Do you understand all there is to know about bankruptcy law? If you’re like most people, probably not. In fact, bankruptcy can be confusing and without the help of a qualified bankruptcy law firm, finding your way through bankruptcy proceedings is almost next to impossible. However, taking the time to read some common questions and answers will not only help you understand more fully the process of bankruptcy, but also, will put you on the right track towards recovery faster.
What Types of Bankruptcy Options are Available?
Talking to a qualified Minneapolis personal and business bankruptcy attorney and learning some information about the different types of bankruptcy available to you can help things start to make sense almost immediately. Maybe you would like to know how filing Chapter 7 or Chapter 13 will affect your future credit or employment opportunities.
Asking a professional is a great way to start the process. In fact, taking the time to educate yourself on some of the more difficult concepts in bankruptcy law will help you make an informed decision in the event that you and your personal bankruptcy lawyer decide to pursue bankruptcy as a strategy to resolve your debt.
Most bankruptcy services can be performed rather quickly. In fact, if you choose to file Chapter 7, in most cases, you can begin on the road to recovery in 3 to 5 months. Ask your personal bankruptcy lawyer to help you identify ways that you can begin to get your financial records in order to expedite the process.
Asking a qualified Minnesota personal and business bankruptcy lawyer questions that you cannot find answers to will help you understand the process of bankruptcy. Familiarizing yourself ahead of time with some basic bankruptcy fundamentals will allow you more time to discuss with your bankruptcy attorney detailed questions that involve your specific situation. The list below will give you an idea of what some of the most frequently asked questions are.
Q. Will filing bankruptcy stop foreclosure?
A. Both a Chapter 7 and Chapter 13 case filing stops foreclosures on mortgages (homestead, rental, and commercial property mortgages) so long as the sheriff’s sale has not been held. Chapter 13 also allows you to pay back the mortgage arrears on a homestead mortgage in your chapter 13 plan over an extended period of time, while you pay the regular monthly mortgage payments after the case is filed
Q.Will I lose any of my property if I file bankruptcy?
A. Generally, in a Chapter 13 case you will not lose any property, even if it is not exempt. In most Chapter 7 cases, you are able to exempt (protect) all your property. Under the laws of Minnesota, and under the federal laws, certain property is declared exempt, and out of the reach of your general creditors. It is the exempt property that you will get to keep after your bankruptcy. As your personal bankruptcy attorney, we will advise you as to whether or not you have any nonexempt assets which you will either have to surrender to the trustee, or buy back from the trustee. In most cases, you will be able to keep your home, automobile, retirement accounts and pensions, household furnishings, and all your property by claiming either the state or federal exemptions. If the property is security for the loan (i.e. home with a mortgage; car with a loan) you will almost always need to keep making the payments to keep the property; or, you can surrender the property to the creditor and the debt is discharged (cancelled).
Q. How much does it cost to file bankruptcy?
A. The court filing fee for a Chapter 7 is $335.00 and for a Chapter 13 it is $310.00. The filing fee is the same whether you are filing individually or jointly with your spouse. The attorney fees for a particular case vary depending upon the complexity of the case. The attorney fees will be determined after a review of your particular facts. We can generally quote you a fee over the phone.
Q. Does filing bankruptcy have to be done by both husband and wife?
A. No. Nevertheless, in most instances the husband and wife will file a joint case if they both have debt. A situation where a joint case would not be warranted is where one of the spouses has little or no debt. However, even where one spouse files without the other, the bankruptcy laws require that both spouses’ income and expenses be analyzed for purposes of determining whether you qualify for Chapter 7 or Chapter 13. Also, the bankruptcy filing only protects and discharges the debt to the person filing the case. So if there is a joint debt, the spouse who does not file, is still legally responsible to pay the debt.
Q. Do I have to go to Court if I file Chapter 7 or Chapter 13?
A. Generally, you will have to appear in Court only one time. Your Chapter 13 or Chapter 7 law firm will do the rest (we handle both). This court appearance is held approximately one month after your case has been filed and is called “The First Meeting of Creditors”. At this hearing, you will be put under oath and questioned by the trustee about the information contained in your petition and schedules, including your assets and liabilities. In most cases, no creditors appear for this hearing.
Q. Can my employer fire me for filing bankruptcy?
A. No. Federal law prohibits employers from terminating the employment of, or discriminating with respect to employment against, an individual who files either a Chapter 7 or Chapter 13.
Q. Can my utility company refuse to serve me if I discharge their bill in bankruptcy?
A. A utility company may not alter, refuse, or discontinue service to, or discriminate against you solely on the basis of a bankruptcy filing that includes the utility. The utility company can, however, ask for a reasonable deposit, within 20 days of the case filing, for continued future service. The deposit is usually two times your average monthly bill.
Q. How does filing bankruptcy affect my credit?
A. Under the Federal Fair Credit Reporting Act, a credit bureau can report the filing of any bankruptcy for ten years from the date the case is filed. Generally, a Chapter 13 is reported for seven years from the date of filing, so long as the case was completed and a discharge was granted. In a Chapter 13 case, you cannot incur any new debts, with some exceptions, until your case is completed. As a rule of thumb, most mortgage companies will not grant a new mortgage to you until two years after the bankruptcy filing. In many instances after a Chapter 7 filing and discharge, you can obtain credit because the creditors know you cannot file Chapter 7 for another eight years, and generally you have little or no debt since the present Chapter 7 discharged all or most of your debt, making you a good credit risk (assuming you have monthly income and ability to pay the new debt).
Q. Should my business file bankruptcy?
A. If your business is struggling financially, you need to know what alternatives are available to resolve your financial problems. Depending upon the structure of your business (sole proprietorship, partnership, corporation, or Limited Liability Company), an out of court workout plan, Chapter 11, or Chapter 13 may be available to you to rehabilitate your business. Early legal counseling from a Minnesota business bankruptcy attorney and financial planning may help save your business. If the business is shutting down and ceasing operations, then a Chapter 7 may be the appropriate course of action. Also, if you as an individual personally guaranteed the business loans, you may be forced to file an individual Chapter 7 or Chapter 13 to eliminate the personal guarantee.