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?
There are relatively few limitations on who can file bankruptcy. The decision of whether to file, and under what Chapter, is based on each individual’s need for relief from debts, their ability to pay, and their capacity and willingness to submit to the legal procedures and rules that apply to the type of bankruptcy or chapter that best fits their situation. A debt-counselor or attorney can help you consider alternatives to bankruptcy.
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?
The Debtor – the person, business, or married couple who files bankruptcy, also known as “the petitioner”;
The Creditors – any persons, firms, or entities that claim debtor owes them money;
The Trustee – a court-appointed person (often an attorney) who oversees the bankruptcy proceedings and administers any property available for distribution to creditors (called the bankruptcy estate). The trustee represents the interests of the unsecured creditors, and must liquidate nonexempt assets, investigate the debtor’s financial affairs, examine creditors’ proofs of claim, provide information to parties in interest, file reports, estate tax returns and recommend, when appropriate, criminal or civil proceedings against a debtor who has committed fraud or other crimes in connection with the case.
The Bankruptcy Judge – who presides over any court hearings on disputed matters in connection with the case.
The Credit Counselor – an independent financial advisor who must certify both before filing, and before the debtor’s discharge is granted, that the debtor has completed the required credit counseling and financial management courses.
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?
Bankruptcy involves a series of steps that usually include the following:
- The debtor gathers financial information that his or her attorney uses to prepare the petition for bankruptcy and the schedules of assets, debts, income and expenses, the statement of financial affairs, and statement of intentions concerning secured debts;
- The debtor obtains the required pre-filing credit counseling from an approved credit counselor;
- The debtor’s attorney files the petition, schedules, statement of financial affairs, statement of intentions, and pays the filing fee to the bankruptcy court;
- The court notifies all listed creditors of the case filing. This notice sets out the date of the meeting of creditors; informs of the injunctive stay against creditor actions, the last date for creditors to file challenges to the debtor’s case, and other pertinent information;
- The debtor appears with his attorney at a hearing before the trustee to be examined under oath and to answer creditors’ questions;
- The debtor completes the reaffirmation, redemption, or surrender of secured collateral according to the Statement of Intentions filed with the case; and
- All parties receive the discharge notice approximately 90 days after filing a Chapter 7 case.
- A discharge will not be issued unless the debtor has completed a prescribed course in financial management. This is usually referred to as “the second counseling session.”
What constitutes the bankruptcy estate?
In general, the bankruptcy estate consists of all property owned by the debtor or in which the debtor has an interest whether individually or as a co-owner with someone else as of the date the case is filed. The estate also includes property the debtor acquires by gift, devise, inheritance, divorce settlements, and life insurance proceeds that the debtor becomes entitled to receive within 180 days after the filing of the case, as well as property recovered by the trustee under certain Code provisions. In a Chapter 13 case, the estate also includes post-filing income received during the repayment plan period from all sources, including the income of a non-filing spouse. The estate then excludes exempt assets protected under applicable federal or state exemptions. The balance of any property remaining for administration by the trustee constitutes the final bankruptcy estate.
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.