Lawson Law Group

Frequently Asked Questions


1. How long does it take before my debts are discharged?

Chapter 7 takes between 3 to 8 months;
Chapter 13 can take several months while trying to get your repayment plan approved. However, the actual discharge is not final until you’ve met the payment plan requirements which take from 36 to 60 months to complete.

2. Can I pick and choose which assets to put into a personal bankruptcy?

No. Every asset you own must be included in the filing. After filing you may choose to exempt some of your assets.

3. What does reaffirm mean?

You become personally liable for the debt again. For instance, if you kept the car and made payments the creditor would probably want you to sign a new contract (reaffirm) for the vehicle.

4. What exactly can I exempt?

It depends on which state you live in. In Illinois we follow state exemptions. Most states allow the Federal exemptions but also have state exemptions that may be more favorable. See 735 ILCS 5/12-1001. This Illinois statute governs exemption amounts for personal property in Illinois. http://www.ilga.gov/legislation/ilcs/fulltext.asp?DocName=073500050K12-1001

5. Do I have to appear before a bankruptcy judge?

No, you will meet with a trustee and your creditors at a meeting called 341.

6. What is a 341 meeting?

    A meeting of creditors at which the debtor is questioned under oath by creditors, a trustee, examiner, or the United States trustee about his/her financial affairs. Nicole will attend this meeting with you.

7. I thought bankruptcy stopped foreclosure? Can they still take my house?

When you file Bankruptcy, you receive an "automatic stay" on court actions such as foreclosures and sheriff’s sales. A creditor can still go into court and ask the bankruptcy judge for a "relief from stay", and if granted the creditor can proceed with court action to foreclose.

8. Can I keep my house, cars or pets?

After filing you can exempt certain items such as a house or pedigree dog. However, in order to keep these items you’ll need to stay current on payments such as a mortgage or car payment.

9. Do my spouse and I have to file jointly?

No! The decision to file individually or together depends on your situation. For instance . . .

  1. If only one partner owns all or most of the debt then only that person should file;
  2. If both partners own the debt, and want to file a Chapter 7 then both should file;
  3. If you’re trying to stop a foreclosure, only one person, on the title to the home, need file a Chapter 13.

10.  If only my spouse files, what am I liable for and what happens to my credit?

As long as there was no joint debt, your credit will not be affected. However, any future join credit purchases will depend upon the member with the worst credit history. On the other hand, if there was joint debt and only one member filed, then the member who

11. Can I be discriminated against for filing bankruptcy?

Under the federal bankruptcy statute, a discharge is a release of the debt. The law provides express prohibitions against discriminatory treatment of debtors by both governmental units and private employers. A governmental unit or private employer may not discriminate against a person solely because the person was a debtor, was insolvent before or during the case, or has not paid a debt that was discharged in the case. The law prohibits the following forms of governmental discrimination: terminating an employee; discriminating with respect to hiring; or denying, revoking, suspending, or declining to renew a license, franchise, or similar privilege. A private employer may not discriminate with respect to employment if the discrimination is based solely upon the bankruptcy filing.

12. Can filing bankruptcy stop bill collectors from calling?

Yes. The automatic stay prevents bill collectors from taking any action to collect debts. And if a creditor continues to call you should call our office immediately.

13. Will my utility services be affected?

Public utilities, such as the electric company, cannot refuse or cut off service because you have filed for bankruptcy. However, the utility can require a deposit for future service and you do have to pay bills which arise after your bankruptcy petition is filed.

14. Can I erase my student loans by filing bankruptcy?

Generally, student loans are not discharged in bankruptcy. In 11 U.S.C. sec. 523(a)(8) there are two exceptions to this general rule:
a. The student loan may be discharged if it is neither "insured or guaranteed by a governmental unit" nor "made under any program funded in whole or in part by a governmental unit or nonprofit institution."
b. The student loan may be discharged if paying the loan will "impose an undue hardship on the debtor and the debtor’s dependents."

 

It is usually difficult to have student loans erased under the undue hardship standard. Whether an exception applies under this law depends on the facts of the particular case and may also depend on local court decisions. Even if a student loan falls into one of the two exceptions, discharge of the loan may not be automatic. You may have to file an adversary proceeding in the bankruptcy court to obtain a court order declaring the debt discharged.

15. Why is it legal to "wipe out" our debts?

More so than in any other time in our country’s history, our economy is based on consumer debt. In fact, in this age of multibillion dollar corporate bailouts, easy credit and relentless bombarding of seductive messages cajoling us to "charge, consume, and buy" it is not surprising that so many people are drowning in debt.
For many of us, this debt is insurmountable and is causing family problems and feelings of hopelessness and even suicide. With credit card interest rates of 18-21%, many feel like modern day indentured servants. Many times, the debt is occasioned by unforeseen events such as loss of a job or medical bills, but more often it is simply poor planning. Nevertheless, in instituting our bankruptcy laws, Congress recognized that responsible, well-intentioned people could from time to time run into financial problems. By allowing you to recover from your debt burden you will be able to start afresh, look to the future and become a more productive member of society. This is good for you and for good for society as a whole.

16. Do I have to pay my bills during the bankruptcy proceeding?

For the most part, the answer is no. For specific property (usually secured) such as your car loan or your houses mortgage that you plan on keeping you have to continue to make payments. Also, for day to day expenses such as rent and utilities you should also continue to make payments. You should stop making payments on other old debts incurred prior to the bankruptcy such as credit card debts.

17. What Won’t Bankruptcy Do For Me?

This is another of the most frequently asked bankruptcy questions and it is important to understand that bankruptcy will not cure all of your financial problems. It is not the right choice for everyone, so it should be understood that bankruptcy will not eliminate certain types of debts, especially those that are secured. Secured types of debt include mortgages and car loans. In addition, bankruptcy will not discharge special treatment debts such as alimony, child support, certain student loans, criminal fines and certain taxes.

18. Who Should Consider Filing for Bankruptcy?

Bankruptcy is ideally designed for individuals who feel as though they are overwhelmed by financial problems.

19. Will My Employer Know I Filed for Bankruptcy?

It should be understood that bankruptcy petitions are public records. Normally; however, your employer will not know you have filed a petition for bankruptcy unless you owe him or her money and they are a creditor.