Frequently Asked Questions
The following should not be construed as legal advice. Instead, it should serve as a starting point for better understanding the bankruptcy process. Feel free to contact us at any time for more specific advice.
Will bankruptcy destroy my credit?
While no two bankruptcy cases are the same, in general, individuals considering bankruptcy (especially those who have already been sued) probably already have damaged credit. The missed and late payments, the accumulating debt, and the lawsuits that lead an individual to consider bankruptcy have already done the damage.
While bankruptcy will stay on your record for up to 10 years, this does not mean creditors will deny you credit for that entire time. In fact, you will likely be offered credit quite soon after filing bankruptcy. Bankruptcy and credit scores are only a couple factors that determine availability to credit. A clear credit record (with no outstanding balances or lawsuits) and current income play even larger roles in obtaining credit.
I will discuss how to rebuild your credit score, how to avoid financial pitfalls, and I'll even be able to run a bankruptcy-specific credit report which includes a future predicted credit score. Bankruptcy does not destroy your credit. As hard as it may seem to believe, it is the first step in FIXING your credit by eliminating old liens, lawsuits, and the constant negative reporting to credit agency that unpaid credit cards result in.
Bankruptcy wipes the slate clean and gives you a fair chance to rebuilding your credit.
will I lose my property?
In nearly every case, "no". Federal and state bankruptcy law provide numerous "exemptions" that allow you to normally protect all of your personal property, your home and car, your retirement and bank accounts, and all of the rest of your property, big and small.
As an experienced bankruptcy attorney, I will help you protect your property from creditors who have (or may in the future) obtained a judgment against you. If bankruptcy can't protect your property, I won't file it. I will take the time to review your assets and help you protect them.
HOW LONG DOES IT TAKE TO FILE bankruptcy?
The answer depends on a lot of factors. A simple Chapter 7 bankruptcy could take days to accumulate the required information, another month to wait for the Meeting of Creditors, and 60 more days for the official discharge. So, all told from beginning to end, three to four months. More complicated Chapter 7's may take several months to plan. It all depends on the circumstances. But, once you have retained a bankruptcy attorney, you can begin directing harassing creditors to the attorney, and the attorney can help you plan to protect assets until the actual bankruptcy is filed.
A Chapter 13 bankruptcy reorganization takes between 36-60 months. The exact length is determined by a number of factors, including household income and the need to catch-up on mortgage, tax, car payment, and other arrears. It could take several more months for all of the final accounting and discharge to be completed.
Contact us to set up a free consultation and get a better idea of how long the process will take for you.
Will I have to appear in court, in front of a judge?
No. While certain bankruptcy matters are argued by your attorney in front of a judge, individuals filing bankruptcy are not required to make any court appearances (except possibly in extremely rare cases where the bankruptcy filer has committed fraud or lied under oath).
In all bankruptcy cases, you will be required to appear at a "Meeting of Creditors", sometimes also referred to as a "Section 341(a) Meeting of Creditors" (which refers to the section under the Bankruptcy Code authorizing such proceedings). While you will testify as to your bankruptcy petition in front of a trustee, and will be sworn in to do so, this Meeting of Creditors is not a "court" appearance.
The Meeting of Creditors is conducted by the trustee in an office, no judge or court officer is present. The trustee asks a relatively standard list of questions relating to your bankruptcy petition, your finances, and your property. While you must answer the questions, as your attorney I will be at your side, ready to assist you. I will prepare you beforehand by reviewing the most commonly asked questions, almost all of which will have "yes or no" answers. A brief sample of questions asked includes, "What is the value of your home?", "Have you filed bankruptcy before?", and "Have you paid back any money owed to family members in the last year?"
Despite the name of the proceeding, creditors rarely appear. While they are permitted to appear and ask questions relevant to your case, they normally have very little incentive to do so. The bankruptcy process largely determines what, if anything, they will receive. Paying an attorney to appear on their behalf is almost never worthwhile.
The Meeting of Creditors should be taken seriously, but it is not an event that should cause stress or anxiety. The meetings normally last between 5 and 15 minutes (sometimes longer in more complex or business cases). As long as you provided honest information while compiling your bankruptcy petition, no problems should arise.
WHAT QUESTIONS ARE commonly ASKED AT THE Bankruptcy MEEting of creditors?
As mentioned above, the bankruptcy Meeting of Creditors is an opportunity for your creditors (or more commonly, the trustee standing in their place) to review your petition and ask questions related to your petition and finances. The creditors rarely if ever show up. The meeting is conducted by a bankruptcy trustee, each of whom asks a set of similar questions in Pittsburgh and Western Pennsylvania. So, what are the most commonly asked questions?
- Have you read and reviewed the information sheet provided by the United States Trustee's office?
- How did you value your home?
- Did you read and review your petition? Are you familiar with its contents? Did you sign it? Are there any errors or omissions to report?
- Have you ever filed a bankruptcy before? If so, when?
- Have you filed all your taxes that are due?
- Do you have any domestic support obligations?
- Have you completed a credit counseling course?
- Have you lived in Pennsylvania for each of the last two years?
- Do you expect to receive any property? Do you have any claims against anyone?
- Have you paid back any friends or family members?
- What is your reason for filing?
The questions have mostly "yes or no" answers, and are quite straightforward. The questions will vary depending on the circumstances. If you own a business, the trustee will ask questions related to the assets. If you petition includes an uncommon issue, the trustee may seek elaboration. In any case, you will be entirely prepared by my office for the bankruptcy Meeting of Creditors.
I have been served with a credit card lawsuit. what should i do?
If a credit card company or other creditor has served you with a lawsuit, you have a limited amount of time to act before it becomes a judgment that can result in the loss of property. (NOTE: if you have been served with a lawsuit related to a foreclosure, please see our page How Does Foreclosure Work?)
If a lawsuit has been filed against you in Allegheny County, you typically have 20 days to file a formal responses. This means actually filing a formal answer to the complaint, not just acknowledging the lawsuit with a letter to the Court or the credit card attorney. When those 20 days have passed, the Court typically sends a second notice giving you 10 more days to file a formal answer. If you do not formally respond to the lawsuit, it will become a judgment.
Once a lawsuit becomes a judgment, it will be possible for the creditor to put a lien on your home, your car, your bank account, or even property you haven't acquired! The creditor will have twenty (20) years to execute (or act) on this judgment. It's important to contact an experienced bankruptcy attorney as soon as possible to deal with these judgments. A bankruptcy filing can eliminate these liens and stop the creditor from attempting to seize your property. The sooner you act, the sooner these lawsuits can be dealt with and avoided. Contact us to learn more about these lawsuits and start the process of eliminating them before they result in the loss of property or the destruction of your credit.
I Had a car repossessed (or a home foreclosed on), can the creditor sue me for the amount i still owe?
Yes. These creditors can get a judgment and collect on these "deficiency judgments" in the same manner as credit card creditors described above.
In short, you will be legally responsible for any amount of your debt the creditor is unable to recover after seizing and selling your property. The amounts owed on repossessed cars and foreclosed homes can be quite large, as creditors often sell these properties for large losses at auction. Once again, these "deficiency judgments" can be collected on for 20 years. Bankruptcy is often times the only solution for dealing with these large, long-lasting judgments.
The bankruptcy "automatic stay" will stop creditors from continuing these actions, and the underlying debt can often be discharged.
what are the credit counseling and financial management requirements, and how are they completed?
All individuals and couples filing either a Chapter 7 or Chapter 13 bankruptcy are required by Federal law to complete pre-bankruptcy credit counseling. This counseling can be completed online or over the phone in about one hour, and it must be completed through an U.S. Trustee-approved organization. The online courses are the cheapest, around $20 total for individuals or couples. If you don't have internet access, the courses can be completed over the phone, but the cost is higher (around $50). As your bankruptcy attorney, I will help you find and sign-up for these courses. Once again, a bankruptcy absolutely cannot be filed without this course certificate. The certificate is good for 180 days before filing bankruptcy.
All individuals completing a bankruptcy must also complete a post-bankruptcy financial management course. Once again, this is required by Federal law, and you cannot receive a bankruptcy discharge without taking a U.S. Trustee-approved course. Individuals and couples can complete this course most easily (and cheaply) online, with costs on the lower end usually $10 per person. If you do not have internet access, the course can be taken over the phone, but the cost will be higher (around $25). You have 60 days from the first date of your meeting of creditors to complete this course in a Chapter 7 bankruptcy, and it must be complete before your final payment in a Chapter 13 (don't worry, your bankruptcy attorney will help you find and sign-up for the courses!)
For online courses, see 123debtor.com, and for those without access to the internet, InCharge Bankruptcy Counseling is available at 1-866-729-0049 and at personalfinancialeducation.com.
My office is also capable of ordering these services for you (often at the cheapest rates when bundled with a credit report), and though you will need to complete the courses on your own, I will gladly help you prepare all the information needed.
In all cases, make sure you attorney has received a certificate of completion so that it can be filed with the Bankruptcy Court.