Bankruptcy FAQs
Everyone involved in bankruptcy has questions about the law, and more importantly, how the law applies in a particular circumstance. Even judges, trustees and board certified bankruptcy attorneys must constantly resort to law libraries to find answers to new and/or novel legal questions. All debtors are unique, and present different factual circumstances for court review.
Frequently Asked Bankruptcy Questions - FAQ
- Are all debts included in bankruptcy? - Yes, absolutely, but all creditors are not required to be treated equally. If creditors are omitted, the court retains authority to levy sanctions for the failure to fully disclose all financial data.
- If I miss Chapter 13 payments, what happens? - Usually the trustee files a motion requesting dismissal if payments become 30 days or more past due, unless prior arrangements are made with the trustee's office.
- Is bankruptcy a taxable event? - No, but a charged off debt, before filing, is subject to tax under IRS imputed income rules. Timing counts.
- Do I have to have a lawyer? - No, but debtors who file alone (pro se) seldom receive the full benefit of filing, and frequently their cases are dismissed for failure to comply with procedural rules, disclosures, and appearances. Apparently, pro se debtors later decide arguing complex laws during formal hearings, opposed by legal experts, produces dismal results. Anyone filing pro se should not expect rescue by a trustee or the Court.
- Are all debts wiped discharged or wiped out? - No, absolutely not. The Code provides numerous classes of debts and circumstances that create liability that may not be discharged.
- Will I lose all property and assets? - No, all states allow personal property exemptions for items the state's legislature deems necessary for basic needs. Fourteen states also allow debtors to select federal bankruptcy exemptions.
- Are student loans dischargeable? - Maybe, but the rules are technical and usually turn on the length of time the debt existed and other relevant factors. More information within.
- How do I file bankruptcy? - Filing and discharge are different concepts. Anyone can file. Only those individuals who qualify and comply with all relevant laws will receive a discharge. Filing begins by submitting a petition to the Clerk's Office. Then deadlines begin to run for legal compliance.
- Can I file alone, without my spouse? - Yes, spouses may file alone, but discharge will not be effective for the spouse who does not file. If you file alone, your spouse can still be sued by creditors.
- Which chapter should I file? - That all depends on your personal financial history, preferences and goals. The best chapter is the one that provides the greatest benefits, but can only be found by a thorough review of all relevant financial information.
Bankruptcy laws allow debtors to choose between chapters, and select among a wide range of options within each chapter. As a result, legal talent is required to craft a legally sound case with a high probability of discharge. To receive high quality answers, debtors must ask the right questions and require answers from legal experts who have a recent track record of success.
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