How much does bankruptcy cost?
In a Chapter 13 bankruptcy, if you have regular income from employment or another source, you don’t have to pay any fees up front. We get paid through the Chapter 13 plan after the plan is confirmed. I prefer that my clients pay the filing fee (the fee the court charges to file your case) up front and that fee is $310.00. But if you can’t do that, you can pay the filing fee in installments. In Chapter 7 cases, I like to quote a fee after hearing about the case. In simple cases, I want to charge a simple, low fee. I charge more the more complex your case is. However, I will work with you to make sure that bankruptcy is an affordable option for you. The filing fee (paid to the court) in Chapter 7 cases is $335.00.
How can I afford bankruptcy?
At your very first meeting with us, we will ask what your income and expenses are. If bankruptcy is right for you, we will tell you what you can safely stop paying in preparation for filing bankruptcy. You should NEVER, NEVER, borrow money to pay your bankruptcy lawyer. In a Chapter 13, if you have regular income from employment, you don’t need any money down.
Do I have to go to court?
It’s possible, but most of our clients only attend a single Section 341 Meeting of Creditors. Although the meeting is held in the court house, it’s not court. At the Meeting of Creditors, the Chapter 7 or Chapter 13 Trustee will be able to ask you questions about your petition, schedules and, in Chapter 13, proposed plan. Sometimes creditors attend the meeting and sometimes they do not. I will attend the meeting with you and I will answer all of your questions about the meeting before we go.
If I start a Chapter 13, but can’t make the payments, what then?
If you don’t make the payments the Chapter 13 Trustee will move to dismiss your case. When a case is dismissed, you lose the protection of the automatic stay which prevents creditors from suing you or garnishing your wages or repossessing collateral. Sometimes, we can modify a Chapter 13 plan if you are having trouble with the payments and we can also convert a case filed under Chapter 13 to a case under Chapter 7.
How often can I file a bankruptcy case?
If you previously filed a Chapter 7, you have to wait eight (8) years for a discharge in another Chapter 7 case. If the first case was a Chapter 7, then you have to wait four (4) years for a discharge in a case filed under Chapter 13. From Chapter 13 to Chapter 13 is two (2) years. From Chapter 13 to Chapter 7 the time period is six (6) years, but there are two exceptions: If you paid unsecured creditors in full or if you paid at least 70% of the claims and the plan was proposed in good faith and was your best effort. So, to recap: 7 to 7 is 8 years; 13 to 13 is 2 years; 7 to 13 is 4 years; 13 to 7 is 6 years. However, there might be times that you would want to file a Chapter 13 even if you were not eligible for a discharge. You may need the immediate protection of bankruptcy.
If I’m married, do both spouses have to file?
No. A married person can file independently of his or her spouse. We do have to schedule the income of a spouse or other adult household member, but they do not have to file bankruptcy. The question would be whether the spouse was also obligated to the debts that you are obligated to. See my Blog for a recent post about the marital deduction.
Will I lose all of my stuff if I file Chapter 7?
In most of our cases (and I mean the vast majority of our cases) our Chapter 7 clients do not lose anything. Tennessee has a $10,000 personal property exemption ($20,000 for a married couple) along with various exemptions for clothing, tools of the trade, retirement accounts and homestead. As long as we can fit your property within those exemptions, and we usually can, you don’t lose anything. You also need to realize that we do not need to use an exemption on encumbered property. So, for instance, if you have a car that’s worth $15,000.00 but you owe $12,000.00 on the car, we only need to use $3,000.00 of your personal property exemption on that vehicle. The homestead exemption in Tennessee goes from a low of $5,000.00 for a single person to a high of $50,000.00 for a married couple with minor children. The same rule applies – we only need enough exemption to cover the unencumbered portion of the house. If we did not have enough exemptions to cover all of your property, then we would discuss Chapter 13. Most retirement plans (401(k), IRA, pension) are absolutely exempt with no dollar limit.
Will my bankruptcy case be reported on my credit report?
Yes. The fact that you filed bankruptcy will be reported for up to 10 years on your credit report. However, typically your credit score will actually go up after you file bankruptcy. Why is that? In a Chapter 7 case, creditors will know that you have discharged all of your debts and that you will not be eligible for Chapter 7 again for eight years. In a Chapter 13, you will have demonstrated the ability to make a regular payment for 3 to 5 years and at the end of a Chapter 13, you should only have one debt – the mortgage on your home. (Caveat: student loans, some taxes and domestic support obligations are not dischargeable – see below)
Are there any types of debts that can not be discharged in bankruptcy?
Yes. Student loans are not dischargeable (absent special circumstances) in bankruptcy and some taxes (depending on the type of tax and when it was due) are not dischargeable. Domestic support obligations (child support, spousal support and other obligations in a domestic decree) are not dischargeable; although, in Chapter 13 those are paid. There are other debts which may not be dischargeable as well, such as debts founded upon fraud. When you meet with us, we are interested in the nature of your debts and the date they were incurred. We will advise you of which, if any, of your debts may not be subject to discharge.
How long does it take to file a bankruptcy petition?
We can get your petition ready as fast as you can get us the information we need to complete the petition. Generally, it takes about a week from the first meeting to the day we sign and file your petition. We can work faster if there is a pressing need such as foreclosure, repossession, garnishment or pending court date. If you want to get an early start, click this link: Want an early start on the paperwork?
How does bankruptcy stop creditors from calling me, suing me, garnishing my wages, foreclosing on my house or repossessing my car?
From the very second that you file a bankruptcy petition, the automatic stay goes immediately into effect. The automatic stay prohibits creditors from doing anything to collect a debt or the collateral securing a debt. A creditor that ignores the automatic stay is in contempt of the orders of the Bankruptcy Court and can be punished accordingly.
What if I file a Chapter 7, but I want to keep a car that I owe money on?
In most cases, that is not a problem. The creditor (car loan company) will want you to keep insurance on the vehicle and to enter into an agreement reaffirming the car. As long as we can show the bankruptcy court that the payments will not be unduly burdensome on you, you can keep the debt. The better question is, many times, should you keep the debt. It depends upon the value of the car, how much you owe and how much the interest on the debt is.
What if I enter into a reaffirmation agreement for my car, but then change my mind?
That’s okay too, as long as you change your mind soon enough. You can cancel a reaffirmation agreement any time before a discharge is entered in your case. Also, you can cancel a reaffirmation agreement within sixty (60) days of filing the agreement with the Court.
What if I have a question that is not listed here?
I’m happy to answer all of your questions. Call or text me at (931)576-1033 or send me an e-mail to email@example.com.