Treatment of debts listed on Bankruptcy and filing the bankruptcy

1. Do I need to list all of my debts?

Yes. The bankruptcy laws require that when you file bankruptcy all debts you owe be listed on your bankruptcy and when you sign your bankruptcy, one of the things you sign includes an oath that you listed all of your debts. This includes even dischargeable debts like taxes, child support and student loans and this even includes debts you intend to keep paying like your house and car.

2. What about debts that I co-signed for a friend or relative?

Yes, these should be listed too. If your friend/relative continues to pay the debt, they should have no problems. Not only should this debt be listed but the friend/relative should be listed too.

3. What if one of the debts on my bankruptcy was co-signed by a friend or relative?

Yes, this should be listed too. But keep in mind that just because you filed bankruptcy this does not get your friend off the hook. Even though it must be listed you can choose to pay it to protect the co-signer. If you choose not to pay it, the creditor can still collect the debt from the friend/relative. Your friend/relative should be listed too.

4. What about utilities?

If you are behind with the phone, gas, electric, you should list this debt and it can be discharged. Listing the utility will prevent shut off of your service or if already shut off you can get service re-connected. The utility company can require a deposit to insure payment for future services. This is usually 1˝ to 2 times your average monthly bill.

5. What about rent to my landlord?

If you intend to break a lease or if you are seriously past due with your landlord, it should be listed on your bankruptcy. You should keep in mind that if you intend to stay in the apartment/house you will have to pay everything owed to the landlord. If you do not intend to stay we can discharge the past due rent but you will have to get out of the apartment/house and you may be required to pay the landlord for the time you are in the apartment/house from the day we file your bankruptcy to the day you actually leave the apartment/house.

6. I have a lot of traffic tickets and fines, will these be discharged in my bankruptcy?

No. Again they should be listed but they will not be discharged.

7. Who will find out about my bankruptcy and is it published in the paper?

The only place I am aware that bankruptcy filings are published in the Chicago area is in the Chicago Daily Law Bulletin a paper generally subscribed to by lawyers. It is not published in any generally circulated paper that I am familiar with. The exception may be for cases filed in Rockford where as I understand it, filings are published in the Rockford Register.

Things that happen after filing bankruptcy during the bankruptcy

8. What debts do I continue to pay after filing bankruptcy?

You should continue to pay for your house and car presuming you want to keep these things. So for your house you should continue to pay all mortgages or home equity loans and association dues and real estate taxes and insurance. If you do not intend to keep your house you do not have to pay the mortgages and home equity loans and real estate taxes but you should continue to pay the insurance and association dues until such time as you leave the house. Also continue to pay your car payments for the cars you intend to keep. If you do not intend to keep the car then you do not have to make any payments, but once again, in either case, maintain your insurance until the car is returned to the lender.

9. One of the debts listed on my bankruptcy is my Doctor/Dentist/hospital. Can they refuse to see me after the bankruptcy?

A public hospital is not supposed to refuse service. A private hospital theoretically can but this is not always the case. A doctor or dentist can refuse to see you but in my experience some will not hold it against you and some will. There is no way of knowing for sure. If it is a doctor or dentist you wish to continue to see, I usually advise that you call them before we file or soon after we file and let them know that they will be receiving a notice from the bankruptcy court and that you were required to list all debts. If the Doctor says he will not see you unless you pay what you owe then you may reply that you will pay him and I advise that you let him know what type of payments you will make. You of course are not required to pay the Doctor it is simply your choice based on whether or not you wish to still see this doctor.

10. What if I forgot to list a debt on my bankruptcy, can I add it later?

Yes. Until your case is over which is approximately 3 ˝ months after we file your case, we can prepare and file an amendment to your case to add debts you may have originally forgotten. Both the Court and I have a fee for amending your case. Once your case is over we can’t usually re-open your case to do such an amendment.

11. I have a checking and/or savings account at a bank that I also owe money to, can they take money out of my account?

Yes they can. I strongly advise in this situation that you close your account and open an account somewhere else at a bank that is not also a creditor.

12. Will any of my accounts be frozen?

No. Other than the situation described in the last question, your life goes on as normal after the bankruptcy is filed. Theoretically the trustee appointed in your case could freeze your account but that is almost unheard of. It is nothing to worry about.

13 What if I change my mind about filing bankruptcy?

You should be pretty sure about filing bankruptcy because once you file it is almost impossible to get out of a Chapter 7 bankruptcy. If you find yourself wanting to get out, you should discuss this with me.

14. Do I see a Judge at any time during my bankruptcy?

No, not usually. Presuming everything goes as planned you will never have to see a Judge. But if there are objections or other complications in the case it is possible that you will be required to appear before a Judge. But this is quite rare. In Chapter 7 bankruptcy, the judge’s job is basically only to get involved when there are disputes or other problems with the case. You will however have a meeting with a trustee which is discussed in another part below.

15. I filed bankruptcy and I keep getting phone calls, letters or bills from my creditors, what do I do?

You should refer all phone calls to me. The normal letters and bills you are getting you can ignore at least initially. It takes some time for these creditors to receive notice and then get the information to the right department and get it out of their computer systems. We usually tolerate this kind of thing for the first month or two after filing. By the third month if you still are getting bills or letters, mail or fax them to me and I will take action to get them to stop.

16. What do I do if I receive a letter from an attorney or other threatening action from a creditor after I file bankruptcy?

If what you get in the mail is from an attorney or is a lawsuit or garnishment or something similar then bring it to me immediately so I can stop it.

Reaffirmations and secured debts

17. Can I keep my house and car?

Yes. Presuming that your house or car does not have major equity and the trustee in your case is not interested in selling it, then you will be able to keep your house or car as long as you keep up to date with the payments and maintain your insurance. You will normally be required to reaffirm any debt secured by items you intend to keep. For more information about the trustee see the section on the trustee herebelow. For more information on reaffirmations see the section on reaffirmations below.

18. Can I keep my computer, wedding ring and furniture?

Yes. Presuming once again that there is no great equity to these things and the trustee is not interested in them you will be able to keep them. If one of your debts is secured by any of these things then the same applies to these things as with a house or car. The difference is that you do not have to continue making payments on these things until after we reaffirm and these debts can sometimes be negotiated down in both amount owed and payment. This will be simply a matter of negotiation.

19. What if I decide not to keep my house?

It is your option to not keep the house if you do not want it. If you decide not to keep your house then the mortgage lender will have to file a foreclosure. Foreclosure is a proceeding separate from your bankruptcy and I do not represent you in the foreclosure. You generally do not need representation in foreclosure when you are willing to let the house go and generally foreclosure is a long process that takes a minimum of seven months before the sheriff’s sale. Until the sheriff’s sale you can stay in your house without making the mortgage payments or real estate tax payments but I recommend that you maintain insurance and keep paying any association dues. The debt to the mortgage will be discharged and they will never be able to collect money from you.

20. What if I decide not to keep my car?

Again you may choose to give up your car. In this case you would not have to make payments but you are required to return the car to the lender usually within a month or so after we file. Once again I recommend that you keep the insurance until the car is returned. After it is returned the lender will sell your car and usually give you notice of the sale. Sometimes the notice says you will be responsible for any deficiency if the car sells for an amount that is less than what is owed. That notice is a form notice and that statement is not true. Your debt to them will be discharged and they will never be allowed to collect any money from you.

21. What if I decide not to keep my computer, jewelry or furniture?

Then you will have to return the item to the lender. Either they will pick it up or ask you to return it to the store where you purchased it.

22. I obtained a loan from a local loan company and they had me list my furniture and/or other household items I already owned. Is this a secured debt and will I have to return these items?

When you list household items you already owned as collateral for a loan this is what we call a nonpurchase money security interest and I can usually void their lien and you can keep these items without having to pay for them.

23. What if I want to reaffirm a debt that is not secured?

Generally this is no longer an option under the new bankruptcy laws.

24. I want to reaffirm some debts, can a creditor refuse to let me reaffirm?

Technically yes they can refuse to let you reaffirm. But this is very rare. As long as you are maintaining payments on a house or car and maintaining insurance they will almost always let you reaffirm.

Meeting with the trustee

25. Who is the trustee?

The trustee is appointed in your case by the United States Trustee. There is a group of trustee’s in this district, thirty some in Cook County and four or five in each of the other counties. Trustees are generally attorneys who practice bankruptcy and being a trustee is not their full time job. We have no control over who gets appointed. The trustee’s job is to see if you have any property that could be a source for paying at least part of your debt. He/she does not come to your house in nearly every case. We go to him/her at the date set for the meeting with the trustee. At that meeting the trustee will have a copy of your bankruptcy and he/she will ask you questions to verify the information contained in your bankruptcy especially concentrating on the assets we listed on your bankruptcy. This meeting usually lasts less than five minutes. If the trustee has any reason to suspect that any of the information is not correct or if he/she believes the values we put down are inaccurate he/she then could go or have an appraiser go to your house. That almost never happens. The great majority of the time the trustee concludes that you have no property that interests him/her and concludes the meeting.

26. What if I am unable to go on the day scheduled for the meeting with the trustee?

We can continue the meeting to a later date one time. The later date is usually about a month after the first date. Again we have no control over when that later date will be. You then must be at the later date. If you do not go on the second date the trustee will ask the Court to dismiss your case. Once the case is dismissed you are no longer protected from your creditors.

27. What if I can go on the day scheduled for the meeting with the trustee, but my spouse can’t?

Presuming you both filed bankruptcy, the trustee wants to see both of you at the same time. So if one or the other of you can’t make it, then it will be continued to a later date for both of you to be there together. Once again if either or both of you don’t attend the next time the trustee can ask to have your case dismissed and you would then no longer be protected from your creditors.

28. What kind of proof of my social security number do I need to bring to the meeting with the trustee?

You will need to bring to the meeting a picture ID and something with your social security number. If your social security number is on your driver’s license then that is all you need. Otherwise, your license and social security card or W-2 and sometimes other forms with your social security number are acceptable.

29. What else do I need to bring to the meeting with the trustee?

Nothing. The trustee usually needs nothing from you. In some rare cases at the meeting the trustee could ask for some other documents like tax returns, appraisals, or insurance statements, but we can provide these things through the mail later if requested.

30. Will you be there at the meeting with the trustee?

Yes. This is part of my job. Every once in a great while I may have a scheduling conflict of some kind and may not be there myself. This does not happen much. But if it does I will hire another attorney at my expense to be there in my place. Any attorney I would hire would also be a bankruptcy attorney who I would inform about your case.

31. Does anyone else attend the meeting with the trustee?

No, not usually. All creditors are invited to attend but they usually do not show. Once in a while creditors may show for the purpose of getting reaffirmations done at the meeting but even in those cases the creditor meets with you and I in the hall and they don’t normally actually sit in on the meeting itself.

32. How long does the meeting with the trustee take?

The meeting itself usually takes only two to five minutes. It is quick. But the trustees schedule many meetings on the same day and several at the same time. So we may have to wait for quite some time before your meeting is actually called.

The end of the bankruptcy

33. How do I know when the case is over and will I receive anything from the Court?

Approximately three to four months after your case is filed and presuming there have been no objections, and you have completed the debtor education requirement, the Court will enter an order discharging all of your dischargeable debts. The Court will send an unsigned copy of this order to you, me and all of your creditors. This is your discharge and you should keep it in case you ever have to prove to anyone in the future that you received a discharge in the case. When you get this you will know your case is over presuming there have been no objections and the trustee is not trying to sell any of your property.

34. Who pays the debts that are discharged in my bankruptcy?

The debts that are discharged are not paid by anyone. The only exception to this may be a mortgage on a house that is foreclosed on that is covered by the VA, FHA or private mortgage insurance (PMI).

35. What if I find myself in deep financial problems again after the bankruptcy is over?

Once you file a Chapter 7 you can’t file another chapter 7 again for another eight years. What most people don’t know is that these limitations do not apply to Chapter 13. So if you find yourself in trouble before six years is up, you may be able to file a Chapter 13 bankruptcy to protect yourself.

36. What if I receive a letter or other threatening action from any creditor after the case is over?

No problem. Just send them a copy of your discharge or have them contact me or send me the letter.

37. It is long after the case is over and I am trying to refinance and I need a copy of my discharge and creditors listed, where do I get a copy of these things?

If you have misplaced your discharge call us. We keep your file for ten years and we can locate your file and make another copy of whatever you need. Because of the time it takes us to locate your file in storage and make the copies, we charge you for this service. You may also obtain a copy from the Bankruptcy Court. Getting a copy from the court usually takes longer and they charge more than I do.

38. It is long after the bankruptcy is over and I am trying to refinance or buy a car or house and my credit report says I still owe some debt that was listed on my bankruptcy, what do I do?

You will need to send a dispute to the credit reporting company. The credit reporting companies are required by law to let you know how to make a dispute. Follow the procedures they instruct you. It will probably be a good idea to give them a copy of your discharge and list of debts which again you can obtain from me or the Court.

39. How long will this bankruptcy be on my record?

Ten years. That is as the law exists today the credit reporting companies can keep this on your credit record for ten years. This of course does not mean it will take ten years to re-establish credit. If after bankruptcy you maintain your payments to all creditors utilities and other bills on a timely basis, you should be able to get credit again much sooner than ten years. A good rule of thumb is two to three years after bankruptcy you should be able to obtain financing for a house or car and some other kinds of credit. This is only a rule of thumb, if the economy has a downturn and credit tightens up, this could change.

Please keep in mind that all of the above is a general description of commonly asked questions and generalized answers. Although I have tried to be thorough, this is not intended to be an exhaustive and detailed explanation of everything that does or could happen in bankruptcy. No attorney could possibly explain everything that could happen in any case. Each case can have its own special circumstances or quirks that could cause a deviation from all of the descriptions and information and answers above. There is no way for me or anyone to perfectly predict everything. The great overwhelming majority of the time, the above information is applicable. The best way to insure the best advice and information from me is for you to be totally and completely open and honest with me as well as on any paperwork we have you complete or sign and to be honest at all times during any meetings or other proceeding in your case.

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