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Loudonville, Ohio |
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General Chapter 7 bankruptcy information and filing information.
Typically, a chapter 7 bankruptcy filing is chosen by a debtor (person who owes money) who has minimal or no non-exempt assets. If there are assets with value over a certain threshold, the trustee may seek to take possession of these items and sell them to pay the debtor’s creditors (people or businesses that the debtor owes money to). Certain assets are "exempt" from this process. This means that the trustee will not take these assets from you. Exempt items include such things as your clothing, household items (unless they have an unusually high value) and some equity in your home, to name a few. How the filing process works 1. The first step is the filing of the bankruptcy petition and schedules with the bankruptcy court. This includes a list of all of your debts as well as all of your assets. It is extremely important that you have listed everything, as failure to fully disclose your assets may result in the court refusing to discharge your debts. Likewise, if you leave a debt off of the petition, that debt will not be discharged. Once the petition is filed, an "automatic stay" is invoked which serves to stop creditors from continuing to attempt to collect the debt from you. If the creditor continues to call or contact you, they may be subject to sanctions by the court. Most creditors are aware of the consequences of continuing to contact a person under automatic stay and telling them you have filed is enough to make them leave you alone. In my own practice, I have my clients give the creditor my name and number and tell them to direct all further communication to me. Often, clients are desperately in need of some breathing room to get a break from creditor calls and consider their options. That said, there are a few exceptions to the automatic stay such as: child support/spousal support obligations, criminal actions against you, and certain governmental actions such as tax audits. 2. A trustee is appointed by the bankruptcy court. This is a person who will oversee the bankruptcy proceeding and will notify all creditors in the petition that a bankruptcy has been filed by you, giving them notice of the automatic stay, discussed above. Additionally, the trustee is the person who will sell assets, if necessary, and distribute the proceeds to your creditors. 3. About six weeks after the filing of the petition, a hearing (in legal terms, called the "Meeting of Creditors" or the "341 Hearing" – a reference to the section in the Bankruptcy Code in which it appears) is held. This hearing serves two primary functions. First, the meeting is a chance for creditors to appear and ask the debtor questions relating to the petition. Normally, the meeting of creditors is primarily for the purpose of the trustee putting the debtor under oath and verifying that the information in the petition is accurate. Be aware when you are looking for a bankruptcy attorney that you may find an attorney who will charge you less for filing your bankruptcy, but later realize that you will not be represented at the 341 hearing. 4. A few weeks after the 341 hearing, you will receive notice from the court that you have been granted a discharge from your debts. This is, assuming, of course, that there are no problems with non-disclosure on your petition or fraud or anything else that might cause the court to deny your discharge. Again, this is a reminder of how important it is to be careful in providing information to your attorney for the petitions.
How will a bankruptcy affect my credit? How will a bankruptcy affect my Your bankruptcy will appear on your credit history for 7 to 10 years. This is not to say, however, that you cannot rebuild your credit significantly within that time, however. You likely will still be able to get credit somewhere, although it will probably be at a fairly high interest rate. There are secured "credit cards" available that offer a chance for rehabilitation of poor credit. I have several resources available to my bankruptcy clients that can be of huge assistance in beginning the rebuilding of credit. Keep in mind that the goal of bankruptcy is to begin anew with a clean slate credit-wise. It will not be easy, but it can be done.
Will I be able to keep my car? Ohio has an exemption for cars that are valued at les than $2,000. Additionally, there is a process called redemption available that may allow you to keep your car. When you redeem a debt, you are agreeing with the creditor to continue making payments on your debt. You must be very careful here, however, because reaffirmation of a debt leaves you legally responsible on that debt as if you had never filed for bankruptcy.
What debts are non-dischargeable? * taxes * child support / spousal support obligations * debts resulting from fraudulent activity * debts resulting from certain drunk driving incidents * student loans
If I file, what about my spouse? It is not always necessary for spouses to file a joint bankruptcy. It is important to seek legal counsel to determine whether this is necessary in your situation. If fact, having one spouse without a bankruptcy on his or her credit history can make things easier as far as being extended credit in the near future. An important factor here is whether the debts are joint debts or primarily in the name of only one of the spouses.
The filing fee for a Chapter 7 bankruptcy is currently $200. This fee goes to the court and is totally unrelated to the legal fee. The current legal fee for a Chapter 7 for an individual is $550. This could be slightly higher if there is a very large number of creditors and the fee is higher if a joint petition is filed (married couple filing). My fee includes drafting and filing the petition with the court as well as representation at the Meeting of Creditors. I am willing to work out a payment plan for these costs and fees, but will not file the case until all of the fees and costs have been paid. If I would not require this up-front, my fees would be dischargeable in the bankruptcy, and that would be rather silly of a bankruptcy attorney, now wouldn’t it?
How soon will the harassing phone calls stop? The filing of a bankruptcy proceeding invokes what is called an "automatic stay." This is a protection of the debtor from any further collection activity of the creditors. There is a penalty to creditors who "violate the stay," and generally the creditors are familiar with this and obey it. The court mails notice to all creditors soon after the filing of your bankruptcy, giving them notice, and if they should call before they get the notice, your telling them you have filed is enough to require them to leave you alone.
How much will I have to repay of my debts? In a normal Chapter 7 liquidation bankruptcy, you will not have to pay anything on your debts. You are being given a fresh start, free from debt. The exceptions to this are discussed above under non-dischargeable debts.
What if there is a creditor that I want to repay, even if I wouldn’t have to? Occasionally, a client wants to re-pay a creditor for a debt that is dischargeable in the bankruptcy. First of all, the debt must be listed to the court regardless. There are 2 options available to set up repayment to the creditor. The first is reaffirmation of the debt. With reaffirmation, the debtor signs an agreement with the creditor promising to stay obligated to the creditor for that debt. This agreement is filed with the bankruptcy court and needs court approval. Upon approval, the debtor will remain liable on this debt as if bankruptcy had never even occurred. Reaffirmation generally occurs in 2 situations. It may be a solution when the debtor has a piece of non-exempt property that he or she wants to keep after the bankruptcy. Also, this is sometimes done in order that the debtor can maintain credit with a certain creditor (a credit card company, for example) so that when the bankruptcy is over, there is credit available that is not negatively affected by the bankruptcy. This should never be done without consultation with a good bankruptcy attorney. The other option for repayment is voluntary repayment. This occurs where a debtor has a debt discharged in bankruptcy but agrees informally to repay the debt. Because the court is not involved here and the debt has been legally discharged, the creditor has no legal recourse if the debtor stops paying. As the name implies, it is totally voluntary.
Nothing contained herein should be construed to constitute advice for your personal circumstances. Furthermore, this is intended as a peripheral glance at the various options available, but by no means is this a comprehensive or exhaustive analysis of the bankruptcy laws. Whether or not you should file a Chapter 7 bankruptcy, or any bankruptcy, will vary depending on your personal circumstances and should only be undertaken after careful consideration and analysis, and after consultation with an attorney. This informative summary may contain information and rules peculiar to the Northern District of Ohio. KICK & GILMAN, LLC is a federally designated Debt Relief Agency under the United States Bankruptcy Code. Return to Kick & Gilman home page. |
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© 2003, Kick & Gilman |
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