FAQ’S

GENERAL INFORMATION

A bankruptcy case is a proceeding filed pursuant to the United States Bankruptcy Code. It is a federal court case.

The objective of a bankruptcy proceeding from the point of view of the filer (whether an individual or a corporation) is to stop collection activities of creditors and to either re-organize finances and set up a plan to pay creditors or eliminate debts altogether. In the case of an individual, one files either a Chapter 7 to eliminate debt or a Chapter 13 case to re-organize the debt. A Corporation will file either a Chapter 11 case to re-organize itself, or a Chapter 7 case to shut the business down. Bankruptcy may make it possible for you to:

(a) Eliminate or “kill” the legal obligation to pay most of or all of your debts. This is called a “discharge”. It is designed to give you a “fresh start”.

(b) Stop foreclosure on your home and give you the opportunity to catch up on missed payments

(c) Prevent repossession of a vehicle or other property or force a creditor to return repossessed property.

(d) Stop wage levies and garnishment, debt collector calls and any other collection activities including lawsuits, no matter what stage they are in.

(e) Restore or prevent termination of utility services.

(f) Allows you to challenge the amount or validity of any claim against you, including tax claims.

FREQUENTLY ASKED QUESTIONS

I am in financial trouble. What are my/our options? What should I/We do? Where can I/We go for help?

First of all, you are doing the correct thing by seeking information from a bankruptcy professional. We will, through this media and others, answer any questions you may have. WE OFFER FREE CONSULTATION AND WE CAN FILE YOUR CASE FAST AND GET YOUR CREDITORS STOPPED IN THEIR TRACKS. If you will call us at 817-268-8333 or 972-613-2284 we will schedule you an appointment to review your situation with us. We will need comprehensive information about your finances to get the most out of this consultation. You can download our questionnaire from this website, or we can email you a copy of the questionnaire to you. If you are somewhat rushed, then make the appointment and then compile the following information:
(a) A complete list of EVERYONE you owe. Include everyone you owe, including debts you intend to keep paying such as house, car, relatives, your dentist, etc.

(b) A complete list of ALL your assets. This means everything you own or have any type of financial interest in. Are you suing anyone? Does anyone owe you money? Do you own any type of invention rights or copyrights? Do you have a retirement fund? The definition of asset is quite comprehensive.

(c) Your past 6 months of paycheck stubs or proof of income. If you are self employed, prepare a statement of earnings and business expenses for the past six months, an example would be a profit and loss statement.

(d) A copy of your last three years income tax returns if you have them available.

(e) A budget of all your living and business expenses, otherwise known as a profit and loss statement or an accounting ledger for personal expenditures.

What is the cost for filing a bankruptcy case?

The typical attorney’s fee for a Chapter 7 Consumer Bankruptcy Case in the DFW are is around $2,000. The court costs and counseling fees run about $350.00. We accept some rather non-complex cases for less. We have payment plans for these fees. The Bankruptcy Judges have established $3000.00 as the base fee in Chapter 13 cases. The court cost in a Chapter 13 case is $281.00. Some attorneys, including John Davis, will accept a fairly simple Chapter 13 case for either no down payment or a small down payment and the court costs. The court will allow the fees to be paid out in the Chapter 13 plan of reorganization. In either Chapter , it is required that individuals obtain a pre-filing credit counseling certificate. The cost for this is usually about $25.00

Will a bankruptcy filing affect my job?

No, Section 525 of the United States Bankruptcy Code contains strong anti-discrimination language. The ban on discrimination extends to areas other than employment. It is rather comprehensive.

Will I lose any property?

Probably not. The Federal and/or State exemption statutes are very generous. For example, in Texas, (with a two year residency)you may exempt from the bankruptcy your home,regardless of the value, $60,000 (for a married couple) of certain personal assets and all values in retirement programs, insurance policies and annuities. There is another exemption scheme under Federal law that is available to you. It also has fairly liberal guidelines also.

Can I file separately from my spouse?

Yes, you may .Keep in mind however, that if a debt has been incurred by both parties, the non-filing spouse will still be responsible for the debt.

Do I have to include ALL my debts in a bankruptcy case?

Federal law requires that ALL debts and all assets be disclosed in a bankruptcy filing. However, you may keep those debts related to the assets that are essential, such as your home & vehicles. Sometimes, it is possible to keep a credit card or two, if you care to.
Do I have to go to Court?

Most people who file a bankruptcy case do NOT have to go to a formal court hearing. You will have at least one informal meeting with your appointed Trustee. If you file a Chapter 13 case, you will have to attend a Chapter 13 orientation class that lasts most of the day.

Does bankruptcy cover student loans?

Student loans are not discharged in bankruptcy unless extreme hardship conditions exist. Hardship is not defined in the bankruptcy code but we know that a catastrophic illness such as terminal cancer would qualify as a hardship. If you have unmanageable student loans, they might be consolidated and repaid in a Chapter 13 case

What about criminal fines and hot checks?

Restitution and criminal fines are not discharged in a bankruptcy case. Hot checks can probably be discharged as long as the creditor is pursuing civil action to collect them. However, criminal prosecution is not stopped by a bankruptcy filing.

How will a bankruptcy filing affect my tax refund?

If you owe the Internal Revenue Service any back taxes at the time you file bankruptcy, they will keep or offset the tax refund. Further issues regarding a tax refund will be discussed during the consultation. IMPORTANT: Chapter 13 trustees like to seize the portion of a tax refund over $2,000. If this issue affects you , bring it to our attention at your first interview.

What will Bankruptcy not do?

Bankruptcy cannot cure every financial problem. Nor is it the right step for every individual. In bankruptcy, it is usually not possible to:

A) Eliminate certain rights of “secured” creditors. A “secured” creditor has taken a mortgage or other lien on property as collateral for the loan. Common examples are car loans and home mortgages. You can force some secured creditors to take restructured payments over time in the Chapter 13 bankruptcy process and bankruptcy can eliminate your obligation to pay any additional money if your property is taken. Nevertheless, you generally cannot keep the collateral unless you continue to pay the debt either as modified or as originally contracted for. An important exception to this rule is the rule that you may avoid (or kill) the lien of a finance company who has taken your existing household items as collateral for a new loan.

B) Discharge types of debts singled out by the bankruptcy law for special treatment, such as child support, alimony, certain other debts related to divorce, student loans, court restitution orders, criminal fines, and some taxes.

C) Protect cosigners on your debts. When a relative or friend has co-signed a loan, and the consumer discharges the loan in bankruptcy, the cosigner may still have to repay all or part of the loan.

D) Discharge debts incurred after bankruptcy has been filed.

How often can I file bankruptcy?

You can file for Chapter 7 bankruptcy again after eight (8) years has passed from the date of your last filing. A new Chapter 13 bankruptcy can USUALLY be filed at any time unless it was dismissed by the judge with a restriction against refiling.

What Different Types of Bankruptcy Should I Consider?

There are four types of bankruptcy cases provided under the law:

A) Chapter 7 is known as “straight” bankruptcy or “liquidation.” It requires a debtor to give up property which exceeds certain limits called “exemptions”, so the property can be sold to pay creditors. Most people do not have any property that is not protected.

B) Chapter 11, known as “reorganization”, is used by businesses and a few individual debtors whose debts are very large

C) Chapter 12 is reserved for family farmers.

D) Chapter 13 is called “debt adjustment”. It requires a debtor to file a plan to pay debts (or parts of debts) from current income. Most people filing bankruptcy will want to file under either chapter 7 or chapter 13. Either type of case may be filed individually or by a married couple filing jointly.

Is Chapter 7 (Straight Bankruptcy) Bankruptcy Right for Me?

In a bankruptcy case under chapter 7, you file a petition asking the court to discharge your debts. The basic idea in a chapter 7 bankruptcy is to wipe out or kill (discharge) your debts in exchange for your giving up any NON-EXEMPT property.

In most cases, all of your property will be exempt. But property which is not exempt is sold, with the money distributed to creditors. If you want to keep property like a home or a car and are behind on the payments on a mortgage or car loan, a Chapter 7 case probably will not be the right choice for you. That is because Chapter 7 bankruptcy does not eliminate the right of mortgage holders or car loan creditors to take your property to cover your debt.

Is Chapter 7 (Straight Bankruptcy) Bankruptcy Right for Me?

In a bankruptcy case under chapter 7, you file a petition asking the court to discharge your debts. The basic idea in a chapter 7 bankruptcy is to wipe out or kill (discharge) your debts in exchange for your giving up any NON-EXEMPT property.

In most cases, all of your property will be exempt. But property which is not exempt is sold, with the money distributed to creditors. If you want to keep property like a home or a car and are behind on the payments on a mortgage or car loan, a Chapter 7 case probably will not be the right choice for you. That is because Chapter 7 bankruptcy does not eliminate the right of mortgage holders or car loan creditors to take your property to cover your debt.

Is Chapter 13 bankruptcy (Reorganization) Right for Me?

In a chapter 13 case you file a “plan” showing how you will pay off some of your past-due and current debts over three to five years. The most important thing about a chapter 13 case is that it will allow you to keep valuable property- especially your home and car-which might otherwise be lost, if you have the financial resources to make restructured payments. For instance, in a Chapter 13 it is possible to modify the rights of a car lender. You can revalue the car to its current actual value(IF THE FINANCIN WAS DONE OVER 910 DAYS AGO) and reduce the interest rate being paid on the debt.

You should consider filing a chapter 13 plan if you:

(1) own your home and are in danger of losing it because of money problems;

(2) are behind on debt payments, but can catch up if given some time;

(3) have valuable property which is not exempt, but you can afford to pay creditors from your income over time.

(4) need time to pay off Internal Revenue obligations. You can get 60 months to pay them with no interest. You will need to have enough income in chapter 13 to pay for your necessities and to keep up with the required payments as they come due.

What Property Can I Keep?

In a chapter 7 case, you can keep all property which the law says is “exempt” from the claims of creditors. If a case is filed in Texas, you may choose the Texas exemptions or the exemption schedule which is set out in the bankruptcy. See the “exemptions” page. You have had to have been a resident of Texas for two years to use the Texas exemptions.

What Will Happen to My Home and Car If I File Bankruptcy?

In most cases you will not lose your home or car during your bankruptcy case as long as your equity in the property is fully exempt, (see Exemptions Page )

Can I Own Anything After Bankruptcy?

Yes. Many people believe they cannot own anything for a period of time after filing for bankruptcy. This is not true. You can keep your exempt property and anything you obtain after the bankruptcy is filed. However, if you receive an inheritance or some other type of substantial windfall within 180 days after you file bankruptcy, that money or property may have to be paid to your creditors if the property or money is not exempt.

Will Bankruptcy Wipe Out All My Debts?

Yes, with some exceptions. Bankruptcy will not discharge some debts:

Examples are as follows;

(1) Money owed for child support or alimony, fines, and some taxes;

(2) Debts not listed on your bankruptcy petition; unless subject to one of the exceptions

(3) Loans you got by knowingly giving false information to a creditor, who reasonably relied on it in making you the loan;

(4) Debts resulting from “willful and malicious” harm;

(5) Government guaranteed student loans;
(6) Some tax debts;

(7) Fines and restitution

Will I Have to Go to Court?

Probably not. In most bankruptcy cases, you only have to go to a proceeding called the “meeting of creditors”. This is sort of a misnomer because creditors rarely attend. You and your legal representative will meet with the bankruptcy trustee and any creditor who chooses to come. Most of the time, this meeting will be a short and simple procedure where you are asked a few questions about your bankruptcy forms and your financial situation. Occasionally, if complications arise, or if you choose to dispute a debt, you may have to appear before a judge at a hearing. If you need to go to court, you will receive notice of the court date and time from the court and/or from your attorney.

Will Bankruptcy Affect My Credit?

There is no clear answer to this question. Unfortunately, if you are behind on your bills, your credit may already be bad. Bankruptcy will probably not make things any worse. The fact that you’ve filed a bankruptcy can appear on your credit record for ten years. But since bankruptcy wipes out your old debts, you are likely to be in a better position to pay your current bills, and you may be able to get new credit.

Can I Get a Credit Card After Bankruptcy?

Yes, there are several options available. While technically not a credit card you could use a bank or debit card to perform activities for which you normally would use a credit card. You also may be able to keep the credit card you already have if the creditor grants approval. If these options do not work you can get secured credit card which is backed by your own bank account.

Are Utility Services Affected?

Public utilities, such as the electric company, cannot refuse or cut off service because you have filed for bankruptcy. However, the utility can require a deposit for future service and you do have to pay bills which arise after bankruptcy is filed

Can Bankruptcy Help Get My Driver's License Back?

If you lost your license solely because you couldn’t pay court-ordered damages caused in an accident, bankruptcy will allow you to get your license back.

What About Co-signers?

If someone has co-signed a loan with you and you file for bankruptcy, the co-signer may have to pay your debt.

Can filing bankruptcy stop bill collectors from calling?

Yes. The automatic stay prevents bill collectors from taking any action to collect debts.

How long after filing will the creditors stop calling?

Yes. Once a creditor or bill collector becomes aware of a filing for bankruptcy protection, it must immediately stop all collection efforts. After you file the bankruptcy petition, the court mails a notice to all the creditors listed in your bankruptcy schedules. This usually takes a few days. Creditors will also stop calling if you inform them that you filed the bankruptcy petition, and supply them with your case number. In some cases, you or your attorney should contact the creditor immediately upon filing the bankruptcy petition, especially if a law suit is pending. If a creditor continues to use collection tactics once informed of the bankruptcy they may be liable for court sanctions and attorney fees for this conduct.

Exactly what happens when I file bankruptcy?

First of all, you turn all your documentation into our office. We will review it with you. Next it is prepared in the computer. We will call you to come in to review the finished documents and sign them. It should be noted here that these papers are signed under penalty of perjury. You can go to prison for filing false or incomplete information. After they are signed, the case is filed. All parties will get a notice within a few days. In about a month to six weeks you will attend a hearing with the trustee (case administrator) in your case with your legal representative. If you are doing a Chapter 7 case , and if all goes well, you will receive a final discharge within sixty to ninety days. If you doing a Chapter 13 case, you should get a preliminary approval of your plan of reorganization. Your obligation at that point will be to make the payments required under the submitted plan until the plan is completed.

Where do I file if I haven't lived in the same state or district for the last six months?

The law states that a case should be filed where the debtor has lived “for the one hundred and eighty days immediately preceding such commencement, or for a longer portion of such one-hundred-and-eighty-day period.” This means that the case should be filed in the bankruptcy district in which the debtor has lived for the greatest portion of the last six months. Further issues regarding “venue” will be discussed during your FREE consultation. Your residency may impact your exemptions.

If I am going through a divorce. How will my ex-spouse filing bankruptcy affect our divorce settlement?

A) Alimony, maintenance, and/or support are not discharged in bankruptcy.
B) Debts incurred through divorce decrees that are not alimony or support may not be discharged unless;

a. The debtor does not have the ability to pay such debt from basic income or property of the debtor not reasonably necessary to be expended for the maintenance or support of the debtor or a dependent of the debtor and, if the debtor is engaged in a business, for the payment of expenditures necessary for the continuation, preservation, and operation of such business; or discharging such debt would result in a benefit to the debtor that outweighs the detrimental consequences to a spouse, former spouse, or child of the debtor.