Frequently asked questions (FAQ) about bankruptcy law and the effects of a bankruptcy filing. Click a question below to read the answer.
1. DO I NEED A LAWYER TO FILE OR CAN I FILE ON MY OWN?
- DO I NEED A LAWYER TO FILE OR CAN I FILE ON MY OWN?
- IS THERE A CHARGE FOR THE CONSULTATION VISIT?
- WILL THE BILL COLLECTORS QUIT CALLING ME?
- WILL FILING BANKRUPTCY AFFECT MY JOB?
- ARE THERE DEBTS I CANNOT DISCHARGE IN BANKRUPTCY?
- ARE CREDIT CARDS AND MEDICAL BILLS STILL DISCHARGEABLE UNDER THE NEW BANKRUPTCY LAW?
- ARE DEBTS IN COLLECTION DISCHARGEABLE?
- CAN I KEEP MY HOME OR VEHICLE?
- WILL BANKRUPTCY STOP WAGE GARNISHMENTS?
- WILL BANKRUPTCY STOP FORECLOSURES OR REPOSSESSIONS?
- AFTER FILING BANKRUPTCY DO I NEED TO KEEP PAYING MY HOUSE AND VEHICLE PAYMENTS?
- CAN UTILITY BILLS BE DISCHARGED IN BANKRUPTCY?
- IS BACK CHILD SUPPORT DISCHARGEABLE IN BANKRUPTCY?
- ARE STUDENT LOANS DISCHARGEABLE IN BANKRUPTCY?
- CAN I DISCHARGE PAST DUE INCOME TAXES?
- ARE PAST DUE PROPERTY TAXES DISCHARGEABLE IN BANKRUPTCY?
- CAN I DISCHARGE A JUDGMENT?
- CAN BANKRUPTCY REMOVE LIENS AGAINST MY PROPERTY?
- WILL I LOSE MY RETIREMENT OR 401(k) SAVINGS?
- IS MY BANKRUPTCY PUBLIC KNOWLEDGE?
- HOW LONG DOES A BANKRUPTCY FILING STAY ON MY CREDIT REPORT?
- IS THERE A CERTAIN AMOUNT OF DEBT TO QUALIFY FOR BANKRUPTCY?
- DO I HAVE TO BE A CERTAIN AGE TO FILE BANKRUPTCY?
- CAN I PICK AND CHOOSE MY DEBTS TO FILE UNDER BANKRUPTCY?
- DO I HAVE TO LIST A CREDIT CARD WITH ZERO BALANCE?
- WILL I BE ABLE TO RECEIVE A LOAN AFTER FILING BANKRUPTCY?
- IS THERE A TIME PERIOD FOR USING CREDIT CARDS OR GETTING LOANS BEFORE FILING?
- MY BOYFRIEND/GIRLFRIEND AND I HAVE BILLS TOGETHER, CAN WE FILE BANKRUPTCY TOGETHER?
- CAN I FILE WITHOUT MY SPOUSE?
- IF I HAVE A CO-SIGNER/CO-DEBTOR WILL HE/SHE BE RESPONSIBLE FOR THE DEBT AFTER I FILE BANKRUPTCY?
- CAN I INCLUDE MY DEPENDENTS DEBTS ON MY BANKRUPTCY?
- CAN I PUT ASSETS IN SOMEONE ELSE’S NAME BEFORE I FILE BANKRUPTCY?
- IF I FILE BANKRUPTCY PERSONALLY, DO I HAVE TO FILE ON MY BUSINESS ALSO?
- IF I FILE BANKRUPTCY ON MY BUSINESS DO I HAVE TO FILE ON PERSONAL AS WELL?
- WHAT IF I FORGOT TO ADD DEBTS TO MY PETITION? CAN I ADD THEM LATER?
- CAN A BANKRUPTCY BE REOPENED?
- IF I FILE BANKRUPTCY, WHEN CAN I FILE AGAIN?
The courts are open to all competent persons representing themselves. It is never wise, however, to represent yourself in any legal matter—just as it is never wise to remove one’s own appendix. It is often necessary to have a detached professional advise you because it is human nature to become too emotionally involved with your own case to rationally understand what is in your best interest. Even bankruptcy lawyers should not represent themselves.
2. IS THERE A CHARGE FOR THE CONSULTATION VISIT?
No. At Clagett Law Office, initial consultations are always free.
3. WILL THE BILL COLLECTORS QUIT CALLING ME?
Yes. Your creditors are prohibited from calling you the second your case is filed.
4. WILL FILING BANKRUPTCY AFFECT MY JOB?
No. Employers may not discriminate against an employee who has filed a bankruptcy case.
5. ARE THERE DEBTS I CANNOT DISCHARGE IN BANKRUPTCY?
Yes, but all debts must be listed on your petition. You must tell your attorney about all of your debts. He can advise you of whether a debt is dischargeable. Those debts can be divided into three types of debts: debts that are always non-dischargeable; debts that are non-dischargeable if the creditor convinces the court of that fact; and debts that are non-dischargeable unless the debtor convinces the court that it should be discharged. Some of the most common debts always non-dischargeable are certain types of taxes and debts in the nature of support, such as alimony and child support. Some of the most common types of debt that could be non-dischargeable, if so ruled by a court, are debts that are incurred by fraud or damages for willful and malicious injuries. The most common debt that is non-dischargeable, unless a debtor convinces the court otherwise, is student loan debt.
6. ARE CREDIT CARDS AND MEDICAL BILLS STILL DISCHARGEABLE UNDER THE NEW BANKRUPTCY LAW?
Yes. There is no change from the previous law.
7. ARE DEBTS IN COLLECTION DISCHARGEABLE?
Yes. Whether a debt has been sent to collection or has been sold to a third party does not change the nature of the debt. If it was a dischargeable debt to begin with, it remains a dischargeable debt.
8. CAN I KEEP MY HOME OR VEHICLE?
As a general rule, you can keep your home and vehicles if you can afford the payments. Remember, however, that Chapter 7 bankruptcy is a liquidation. This means your home or vehicles would be subject to sale by the Chapter 7 trustee if the equity in either item is greater than the amount you could exempt, which is rarely the case for most West Virginians filing bankruptcy. In Chapter 13, you are a debtor in possession, and you can keep your home and vehicles if you can afford the payments required for you to keep them.
9. WILL BANKRUPTCY STOP WAGE GARNISHMENTS?
Yes, and the wage attachment or garnishment will be permanently enjoined if the debt is a dischargeable debt.
10. WILL BANKRUPTCY STOP FORECLOSURES OR REPOSSESSIONS?
Yes, but you must be able to somehow cure the default. Relief from foreclosures and repossessions is not permanent. The protection will end no later than discharge, and often sooner, if the creditor asks for court permission in a Chapter 7 case in which you cannot satisfy the requirements to bring the debt out of default. In a Chapter 13 case, the plan must provide the lien holders what they must be paid under bankruptcy law. If that sum is not affordable, then the case will fail; resulting in loss of the collateral securing the unaffordable debt.
11. AFTER FILING BANKRUPTCY DO I NEED TO KEEP PAYING MY HOUSE AND VEHICLE PAYMENTS?
If it is your intention to retain possession of your home and vehicle, you should continue making those payments unless advised to do differently. For example, discontinue these payments if the payment is to be made by the Chapter 13 trustee or the property is to be redeemed for a lump sum payment.
12. CAN UTILITY BILLS BE DISCHARGED IN BANKRUPTCY?
Utility bills are dischargeable in bankruptcy, but the utility may require you to pay a reasonable deposit within 20 days.
13. IS BACK CHILD SUPPORT DISCHARGEABLE IN BANKRUPTCY?
14. ARE STUDENT LOANS DISCHARGEABLE IN BANKRUPTCY?
As a general rule, student loans are not dischargeable in bankruptcy. They can be discharged if, after the filing of an adversary proceeding, the bankruptcy court finds that it is a hardship on you and your family to require you to pay the student loan debt. The U.S. Court of Appeals for the Fourth Circuit has made the bar very high for a student loan debtor to prove a hardship.
15 .CAN I DISCHARGE PAST DUE INCOME TAXES?
Assuming no evasion or fraud, income taxes that came due three years before the filing date may be discharged in Chapter 7. Unless an extension of time was obtained, income taxes for individuals come due on April 15 following the tax year. Chapter 13 provides favorable repayment options for tax liability less than three years old.
16. ARE PAST DUE PROPERTY TAXES DISCHARGEABLE IN BANKRUPTCY?
Yes and no. A property tax is dischargeable if it has been unpaid for one year after penalties began on the tax. The problem is that real property taxes in most states, if not all, constitute a lien on the land, which subjects the land to be sold for unpaid taxes. Therefore, the dischargeability of property taxes is only an issue as to personal property taxes. Since most state laws put the burden of making sure that the property tax is paid on the taxpayer, it might be considered evasion if the taxes were never assessed. This would make the obligation non-dischargeable.
17. CAN I DISCHARGE A JUDGMENT?
Judgments for dischargeable debts are discharged in bankruptcy. If the judgment carries with it a lien, the lien will have to be avoided by motion. If the debtor does not have sufficient exemption to cover the collateral to which the lien attaches, the lien may not be avoided or may only be partially avoided.
18. CAN BANKRUPTCY REMOVE LIENS AGAINST MY PROPERTY?
Yes, if the liens are judgment liens and there is sufficient exemption remaining to cover the value of the collateral to which the liens are attached as described in Question 17. Statutory liens such as mechanic’s liens and tax liens may be removed if the liens are not supported by any equity in the asset, or reduced. This depends on the type of bankruptcy filed, and on the value of the collateral securing the lien.
19. WILL I LOSE MY RETIREMENT OR 401(k) SAVINGS?
20. IS MY BANKRUPTCY PUBLIC KNOWLEDGE?
Yes and no. While bankruptcy matters are public information, the same as most court matters; the information is not widely disseminated. As a general rule, the filing of a consumer bankruptcy case is of little concern to the general public, so it does not appear in most newspapers. This is to be contrasted with the newspapers in Charleston, WV, that publish the names of debtors filing cases in the Southern District of West Virginia.
21. HOW LONG DOES A BANKRUPTCY FILING STAY ON MY CREDIT REPORT?
Similar to all legal matters, bankruptcy will stay on your credit report for 10 years.
22. IS THERE A CERTAIN AMOUNT OF DEBT TO QUALIFY FOR BANKRUPTCY?
No. However, you may reach a point where the expense of filing a case would outweigh any benefit received from discharging the debt. Also, filing a bankruptcy case is a serious matter that should not be taken lightly.
23. DO I HAVE TO BE A CERTAIN AGE TO FILE BANKRUPTCY?
While there is technically no age limit, you have to reach the age of majority, 18 in West Virginia, to file without the need to have the case filed by an adult. In legal terms this is called “next friend.” Since minors generally can’t incur debt except for necessities, there is little reason for anyone under the age of majority to need to file a bankruptcy case.
24. CAN I PICK AND CHOOSE MY DEBTS TO FILE UNDER BANKRUPTCY?
While you can pay any creditor you choose after you file a Chapter 7 case, all creditors must be listed whether or not a debt is a dischargeable debt. In Chapter 13, as a general rule, the same type of debt must receive the same treatment. Accordingly, you cannot pay one credit card debt at 10 cents on the dollar, inside the Chapter 13 plan, while paying another credit card debt in full outside the plan.
25. DO I HAVE TO LIST A CREDIT CARD WITH ZERO BALANCE?
No. An additional question might be: Can I make a purchase after I have filed a bankruptcy case, and the answer to that is probably not. A majority of credit cards are issued by Bank of America, Chase, Synchrony Bank or Comenity Bank. List one Bank of America debt and all Bank of America and FIA lines of credit will be canceled. Chase cards may have Chase printed on the card, but some also have printed BP, Disney, or Toys R Us. Citibank and Synchrony Bank issue cards in many names, including Sears, Wal-Mart, Sam's Club, J.C. Penney, Exxon, CITGO and most other gasoline retailers, Lowe's, Home Depot and most home improvement retailers. Comenity Bank issues cards for most small clothing stores, such as Lane Bryant, Victoria's Secret and the like.
26. WILL I BE ABLE TO RECEIVE A LOAN AFTER FILING BANKRUPTCY?
Yes, in a Chapter 7 case, assuming the lender finds you creditworthy. Quite honestly, a number of creditors will not give credit to someone who has filed a bankruptcy case. On the other hand, a number of creditors are quite willing to give you credit the minute that you receive your discharge. Remember that a debtor in a Chapter 13 case in the Northern District of West Virginia, as well as most other districts, may not obtain credit without court approval until discharge.
27. IS THERE A TIME PERIOD FOR USING CREDIT CARDS OR GETTING LOANS BEFORE FILING?
Yes and no. But the closer you obtain a debt to the time of filing will leave you more likely to be sued by that creditor to have your debt declared non-dischargeable. You should always be prepared to inform your attorney of any debts incurred in the six months prior to filing as well as in the 70- and 90-day period prior to filing.
28. MY BOYFRIEND/GIRLFRIEND AND I HAVE BILLS TOGETHER, CAN WE FILE BANKRUPTCY TOGETHER?
No. Only married persons may file a joint petition.
29. CAN I FILE WITHOUT MY SPOUSE?
Yes you can, but if you live with your spouse, the spouse’s income must be considered for purposes of the Means Test and Schedule I: Your Income.
30. IF I HAVE A CO-SIGNER/CO-DEBTOR WILL HE/SHE BE RESPONSIBLE FOR THE DEBT AFTER I FILE BANKRUPTCY?
If you file a Chapter 7 bankruptcy case, the co-debtor remains responsible for the debt. It doesn’t matter who signed first on the loan document. If you file a Chapter 13 Bankruptcy case, there is a co-debtor stay for consumer debts. That means a co-debtor cannot be subject to any collection action on the debt without permission of the bankruptcy court during the pendency of the Chapter 13 case. If the co-signed debt is not paid in full by the Chapter 13 trustee, the balance of the debt may be collected from the co-debtor after the bankruptcy debtor is discharged.
31. CAN I INCLUDE MY DEPENDENTS' DEBTS ON MY BANKRUPTCY?
If any of your dependents are personally liable for a debt, the fact that you file bankruptcy will have no effect on their continuing liability for the debt.
32. CAN I PUT ASSETS IN SOMEONE ELSE’S NAME BEFORE I FILE BANKRUPTCY?
No. That is the worse act that you can do. If you believe that you may own more assets than you can exempt, you should contact competent bankruptcy counsel before attempting to sell or transfer any assets. You may discover that you have sufficient exemption to protect the asset or that the manner in which you own the asset may protect it from the trustee. The minute that you relinquish ownership of an asset, you lose the right to exempt it. The trustee has the power to recover and sell any asset given away or sold for inadequate consideration. If you don’t report the sale or transfer on your bankruptcy petition, you will not only run the risk of being denied a discharge, but you also could be prosecuted in federal court for bankruptcy fraud.
33. IF I FILE BANKRUPTCY PERSONALLY, DO I HAVE TO FILE ON MY BUSINESS ALSO?
If your business is a sole proprietorship, there is no difference between the business debts and assets and your personal debts and assets. If your business is not a sole proprietorship such as a corporation or LLC, it would not be in bankruptcy when you filed your personal bankruptcy, but it would be an asset of your personal bankruptcy estate. That means it could be subject to sale if you did not have enough exemption remaining to protect the value of the business.
34. IF I FILE BANKRUPTCY ON MY BUSINESS, DO I HAVE TO FILE ON PERSONALLY AS WELL?
It depends on the type of entity your business is. If your business is a sole proprietorship, there is no difference between your business debts and assets and your personal debts and assets. You will have to personally file a bankruptcy case. If your business is not a sole proprietorship but is instead a corporation or LLC, then the business must file its own bankruptcy case. Since the debts of most small businesses are personally guaranteed by the owner or owners, the owner(s) could eventually find themselves in bankruptcy even if their bankrupt business is a corporation or LLC.
35. WHAT IF I FORGOT TO ADD DEBTS TO MY PETITION? CAN I ADD IT LATER?
So long as your case is not closed and the time for filing claims has not expired, your petition may be amended to list additional creditors. If your case was closed without a distribution to creditors and the debt is not of the type that could be declared non-dischargeable, the debt is discharged even though it was not listed.
36. CAN A BANKRUPTCY BE REOPENED?
In certain instances a bankruptcy case can be reopened, but except to bring a contempt proceeding against a creditor ignoring the discharge injunction, it is a rare occurrence. Most courts have moved away from the practice of reopening cases to add creditors as the debt is generally discharged anyway.
37. IF I FILE BANKRUPTCY, WHEN CAN I FILE AGAIN?
A Chapter 7 may be filed eight years after the filing date of a previously discharged Chapter 7 or Chapter 11 case and six years after the filing date of a previously discharged Chapter 12 or Chapter 13 case unless the case paid 70 to 100 percent of the unsecured claims, in which event there is no time limit. A Chapter 13 case may be filed four years after the filing date of a discharged Chapter 7 case and two years after the filing date of a discharged Chapter 13 case.