Too Many Credit Card Deals Come Your Way? Answers To Bankruptcy Questions (Bankruptcy FAQ)
2007-07-02
You have so many credit cards that you are barely making the minimum payments. So now you are likely facing bankruptcy because your month outgo is more than your monthly income. And what do you have to thank for it? American Express, Visa, MasterCard, Discover, retail credit cards and gas credit cards are to blame. You made the mistake of answering every single “Best Credit Card Deal” that landed in your mailbox. Now you are facing the United States’ version of debtor’s prison.
Filing for bankruptcy may be your only salvation. But what is bankruptcy…exactly? How do you file and will you ever be back in the black in the credit card world. Following are a few questions about bankruptcy and how it could be a good option for you to escape your many credit card bills.
Three Main Types Of Bankruptcy
Q: What is a Chapter 7 bankruptcy?
A: Chapter 7 is the Bankruptcy Code's liquidation chapter. This is the form of bankruptcy most people are most familiar with. This is the type of bankruptcy epitomized on television and in the movies. “The taxman cometh and takes all your stuff.” It is sometimes called "straight bankruptcy.” Basically in this case Chapter 7 trustee is appointed to take over your property. Any property of value will be turned into payments to your lenders. If anything is left, you get to keep it. In this form of bankruptcy you are allowed to keep just what you need to survive (food, clothing, maybe your car). But everything else goes to Uncle Sam and then to the creditors. The rules for Chapter 7 will vary slightly from state to state.
Q: What is a Chapter 13 bankruptcy?
A: Chapter 13 is frequently referred to as the "wage earner" chapter. This basically means you have to have a job. As long as you have a job, and can pay back your debts, you can file Chapter 13. Here’s how it works: Instead of making 20 payments every month for your car your food, your entertainment, your credit cards and every other expense you have, you make one payment to the court. The court, or trustee in charge or your plan, pays off your creditor. In the case of a Chapter 13 bankruptcy, you get to keep your stuff. But now, you just owe one creditor instead of 20. This drives your monthly payment down to something much more affordable.
Q: What is a Chapter 11 bankruptcy?
A: A Chapter 11 bankruptcy allows both businesses and individual debtors to reorganize their financial affairs by paying to creditors through a plan of reorganization. This is simply a way to continue making the same payments to the same creditors you were before but the payments are much lower.
Do I Need An Attorney?
Q: Do you have to have an attorney to file for bankruptcy?
A: If you are filing as an INDIVIDUAL, no, you do not need an attorney. If you are filing as an individual you may file your own case. However, if you are filing as a CORPORATION or PARTNERSHIP you must file through an attorney.
Forms And Papers…Where Can I Get The Necessary Documentation?
Q: Where do I go to get the forms and information on filing for bankruptcy?
A: From your local bankruptcy court or your attorney. And if you do decide to use an attorney, use one that specializes in bankruptcies. The average layman will have a hard time understanding the language replete in bankruptcy forms.
I Have More Forms And I Am Trying To Figure Them Out. But I Only Understand Every Other Word
Q: What is the difference between the U.S. Trustee and the Trustee assigned to a case?
A: The United States Trustee's Office is part of the Department of Justice, which supervises all bankruptcy cases. A Trustee is an individual appointed by the United States Trustee to oversee and administer a particular case. Put simply, the U.S. Trustee is Uncle Sam. The Trustee is Uncle Sam’s little brother in the state in which you file.
Q: What is a discharge?
A: A discharge is not as simple as the word would imply. A discharge is simply a percentage of the debt that the creditor “cannot” force you to pay. However, there are exceptions. A discharge does not excuse:
- Most tax debts
- child support obligations
- debts created by fraud or drunk driving among others
- court-ordered fines and restitution
- alimony
- student loans
In addition, your discharge may be denied entirely if you conceal the fact of owning property, destroy, falsify, or conceal records or make a false oath. Always consult your attorney to verify which debts have been discharged
I’ve Filed For Bankruptcy, But Still Have Questions
Q: I need a copy of my [document].
A: You can get a copy of any document pertaining to your case from your local bankruptcy court.
Q: How do I know the status of a particular case?
A: Again, see your local bankruptcy court.
Q: What is the balance on my Chapter 13 account?
A: You should contact your chapter 13 trustee.
Q: One of my creditors won't accept my discharge, as he wants his money.
A: Please contact your attorney. Send “ALL” creditor inquiries from here on to your attorney. That’s what you are paying him for. If you filed without an attorney, now’s the time to put one on retainer. Let the legal eagles hash this out.
Q: Where can I obtain information on property for sale by the Trustee?
A: Please look through your location's Trustee list at a bankruptcy related site and contact him/her directly.
What Is A 341 Meeting Of Creditors?
Q: What "341 Meeting of Creditors?”
A: An 11 U.S.C. 341(a) Meeting of Creditors (also known as 341 meeting), implies a forum for creditors and parties-in-interest to ask the debtor questions under oath. In other words, you have to prove to your creditors, in front of the court, why you can’t pay your bills.
Q: Must I appear at the 341 meeting (concerning both debtors and creditors)?
A: Yes, debtors MUST appear at the meeting; creditors may appear, but there is no obligation.
Q: I cannot be at the 341 meeting on the day and time settled. What do I do?
A: The answer to this question is simple…you have to make the meeting or your case will be dismissed…no “ifs” “ands” or “buts”
Q: Where do I go for 341 meeting to solve my Chapter 7 or 11?
A: Please contact your local district office.
Q: How do I affirm a 341 meeting day and time?
A: Check your Notice of Meeting of Creditors to see the concise date and time. If you do not have your notice, please contact your attorney. In case you don't have an attorney, you are free to call the court.
Q: Our attorney is occupied at another hearing.
A: If your attorney is away at the time your 341 meeting is called, please tell the trustee that you are present and your attorney is not. In most cases, the trustee "trails" your meeting until the end of that hour's calendar. If next time your case is called and attorney not present again, please introduce yourself to the trustee, he or she will give you the necessary instructions. Generally, your attorney must be present while you are questioned by the trustee. If your attorney is not present for the hearing, let the Judge know you are present and follow the Judge's instructions on the matter.
Q: What if I happen to be late due to stuck in traffic, car problems, etc. – can I still to come to the 341 meeting?
A: Yes, it's mandatory to attend the 341 meeting.
Questions Answered For The Creditor
Q: I want to report bankruptcy fraud. How do I go about this?
A: If you have a complaint or concern regarding fraud in a bankruptcy filing, please detail the concern in writing and send a letter to the U.S. Trustee in your area with a copy to any assigned trustee. Please include:
- Your name
- Your address
- Your daytime phone number
- A clear and concise explanation of the fraud
- Copies of any documents you have related to the case
When Will This All Be Over?
Q: When will my case be closed/final?
A: You should speak to your attorney regarding the closing of your case. Basically:
- A chapter 7 no-asset case will be closed approximately 60-90 days after the 341 Meeting of Creditors
- A chapter 7 asset case will be closed approximately 90-120 days after a Final Report is filed and after all assets have been administered.
- Generally, a chapter 11 case will be closed after a Final Decree is entered.
- Generally, a chapter 13 case will be closed approximately 60-90 days after the Final Report is filed. (Chapter 13 cases last from 36 to 60 months before closing begins).
Now that all of your questions are answered, don’t you wish you would have paid off those credit cards on time?
