be completed either over the internet, locally in person, or on the phone. The first required session details your debt and an analysis of your take-home pay and necessary expenses. Completion is necessary to enter the Bankruptcy Court. The second required session is regarding financial management, and you cannot receive a discharge of your debts until it is complete.

Do Not Pay Debt Without Consulting Your Attorney. The Bankruptcy Law has very specific rules with regard to the payment of debt prior to the filing of your bankruptcy. Do not pay family, friends, business partners, relatives, or co-workers without consulting your attorney. Debt repayment is a complicated and crucial part of the analysis any competent attorney discusses with you in your consultation. During tax refund season, many clients are tempted to pay back “loans” that family members made to them throughout the year. Do not do this. We will protect your tax refund and advise you properly in the payment of your personal obligations.

There Could Be Hundreds Of These Commandments. Don’t be fooled by catch-all websites; nothing substitutes for personal interviews to provide the best possible representation before the United States Bankruptcy Court. Our free consultation provides you with the opportunity to determine your eligibility for a successful discharge in bankruptcy.