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Answers to Frequently Asked Questions

Q: What's bankruptcy?
A: Bankruptcy allows individuals or businesses (debtors) who owe others (creditors) more money than they're able to pay to either work out a plan to repay the money over time or completely eliminate (discharge) most of the bills.

Q: What's the difference between secured and unsecured debt?
A: Secured debt is a claim that's secured by some type of property, either by an agreement or involuntarily with a court judgment or taxes. Creditors can generally claim the property (and take it to pay off the debt) in the event of bankruptcy. Unsecured debt is not tied to any type of property, and the creditor can't claim it if you file for bankruptcy. A mortgage is a secured debt on you property. Keep in mind that debts that you think are secured sometimes aren't due to a creditor failing to properly secure a lien. It is important to speak to an experienced bankruptcy attorney who can avoid those liens and allow you to keep those properties.

Q: What difference does an unsecured possession versus a secured possession have in my situation.
A: Generally, you may keep a secured possession like your home or car but you have to pay the creditor back part or all of what you owe them. You generally don't pay anything back to an unsecured creditor in a Chapter 7 Bankruptcy.

Q: Which Bankruptcy type or chapter should I file?
A: Consumers typically file Chapter 7 Bankruptcy if they qualify. This is the easiest, fastest and cheapest way to becoming debt free. Under some situations, either where your income is too high to qualify for a Chapter 7 Bankruptcy or where you may have a repossession or foreclosure, Chapter 13 Bankruptcy is a better option. It is important to speak to an experienced Oklahoma Bankruptcy Attorney to determine which chapter is best for you.

Q: Can I change from one chapter of bankruptcy to another?
A: Generally, you can convert a case one time to any other chapter you're eligible for.

Q: Who can file bankruptcy?
A: With few exceptions, any person or business owing money to a creditor can file a bankruptcy petition.

Q: How often can you file for bankruptcy?
A: Filing bankruptcy can adversely affect your ability to obtain future credit, rent housing and even negatively impact a job application. Any decision to file must be carefully considered. Chapter 7: Can be filed every 8 years from a previous chapter 7 filing or 6 years from a prior chapter 13 filing. Chapter 13: Can be filed 4 years from a prior Chapter 7 filing or 2 years from a prior Chapter 13 filing.

Q: What do I need to begin the bankruptcy process?
A: I advise that you bring to your initial consultation the last 3 months of all bank statements, the last 6 months of paystubs (you may be able to have your employer print out a report if you don't have those), the past year's tax return and titles to your vehicles.

Q: Do you have to have a certain amount of debt to file?
A: No. However, some situations may not warrant filing for bankruptcy. If your financial situation is temporary, you may consider making arrangements with individual creditors for a change in payment amounts or a reduction in the total amount due. If you have little property or money, filing bankruptcy may not be necessary, as the creditor may not be able to collect the debt. I have other debt relief solutions if it is determined that your situation is not serious enough to need to file bankruptcy at this time.

Q: What's a joint petition?
A: A joint petition is when an individual and a spouse file a single petition. Unmarried partners must each file a separate case.

Q: What happens if one spouse files for bankruptcy and not the other?
A: If one spouse files and the other doesn't, the one who doesn't file could be responsible for the debts. It doesn't usually cost much more to file together so make sure that the other spouse won't be on the hook for any of the debts later on.

Q: Does my divorce decree protect me from creditors if my ex files for bankruptcy?
A: No. If you're a co-signor with your ex-spouse on a debt acquired while married, the creditor can require the entire payment of that debt from you even though the divorce decree assigns the full debt to your ex-spouse. Your divorce decree may address any recourse you may have against your ex-spouse should he default on the loan obligations.

Q: Can a loan co signor be responsible for a debt if the other person declares bankruptcy?
A: Yes. The lender can require the co-signor to make payments on a loan once the principal has declared bankruptcy on the credit. This makes it extremely important when considering co-signing a loan: Be ready, and able, to pay the loan in the event that the principal signor defaults. There are maneuvers that can be done through bankruptcy to keep the co-signer from having collection efforts against them.

Q: Can all types of debt be discharged?
A: No. The debts that can't be discharged vary slightly between the different chapters of bankruptcy. Generally, the following cannot be discharged:

Debts for taxes owed to local, state or federal agencies. There are some exceptions to this rule so make sure you bring up any tax debts owed during your consultation.

Debts for money, property, services, or an extension, renewal, or refinancing of credit, which was obtained fraudulently

Debts that weren't in the initial list of debts or that the debtor waived being cancelled

Debts owed to a spouse, former spouse, or child, for alimony, maintenance, or support of a spouse or child, with a separation agreement, divorce decree or other order of a court of record

Debts owed for injury to another person or property owned by another (as in a court judgment)

Debts for government-sponsored educational loans, unless it can be shown that repayment will cause an undue hardship

Debts for death or personal injury caused by the debtor's drunk driving or from driving while under the influence of drugs or other substances (as in a court judgment)

Debts incurred after a bankruptcy was filed

Any type of legal judgment

This list is not exhaustive and may have exceptions.

Q: What can I keep, if anything, if I file bankruptcy?
A: Exemptions allow an individual to "exempt", or keep, certain kinds of property. State law defines which assets are considered "exempt," but typically includes:

Wedding Rings

Vehicles up to $7500.00 worth of equity

Your Home

Your qualified retirement savings

"Tools of the trade" or tools and equipment necessary to allow the individual to continue working

Oklahoma has very liberal exemptions so take some comfort in that.

Q: Do I have to file bankruptcy on all the accounts I owe, or can I keep some?
A: You must include all the debts you owe in your petition and schedules. You may opt to keep some debts by "reaffirming" the specific debt. Also, if you have loans that have been made by friends or family members, nothing prevents you from voluntarily paying those debts back after the bankruptcy is over.

Q: Will I lose my retirement accounts or payments from social security?
A: Generally, no. Retirement accounts that are ERISA-qualified aren't considered property of an estate and aren't taken into consideration as assets. Social Security benefits are protected from assignment, or garnishment for debts in bankruptcy. Once paid, the benefits continue to be protected only as long as they can be identified as Social Security benefits. For this reason, if you have a lawsuit from a creditor, it is very important that you have a bank account where only the social security payments go into. Do not mix or mingle those funds with any other funds or you could risk losing those funds if a creditor garnishes your bank account.

Q: Will I lose my home if I file for bankruptcy?
A: Generally not if you are current on your mortgage. Even if you are behind and even in foreclosure, Bankruptcy may be a tool to allow you to keep your home and get caught up on the delinquency.

Q: How long does a bankruptcy stay on my record?
A: Bankruptcies remain on credit reports anywhere from 7 up to 10 years. However, just because a bankruptcy is on your record, this does not keep you from rebuilding your credit in relatively short order if you follow the steps that I lay out.

Q: Can I do anything to remove a bankruptcy from my credit report?
A: No. Although at your option, you can file an explanation with the credit reporting agencies briefly describing the events resulting in your bankruptcy. If an account is reported inaccurately, you can request the record be updated to reflect the actual situation.

Q: Can a "credit repair" company really save me from bankruptcy?
A: Most consumers can be just as effective as a credit repair company in dealing with credit reporting agencies and improving their credit ratings, it simply takes time and patience. While there are non-profit companies in each state that offer credit guidance for a small fee, credit repair companies offer very little relative to the fees they charge. I offer programs to help you repair your credit after bankruptcy.

Q: Can a creditor continue to contact me after I've filed for bankruptcy?
A: Generally no. An automatic stay is immediately put in place which prevents most creditors from continuing collection efforts. If you have filed bankruptcy and had the case dismissed in the recent past there may not be an automatic stay put in place though. Also, some debts like alimony and child support are not affected by the automatic stay and can continue collection efforts.

Q: Who lets my creditors know I've filed for bankruptcy?
A: The bankruptcy court notifies, by mail, all creditors advising them of the pertinent events of your case.

Q: What and who is a trustee?
A: The trustee is usually a lawyer appointed to administer your case. You will have a meeting approximately a month after you file which he will preside over. He will want to make sure that all of your documents that you filed are accurate and may ask you some clarifying questions at that meeting as well. Although, in reality, there are seldom any assets available in a Chapter 7 case, their job is to get, sell and distribute the proceeds from any assets that are not exempt. In a Chapter 13 case, the trustee will be the one who you mail your plan payment to each month and he/she will distribute those funds to your creditors.

Q: What is a plan?
A: A plan is a sort of budget that your lawyer will file on your behalf in a Chapter 13 case. It uses the income that you have available to pay your unsecured claims (if any), your secured claims like your auto payment, your attorney's fees, etc. There is no plan in a Chapter 7 case as you won't be paying anything back (except for your secured creditors).

Q: Can creditors object to a bankruptcy filing or plan?
A: Yes. Bankruptcy filings allow creditors to object to specific debts in the plan or the repayment or cancellation in its entirety.

Chapter 7: Creditors generally have 60 days after the first creditors meeting to object to the discharge of a specific debt. If no objections are filed, the court issues the discharge order, the trustee collects and sells the assets and then distributes the proceeds to the creditors under a predetermined schedule. If there are objections, the bankruptcy proceedings, less the objected debt(s), continues. A trial may be necessary to resolve the objectionable issues.

Chapter 13: Creditors can object to the plan for repayment and the court may take this into consideration. If no objections are filed by creditors or the trustee, the plan may be confirmed as filed.

Q: What happens at a creditors', or 341, meeting?
A: The debtor must attend the creditors' meeting conducted by the trustee appointed to their case. The debtor must answer questions concerning the accuracy and completeness of the documents filed, determine your residency, ask any other questions that may evolve after the trustee looks over your case, etc.

Q: What if I've forgotten to include a debt on my schedule? Can I add it later?
A: After filing the petition, if you discover that an entry is inaccurate or missing, you may typically file an amendment to correct it. Remember, you're submitting the petition under the penalty of perjury, so take care with the initial filing. Also, any debt that isn't on the list can't be discharged and you'll be responsible for it. You may have to pay a fee to add creditors after the initial filing.

Q: When do I have to stop using my credit cards if I'm planning on filing for bankruptcy?
A: As soon as you anticipate filing bankruptcy, stop using your credit cards. Bankruptcy law allows the review of questionable purchases for potential fraud. If purchases are made 40 days prior to filing or cash advances taken within 20 days of filing, the debt may possibly be excluded from the bankruptcy and it can be dismissed.

Q: What's a reaffirmation agreement?
A: When you "reaffirm" to pay off a debt, you're legally obligated to pay all or a portion of an otherwise cancellable debt. This is voluntary and not required by bankruptcy codes. You may voluntarily repay any debt instead of signing a reaffirmation agreement, but there may be valid legal reasons for wanting to reaffirm a specific debt, such as a vehicle loan or student loan.

Q: Can a bankruptcy be reopened?
A: Yes. Typically, a bankruptcy case is reopened by the trustee when questions arise concerning what was included or possibly omitted, or any other irregularities that surface.

Q: How's an inheritance treated in a bankruptcy case?
A: How an inheritance is treated in bankruptcy depends on when you become entitled to receive it and what type of bankruptcy relief you're seeking.

If you've filed for Chapter 7 bankruptcy, and you become entitled to an inheritance within 180 days of your filing date, the inheritance will be a part of your bankruptcy estate, and can be used to pay your debts. The important date is when your right to the inheritance is fixed, typically on the date of a person's death. You might not receive property or money from someone's estate for many months.

If you've filed a Chapter 13 case, your inheritance can be used in determining how much you have available to pay creditors under your repayment plan, and the 180-day limit doesn't apply. In either type of bankruptcy, you must inform the bankruptcy trustee about the inheritance. If you're thinking about filing for bankruptcy, ask a bankruptcy lawyer how an expected inheritance might factor into your plans.




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