Frequently Asked Questions
What Happens If I File A Chapter 7 Bankruptcy?
You commence a chapter 7 bankruptcy proceeding by filing a “petition” with the bankruptcy court. The person filing a chapter 7 is referred to as the “debtor.” The debtor is required to disclose to the court all his or her property and debts and turn over all nonexempt property to the bankruptcy trustee, who then converts it to cash for distribution to the creditors. The debtor then receives a discharge of all dischargeable debts.
Who Can File a Chapter 7 Petition?
Almost any individual, partnership, or corporation may file for a chapter 7 bankruptcy petition if he or she resides, has a domicile, a place of business, or property in the United States, or a municipality. If you were granted or denied a chapter 7 discharge in a prior case within the last 6 years or completed a chapter 13 plan in a prior case, you might not be entitled to receive a discharge in bankruptcy and probably are not a candidate for a chapter 7 bankruptcy proceeding.
What Are The Most Common Reasons For a Chapter 7 Bankruptcy?
The most common reasons for consumer bankruptcy are: unemployment; large medical expenses; seriously over-extended credit; marital problems and other large unexpected expenses.
Who Can File a Chapter 13 Bankruptcy Petition?
Individuals may file chapter 13 bankruptcy petitions if they:
- reside, have a domicile, a place of business, or property in the United States, or a municipality;
- have a source of regular income; and
- on the date the petition is filed owe less than $250,000 in noncontingent, liquidated, unsecured debts and less than $750,000 in noncontingent, liquidated, secured debts. Corporations and partnerships may not file a chapter 13 bankruptcy petition.
Will The Bankruptcy Stop Bill Collectors From Calling?
Yes. The automatic stay prevents bill collectors from taking any action to collect debts.
How Long After Filing Will The Creditors Stop Calling?
Once a creditor or bill collector becomes aware of a filing for a bankruptcy protection, it must immediately stop all collection efforts. After you file the bankruptcy petition, the court mails a notice to all the creditors listed in your bankruptcy schedules. This usually takes a couple of weeks. Creditors will also stop calling if you inform them that you filed a bankruptcy petition, and supply them with the “docket number” for your case. In some cases, you or your attorney should contact the creditor immediately upon filing the bankruptcy petition, especially if a law suit is pending. If a creditor continues to use collection tactics once informed of the bankruptcy they may be liable for court sanctions and attorney fees for this conduct.
Who Notifies The Creditors and Bill Collectors?
After the bankruptcy petition is filed, the court mails a notice to all the creditors listed in the schedules. This usually takes a couple of weeks.
Can My Employer Fire Me For Filing Bankruptcy?
No. The Bankruptcy Code prohibits government units and private employers from discriminating against you because you filed a bankruptcy petition or because you failed to pay a dischargeable debt.
Can I Go To Jail If I File Bankruptcy or Don’t Pay My Debts?
No. There are no debtors’ prisons in the United States.
Does The Spouse of a Married Person Also Have to File Bankruptcy?
No. In some cases where only one spouse has debts, or one spouse has debts that are not dischargeable then it might be advisable to have only one spouse file.
Will I Have to go to Court?
About 30 to 40 days after filing the bankruptcy petition, you will have to attend a hearing presided over by a bankruptcy trustee. This hearing is called the First Meeting of Creditors. The trustee is not a judge, but an attorney appointed by the United States Trustee to oversee bankruptcy cases. At the First Meeting of Creditors, the trustee will ask you questions under oath regarding the content of your bankruptcy papers, your assets, debts and other matters. Creditors will also be permitted to ask you questions, although in the majority of cases creditors do not ask questions at the First Meeting of Creditors.
After the initial meeting, you normally do not need to return to court. However, if a creditor or the trustee files a motion or an adversary action you may have to appear in court with your attorney.
Can I File a Bankruptcy for my Debts, but not Include my Assets?
No.
Do I have to Disclose All of my Assets?
Yes. If you knowingly and fraudulently conceal an asset from the court, you have committed a felony and can be fined up to $5,000, imprisoned for up to five years, or both. In addition, the court can deny you your discharge, or dismiss or convert your bankruptcy proceeding.