NEW HAMPSHIRE FAMILY LAW ATTORNEYS
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FREQUENTLY ASKED QUESTIONS - 1
WHAT IS BANKRUPTCY?
Bankruptcy is a way for people and businesses who owe more money than they can pay (Debtors) to either work out a plan to repay the money over time in a case under Chapter 11, Chapter 12 or Chapter 13, or to wipe out ("Discharge") most of their bills in a Chapter 7 Bankruptcy case. The filing of a Bankruptcy Petition immediately stays ("stops") most actions to collect debts which were due at the time of filing, including harassing phone calls and letters from creditors, garnishments, law suits, repossessions, and foreclosures. The Bankruptcy Code is intended to provide people that owe money relief from creditor action. At the conclusion of a Bankruptcy case an individual is able start over again with a clean slate.
WHO CAN FILE A BANKRUPTCY?
Any person, partnership, corporation, or business trust may file a Bankruptcy with certain exceptions.
DO I NEED A LAWYER TO FILE FOR BANKRUPTCY?
No. The Court permits individuals to file their own cases and to represent their own interests in Bankruptcy proceedings. Partnerships and corporations must have an attorney represent their interests in a Bankruptcy case. Please understand that a person filing Bankruptcy without legal representation will be held responsible for knowing the requirements of the Bankruptcy Code and Federal Rules of Bankruptcy Procedure and will be given no special consideration by the Court. Missing a deadline, failing to perform a required task, or failing to respond properly to an action could result in the dismissal of your case, denial of Discharge, or losing property which you might otherwise have been entitled to keep. Further, failure to adequately list assets or failure to provide correct information on an individual's Bankruptcy petition schedules may result in potential criminal action against someone filing for bankruptcy. Please note that: Bankruptcy Fraud is a serious Federal crime punishment can be up to Five (5) years in prison, and a fine of $250,000.00 or more.
WHAT IS THE DIFFERENCE BETWEEN THE SERVICES THAT AN ATTORNEY AT FAMILYLEGAL CAN PROVIDE FOR ME AND A BANKRUPTCY PETITION PREPARER ?
Bankruptcy Petition preparers are permitted to provide services limited to the typing of forms and filing of documents. They are NOT attorneys and are not allowed to provide you with legal advice. They cannot help you choose what Bankruptcy Chapter is best for you. Further, they are unable to represent your interests in a Bankruptcy case by attending meetings and hearings. Petition preparers are unable provide you with appropriate guidance throughout your legal proceeding. The experienced Attorneys and staff at Family Legal will see you through your entire case from beginning to end. We will help you decide if Bankruptcy is right for you. We will help you decide what Bankruptcy Chapter will best suit your circumstances. We will prepare your Petition. We will produce all of the documents to the Chapter 7 Trustee and to the U.S. Trustee. We will attend meetings and hearings with you. We will provide you with guidance and our legal expertise every step of the way. We do more than just fill out documents. We are there with you ever step of the way.
WHAT ARE THE DIFFERENT CHAPTERS I CAN FILE UNDER?
Consumer Debtors usually file for Bankruptcy under Chapter 7 or Chapter 13.
Chapter 7 is a a liquidation case. In a Chapter 7 case, the Court will appoint a Trustee to see whether the Debtor has anything over and above the exemption amounts provided for under State Statute or Federal Law. If the Debtor does have something above and beyond the list, then the Trustee can sell the item and use the money to pay so much on the dollar to creditors. If the Debtor does not have anything over the exemptions, then the Trustee will report to the Court that it is a No Asset case, meaning no assets will be taken for the benefit of creditors.
The experienced Bankruptcy Attorneys at Family Legal will be able to inform you as to what assets are protected and whether any assets you own may be subject to liquidation by the Chapter 7 Trustee. At the conclusion of the case, the Debtor gets a Discharge, which means that the Debtor does not have to pay most types of debts. Corporations and partnerships do not receive Discharges. Consequently, any individuals legally liable for the partnership's or corporation's debts will remain liable. Therefore, individual Bankruptcies may be required as well as the corporation or partnership Bankruptcy when an individual owns a business.
Chapter 9 is only for municipalities and governmental units, such as schools, water districts, and so on.
Chapter 11 is the reorganization Chapter available to businesses and individuals who have substantial assets and/or income to restructure and repay their debts. Creditors vote on whether to accept or reject a plan of reorganization which must be approved by the Court. In addition to the filing fee paid to the Clerk, a quarterly fee shall be paid to the U.S. Trustee in all Chapter 11 cases. There is no debt limit under Chapter 11. To qualify as a small business chapter 11, the debtor must be engaged in commercial or business activities, other than the ownership of real property, and the total of its secured plus unsecured debts must be less than $2,190,000.
Chapter 12 offers Bankruptcy relief to those who qualify as family farmers or family fishermen. There are debt limitations for Chapter 12, and a certain portion of the Debtor's income must come from the operation of a farming or fishing business. Family farmers and family fishermen must propose a plan to repay their creditors over a period of time from future income and it must be approved by the Court. Plan payments are made through a Chapter 12 Trustee who also monitors the Debtor's farming or fishing operations while the case is pending.
Chapter 13 is the debt repayment Chapter for individuals with regular income whose debts do not exceed the amounts charged periodically with the consumer price index ($360,475.00 in unsecured debts and $1,001,400 in secured debts), including individuals who operate businesses as sole proprietorships. It is not available to corporations or partnerships. Chapter 13 generally permits individuals to keep their property which is otherwise subject to liquidation in a Chapter 13 by repaying creditors out of their future income. Each Chapter 13 Debtor proposes a repayment Plan which must be approved by the Court. The amounts set forth in the Plan must be paid to the Chapter 13 Trustee who distributes the funds for a percentage fee. Many debts that cannot be Discharged can still be paid over time in a Chapter 13 Plan. After completion of payments under the Plan, Chapter 13 Debtors receive a Discharge of most debts.
People that typically file a Chapter 13 are:
People that have a lot of income left over after payment of their expenses and are thus going to have a problem doing Chapter 7;
People that have fraud issues with a Chapter 7 or issues with a divorced spouse and have money to do a Chapter 13;
People that have problems with IRS;
People that are facing a foreclosure on their home and want to keep the home. In that case they come up with a Plan to pay their mortgage arrearages as part of their Chapter 13 Plan, then keep up with their normal payments outside of their Plan;
People that want to do a cramdown on a vehicle loan. What that means is that if the Debtor has a vehicle loan which greatly exceeds the value of the vehicle, in some instances they can pay the value of the vehicle rather than the total amount due under their Chapter 13 Plan;
People that may be able to strip their second mortgage, and;
People that do not qualify for filing a Chapter 7.
Chapter 13 may be able to help you keep your home if you have a foreclosure sale scheduled. If you have a foreclosure sale scheduled, it is very important that you call Family Legal immediately and schedule a free Consultation with one of our experienced Bankruptcy Attorneys right away and well in advance of your foreclosure sale date.
Chapter 15 is a new Chapter to deal with insolvency cases involving Debtors, assets, claimants, and other parties in interest in more than one country. If you have assets in different countries, it is very important that you raise it with the attorneys and staff at Family Legal.
WHICH CHAPTER IS RIGHT FOR ME?
The experienced New Hampshire Bankruptcy Attorneys at Family Legal will guide you as to what Bankruptcy Chapter is best for you given your debts, your assets and your income and expenses. It is very important that you provide to us all of that information and documentation as completely as possible so that we can provide you with the very best legal advice for your circumstances.
In general, Chapter 7 is utilized when a person has insufficient income to pay all or most of his/her debts. Otherwise, if the person has sufficient income or property and can afford to pay all or a substantial portion of his/her debts, Chapter 11, 12, or Chapter 13 may be appropriate depending on whether the Debtor is an individual, partnership, corporation, or family farmer or fisherman.
HOW DO THE RECENT CHANGES IN THE BANKRUPTCY LAW AFFECT ME?
The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005 made significant changes to the Bankruptcy Code which affect all Debtors filing cases on or after October 17, 2005. Some of the biggest changes are as follows:
You Have To Take Mandatory Pre-Bankruptcy Credit Counseling: All individual Debtors must undergo credit counseling from an approved counseling agency within 180 days before filing for Bankruptcy. There are certain exemptions to the requirement in that they Court may grant an exception due to incapacity or disability, or because you are on active military duty in a combat zone. The Court can also, if there are exigent circumstances that merit a waiver of the Pre-Bankruptcy counseling requirement and the Debtor was unable to get counseling services within 5 days after requesting it, allow the debtor 30 days from the filing of the petition to comply with the credit counseling requirement. You should talk to your attorney about any special circumstances that you have which may effect your ability to take the Pre-Bankruptcy counseling. Our Firm has brochures from several providers offering the course via internet, in person or over the telephone. Many of the counseling agencies also offer counseling in several different languages. There are also special provisions for the deaf and blind.
You Have To Take a Mandatory Debtor Education Course after Filing: All individual Debtors must complete a Personal Financial Management (or Debtor Education) course before they will be granted a Discharge. This Debtor Education course is separate from and required in addition to Pre-Bankruptcy credit counseling. Many of the same providers that offer the first course offer the second course and some offer discounts if you take both programs through their office. Also, again, several providers offer the course via internet, in person or over the telephone. Many of the counseling agencies also offer counseling in several different languages. There are also special provisions for the deaf and blind.
Documentation must be provided to your Bankruptcy Trustee at least 7 Days Before the First Meeting of Creditors: All individual Debtors must supply documents to the Chapter 7 or Chapter 13Trustee at least 7 days prior to the Meeting of Creditors. If you work with the experienced Bankruptcy Attorneys at Family Legal, we take care of providing all of the necessary paperwork to the Bankruptcy Trustee well in advance of your scheduled Meeting.
You must now pass a Means Test to file for bankruptcy if your debts are primarily consumer related: Individual Debtors who file a Chapter 7 Bankruptcy Petition must file a new form which will give detailed information about their income for the purpose or determining whether a Debtor's filing represents an abuse of the Bankruptcy system. People now need to qualify to file for Bankruptcy protection. Some Debtors may be prohibited from filing a Chapter 7 case if their income would permit them to make payments to their creditors. The experienced Bankruptcy Attorneys at Family Legal take all of the guess work out of that for you. We complete the forms and determine your eligibility to file for Bankruptcy protection.
DO I NEED TO FILE BANKRUPTCY WITH MY HUSBAND/WIFE?
No. However, if you live with your spouse and have lived with your spouse for the six (6) months prior to filing, we will need to have your spouse's pay stubs in order to determine whether you qualify to file for Bankruptcy, even if that person is not filing. You also need to consider that you can not, by virtue of your single filing, wipe out the debts of your husband/wife. If you have any joint debts with your husband/wife and you do not file for Bankruptcy together, then your spouse will still be obligated for the debts for which you were jointly liable. Please note that only people who are married on the date they file may file a joint Bankruptcy Petition. Unmarried persons must each file a separate case.
WHAT IF I HAVE A CO-SIGNOR FOR ANY OF MY DEBTS?
If you file for Chapter 7 Bankruptcy protection, the creditor can still proceed against the co-signor for the debt. That means they can sue them and take any collection action authorized under the credit agreement against the co-signor. In a Chapter 7 proceeding, the co-signor is not protected by your Bankruptcy filing. If you file for Chapter 13 Bankruptcy protection, the creditor in most instances cannot proceed against the co-signor for the debt, provided the debt is a consumer debt, and you are making the required payments under your Chapter 13 Plan.
HOW LONG WILL A BANKRUPTCY STAY ON MY CREDIT REPORT?
Bankruptcies normally will remain on your credit report for up to Ten (10) years.
HOW WILL A BANKRUPTCY EFFECT MY ABILITY TO GET CREDIT IN THE FUTURE?
Your Bankruptcy filing may be taken into consideration by any person reviewing your credit report for the purpose of extending credit to you in the future. The decision whether to grant you credit in the future is strictly up to the creditor and varies from creditor to creditor depending on the type of credit requested. The Attorneys at Family Legal can provide you with a credit score prior to your filing, with some suggestions as to how you can improve your credit score in the future, and the score you can work to get within a year after filing your Bankruptcy Petition.
However, it is important to consider the status of your overall credit now. If your credit is perfect right now, then it will absolutely have a negative affect on your credit. If your credit is damaged now, it may be one of the best things you can do to improve your credit and your credit score because after your case is discharged you are many times, debt free, making your ability to pay new creditors better than before and therefore a good credit risk. Also, you cannot file for Chapter 7 Bankruptcy again for eight (8) years and sometimes creditors see you as a good credit risk after you obtain a discharge from Bankruptcy than someone else that may be coming through the door asking for credit.