Questions People Often Have About Bankruptcy
Are you licensed?
Yes, we are licensed in the states of Kentucky and Illinois in both state and federal courts.
What do you charge for a consultation?
We offer all of our prospective clients a free initial consultation with no cost or obligation to them. This will provide us with time to discuss your unique needs, expectations, and financial goals. It will also provide ample time for you to ask any questions you may have about the process. Filing for bankruptcy is a difficult decision to make and we can help you to make an informed decision.
Who may declare bankruptcy in Kentucky or Illinois?
Though bankruptcy is a relatively unrestrictive option for debt relief, whether you may declare for bankruptcy depends on a few factors. Your income and assets play a role, and so does the type of bankruptcy necessary for your situation. For instance, if you plan to declare bankruptcy for your business, you may need to file for Chapter 11 bankruptcy. If you do not have a lot of assets and/or a regular income, you may need to file for Chapter 7 bankruptcy. Qualifications for Chapter 7 depend upon what is called the means test.
How long will the case take?
This varies on a case-by-case basis. From when we file your case to when we get an order of discharge from the court it generally takes three to four months to complete a Chapter 7 bankruptcy, and from three to five years to complete a Chapter 13 bankruptcy. You can rest assured that we will do all we can to ensure that your case proceeds smoothly so you can get through this process as quickly and efficiently as possible.
Who is involved in bankruptcy proceedings?
Those involved in bankruptcy include:
- The debtor – or, “the petitioner.” The debtor is who is declaring bankruptcy. They could be a person, a married couple or a business.
- The creditors – to whom the debtor owes money.
- The credit counselor – from whom the debtor receives credit counseling. They must confirm that the debtor has finished counseling and financial management classes both before filing and before discharge.
- The bankruptcy judge – they preside over the case’s related court matters and hearings.
- The trustee – the representative of the creditors. They investigate the debtor’s financial affairs, oversee proceedings, file reports and perform other related administrative duties. The trustee is appointed by the court.
Should I file for Chapter 7 or Chapter 13 bankruptcy?
This depends on your unique situation. The best way to determine how to proceed is to contact us so we can evaluate your specific situation and provide you with our professional recommendations and information on the options available to you.
What happens when you file a Chapter 7 Bankruptcy?
If you qualify for Chapter 7 bankruptcy, this is how it may look for you:
- First, you will collect necessary financial information for your attorney. The attorney then prepares a petition for bankruptcy.
- You attend credit counseling from a credit counselor approved by the court.
- The court notifies the creditors of the filing and other relevant information.
- The court approves a trustee to oversee your bankruptcy case.
- You and creditors with a stake in the case have a short meeting (the court will contact you about this).
- The trustee oversees the examination of your nonexempt property.
- Collateral, or property/assets are reaffirmed, redeemed or surrendered to the creditors.
- You take a financial management class.
- A bankruptcy discharge should arrive in the mail within sixth months of your filing.
- After discharge, your case will officially close and you—no longer liable for what you owe to the creditors—begin your fresh start.
What constitutes the bankruptcy estate?
The bankruptcy estate may include several types of properties or financial resources possessed by the debtor at the time of filing. It may also include assets collected within 180 days after filing. Specifically, the estate can include inheritances, tax refunds, stocks, some marital property, proceeds from property rental income and other related assets. In the case of Chapter 13 bankruptcy, income received post-filing may be included in the estate while the debtor remains under their repayment plan. This may even include the income of the debtor’s non-filing spouse.
How long will the bankruptcy remain on my credit?
A Chapter 7 or Chapter 13 bankruptcy will remain on your credit record for approximately 10 years from the date of filing, so you should carefully consider whether filing for bankruptcy is right for you. You cannot file for Chapter 7 bankruptcy again for another eight years after the date your case was filed.
Which creditors do I need to disclose?
You need to disclose all creditors on your bankruptcy. You cannot legally leave any out. Note however, that simply because you must list all debts, it does not mean you must stop paying them or that you must default and burn your bridges with all creditors. On the contrary, people often choose to continue to voluntarily pay certain debts after a bankruptcy in order to stay on good terms with that particular creditor.
What payment methods do you accept?
We accept cash and personal checks, money orders and certified bank checks.
Do I Get To Keep My Personal Property?
You are entitled to keep a generous amount of your belongings when filing Ch. 7 bankruptcy. Applicable law in Illinois and Kentucky provides for personal exemptions–items that are protected up to a certain dollar value (and in some cases entirely protected regardless of value) from seizure by your creditors. You will usually be allowed to keep all of your household goods. Other essential items (see below) may also be protected if they fall within the exemption guidelines. Some people do own more assets than what the law says they can keep if they file a Chapter 7 bankruptcy. For those people, having an experienced attorney is a must. In this situation you may need another option other than a chapter 7 case. A good lawyer can almost always come up with another option that would allow you to keep property (things) that is important to you. One such alternate option might be a chapter 13 case. Make sure you fully disclose all the facts to your lawyer so he or she can properly advise you and fashion a solution that works for you.
Can I Keep My Home?
Illinois and Kentucky exemptions allow debtors to keep a certain amount of equity in a homestead. Equity is determined by subtracting the amount that you owe on your mortgage(s) from the fair market value of your home. The decision of which exemptions to select, to protect your home from liquidation should be made in consultation with an experienced attorney.
The “automatic stay” goes into effect the moment your bankruptcy petition is filed, and protects your home from foreclosure during the pendency of your bankruptcy. If you have a mortgage on your home, you MUST keep the payments current during and after the bankruptcy to avoid foreclosure. If you fall behind on your mortgage payments after filing bankruptcy, the mortgage company may ask for court permission to lift the automatic stay and begin foreclosure proceedings.
If your home is “upside down,” meaning you owe more on the home than it’s worth, we might recommend that you voluntarily surrender the home, which allows you to get out from under that crushing monthly debt, and purchase or rent a less expensive home after bankruptcy.
Can I Keep My Vehicle(s)?
Illinois and Kentucky (Kentucky has authorized use of the Federal exemptions) exemptions allow debtors to keep a certain amount of equity in motor vehicles. Equity is determined by subtracting the amount that you owe on your motor vehicle from the fair market value of your motor vehicle. The decision of which exemptions to select, to protect your motor vehicle from repossession or liquidation should be made in consultation with an experienced attorney.
The “automatic stay” goes into effect the moment your bankruptcy petition is filed, and protects your motor vehicle(s) from repossession during the pendency of your bankruptcy. If you have a loan on your vehicle, you MUST keep the payments current during and after the bankruptcy to avoid repossession. If you fall behind on your loan payments after filing bankruptcy, the lender may ask for court permission to lift the automatic stay to repossess your motor vehicle.
If your car is “upside down,” meaning you owe more on the vehicle than it’s worth, we might recommend that you surrender the vehicle, which allows you to get out from under that crushing monthly debt, and purchase or finance a less expensive car after bankruptcy.
Will I Lose My Retirement Savings?
Most retirement savings plans are fully protected by the Employee Retirement Income Security Act (ERISA), and are fully protected in bankruptcy. Also, Individual Retirement Accounts (IRAs) and 401(k) accounts are generally fully protected in bankruptcy. We can help you determine whether your specific retirement account will be protected in bankruptcy so you can be confident of keeping those savings for your retirement.
What Is The Difference Between Secured And Unsecured Debt?
Secured debt, such as mortgages, car loans, etc., is debt that is secured by a lien on property. Creditors can generally claim the property that secures the debt in the event of bankruptcy, unless you are current on the payments. Unsecured debt, such as credit card balances, medical bills, etc., is debt that is not secured by any type of property.
When Will The Harassing Phone Calls From Creditors Stop?
Once your bankruptcy petition is filed, you and your creditors will receive an official notice from the United States Bankruptcy Court regarding the pendency of your case. The automatic stay goes into effect the moment your bankruptcy petition is filed, and creditors are immediately prohibited from contacting you.
What Debts Can’t Be Discharged In A Ch. 7 Bankruptcy?
The debts that cannot be discharged in a Ch. 7 bankruptcy include the following:
- Generally, debts for taxes owed to local, state or federal agencies.
- Debts for money, property, services, or an extension, renewal, or refinancing of credit, which were obtained fraudulently.
- Debts that were not listed in the schedule of debts (sometimes).
- Domestic Support Obligations, such as child support, spousal support, etc.
- Debts for most government-sponsored or guaranteed student loans.
- Debts arising from a court judgment for death or personal injury caused by the debtor’s drunk driving or from driving while under the influence of drugs or other substances.
- Debts incurred after a bankruptcy was filed.
Will I Ever Get Credit Again?
Yes, a bankruptcy can actually clean up your credit report in the sense that your credit report should show zero balances owed to your unsecured creditors, rather than the tens of thousands of dollars that you may currently owe. Having a bankruptcy noted on your credit report may not look as bad as having multiple negatives such as repossessions, foreclosures or even late payments that may already be on your credit report or that would likely show up eventually on a credit report if you continue to default rather than resolve it all at once through a bankruptcy. Bankruptcy will typically improve your debt-to-income-ratio, which is an important factor that many creditors consider when extending new credit. Although a Ch. 7 bankruptcy may remain on your credit report for up to 10 years, most people resume normal credit activities immediately after receiving their discharge. The interest rates may not be prime, and some waiting periods may apply, but you can begin re-establishing your credit immediately, as long as you stay current on your payments. However, we will counsel you to change your spending habits to get away from dependence on credit and to avoid the credit trap in the future.
Can I Keep Any Credit Cards?
Whether a debtor keeps credit cards after filing bankruptcy is entirely up to the credit card issuer. If you are seeking a discharge of a credit card balance, that credit card issuer will most likely cancel the card unless you reaffirm the debt. Even if you have a zero balance, the credit card company might cancel the card when they discover you have filed for bankruptcy.
Can My Boss Fire Me Because I Filed For Bankruptcy?
No. 11 U.S.C. Sec. 525 prohibits any employer from discriminating against you because you filed bankruptcy.
I Filed For Bankruptcy Before. When Can I File Again?
A new Ch. 7 case can only be filed if 8 years have passed since a previous Ch. 7 bankruptcy filing. A new Ch. 7 case can only be filed if 6 years have passed since a previous Ch. 13 filing. If you are currently wanting to file a chapter 13 case, you need to know that if you previously filed a chapter 7 case and got a discharge in that chapter 7 case, and 4 years have not yet passed since the filing of the chapter 7 case, you cannot get a discharge at the end of the new chapter 13 case. If this all sounds very confusing, that is quite normal. The important thing to remember is these rules are complicated and your attorney needs to know the exact details if you filed a previous bankruptcy of when it was filed; what type of case it was; and whether you got a discharge of debts in the prior case.