Learn about:

• What Is Bankruptcy?

• Does Bankruptcy Eliminate All of My Debts?

• Who Will Know if I File for Bankruptcy?

• Will it Affect My Employment?

• How Long Does a Bankruptcy Stay on My Credit Report?

• Will Bankruptcy Stop Creditors from Calling Me?

• How Will Bankruptcy Affect My Business?

• Will I Lose My Property?

• Do I Have To List All My Credit Cards?

• What if an Account I Owe Has Already Been “Charged Off” by the Creditor?

• What If I Don’t Do Anything?

• Do I Need an Attorney?

What Is Bankruptcy?

Bankruptcy is legal option that allows you to eliminate some or all of your debts or have more time to pay them back, and is governed by U.S. federal law. It is administered by the court system and grants you protection from creditors. It recognizes the fact that when you do not have the ability to pay back your debts, it is better for you, the lenders, and the economy if you are given a financial fresh start.

For consumers there are usually two approaches that apply, named for the section of law that created them: Chapter 7 Bankruptcy where most debts are eliminated, and Chapter 13 Bankruptcy that sets up a favorable repayment plan over 36 to 60 months. See our Bankruptcy Basics page for a discussion of the differences.

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Does Bankruptcy Eliminate All of My Debts?

There are certain debts that will not be discharged through bankruptcy, and you will still be responsible for paying them back. These include alimony, back child support, and most tax debts. During the bankruptcy process, creditors can also challenge whether your debt to them should be eliminated, but this is rare and they need to convince the court why the debt should continue past bankruptcy. Student loans can usually not be discharged unless we can prove that repaying the loan would be too much of a burden on you, but the standard set by the court is difficult to meet. We can discuss all of these factors during your free consultation so you know exactly what can and cannot be eliminated.

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Who Will Know I Filed for Bankruptcy?

Usually the only people who know that you have filed for bankruptcy protection are your creditors, your lawyer, and anyone you choose to inform. However, it is a matter of public record, and technically the proceedings are open to the public, but are usually held in a conference room rather than the court building, and they are so routine and boring we’ve never seen anyone there except those who needed to be. In most cases, you will only need to make one appearance to confirm you identity and answer a few basic questions.

Some small towns still publish “Public Records” in the classifieds section, and you can look in the local paper to see if that’s true where you live. As a public record, it will appear on your credit report, and the information is accessible to anyone who has a PACER account with the U.S. courts, but because of the cost only creditors and attorneys use this, and possibly private detectives.

You will receive some mail with a return address that may indicate it is from the U.S. Bankruptcy Court or Bankruptcy Trustee. The exact format is determined by the court and we have no control over that as your attorney.

Overall, remember the important reasons for filing bankruptcy: eliminating your debts, getting a financial fresh start, and removing the burdens that are having such a negative impact on your life. Those far outweigh the significance of someone finding out you filed for bankruptcy.

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Will it Affect My Employment?

Federal law makes it unlawful to terminate an employee or to discriminate in hiring because a person:

• Has sought protection under the Bankruptcy Act

• Has had financial problems before seeking protection under the Act

• Has unpaid debts that were discharged under the Act

However, discrimination takes many forms. If a current or prospective employer runs a credit report on you they will see evidence of your bankruptcy. If they somehow believe that bankruptcy carries a burden that will affect your work, they may (illegally) find another excuse to fire you, but that would be difficult to prove. They may also decide to hire another more qualified person for the job, which would not be illegal.

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How Long Does a Bankruptcy Stay on My Credit Report?

Credit reporting agencies determine how far back into history they look, so it may be anywhere from 7 to 10 years. However this will not necessarily affect your credit rating for that long, which can begin to improve shortly after you file for bankruptcy. See our section on improving credit score for more information on this.

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Will Bankruptcy Stop Creditors from Calling Me?

YES. Once we file your bankruptcy case (often the same day we meet with you), creditors are prohibited from pursuing any collection activities against you, including telephone calls, filing or continuing law suits, sending collection letters, or garnishing your wages. From the moment you engage us as your bankruptcy attorney, you can refer any calls directly to our office and we will put a stop to it for you.

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How Will Bankruptcy Affect My Business?

Filing for personal bankruptcy should not affect your business if it is incorporated. Furthermore, if you file for Chapter 13 Bankruptcy, none of your assets are affected, you are simply put on a payment plan to pay off your debts over an extended period of time.

If you own a business, are a sole proprietor, or own stock in a family or closely held business, it is vital that you speak with our bankruptcy attorney to understand your options.

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Will I Lose My Property?

Most clients are able to keep all of their property and assets, including their business, home, furniture, autos, cash, retirement accounts, and much more. There are certain limitations, so it is vital that you speak with our bankruptcy attorney to understand your options.

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Do I Have To List All My Credit Cards?

You only need to list the credit cards on which you have a balance. You must list all of your debts on the bankruptcy filing, even debts that are non-dischargeable or secured. Failure to do so constitutes perjury which could result in your discharge being denied.

However, not listing a credit card on your bankruptcy schedules does not mean you will be able to continue using the card. Credit card issuers use a national data base that notifies them when someone has filed bankruptcy, and they routinely cancel cards of those who have filed bankruptcy, whether or not you have an outstanding balance.

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What if an Account I Owe Has Already Been “Charged Off” by the Creditor?

If you have been told by a creditor that they have written off the debt that you owe them (your account has been “charged off”) it does NOT mean that you no longer owe the debt. Charge offs are an accounting mechanism to help a creditor accurately reflect how much debt is on their books that they EXPECT to collect, not how much is legally owed to them.

So be sure to list ALL of your debts when filing for bankruptcy. If a creditor informs you that you cannot use bankruptcy to discharge your debt to them because it has been charged off, do not believe them. You still owe the debt, and you should definitely list it when filing, otherwise you will still owe it in the future.

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What If I Don’t Do Anything?

There are some instances when filing bankruptcy is not the best option, and we can help you determine that during your free consultation. For example if all of your income is from disability payments or social security, and you have no assets, you may be “judgment proof” – suing you in court would not benefit the creditor, because you have nothing they can take.

However, doing nothing is rarely a good idea – you should at least seek to understand what can happen to you and what your options are for responding to creditor demands. If anyone is threatening you with collection actions or filing a lawsuit against you, ignoring them will not eliminate the debt and will only prolong the inevitable. Eventually they will try to obtain a judgment against you and may be able to proceed against your assets or garnish your wages. And you never want to ignore debts owed to the IRS – they can take actions above and beyond what regular creditors are allowed to take.

We can help you consider your income and assets versus your expenses and debts. This is the best way to assess the situation and then discuss your options. We’re here to help you take the worry out of your financial situation, by replacing it with knowledge about your legal options. There likely much more that can be done to resolve your situation than you realize, so contact our bankruptcy attorney today for a free consultation and learn about how to get a financial fresh start.

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Do I Need an Attorney?

It’s true, you could fill out all of the forms and file your own bankruptcy papers. You’ve probably seen people on the news defend themselves in court against serious charges too, but it’s rarely advisable.

Unfortunately, with the passage of the “Bankruptcy Abuse Prevention and Consumer Protection Act of 2005”, the days of do-it-yourself bankruptcy are effectively over. Thanks to the powerful banking and credit card lobbyists, Congress has made the laws more complex, severely limited the options for consumers in trouble, and added stringent requirements that you must meet in order to file for bankruptcy.

However, it costs you nothing to meet with us to learn about your options and seek advice on what is best for your situation. One of our goals at the initial meeting is to try and alleviate fear and anxiety, and you are under no obligation to use our services after that meeting. There are many instances when we advise our clients against filing for bankruptcy, and we can point out viable bankruptcy alternatives that may be best for your situation.

We invite you to contact our bankruptcy attorney today and explore how you can get a financial fresh start!

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