You are a bad person/failure for filing bankruptcy.

Not True. There is a reason that over one million people file for bankruptcy each year and it is not because they are bad people. Bankruptcy is a means for good people who are going through bad times to get relief. Many times people have to file because they have lost their job, gone through divorce, or experienced medical illness. Some have to file because they just plain made some bad financial choices. Whatever. Bad times don’t make a person bad. Bankruptcy can provide the relief that good hardworking people need to get them out of the bad times. It provides hard working people with the fresh start that they deserve, but are not able to obtain.

Discharge of Debts (Bills).

What is a discharge in bankruptcy?

A bankruptcy discharge releases the debtor from personal liability for certain specified types of debts. In other words, the debtor is no longer legally required to pay any debts that are discharged. The discharge is a permanent order prohibiting the creditors of the debtor from taking any form of collection action on discharged debts, including legal action and communications with the debtor, such as telephone calls, letters, and personal contacts.

When does the discharge occur?

The timing of the discharge varies, depending on the chapter under which the case is filed. In a chapter 7 (liquidation) case, for example, the court usually grants the discharge promptly on expiration of the time fixed for filing a complaint objecting to discharge and the time fixed for filing a motion to dismiss the case for substantial abuse (60 days following the first date set for the 341 meeting). Typically, this occurs about four months after the date the debtor files the petition with the clerk of the bankruptcy court. Since a chapter 12 or chapter 13 plan may provide for payments to be made over three to five years, the discharge typically occurs about four years after the date of filing.

How does the debtor get a discharge?

Unless there is litigation involving objections to the discharge, the debtor will usually automatically receive a discharge. The Federal Rules of Bankruptcy Procedure provide for the clerk of the bankruptcy court to mail a copy of the order of discharge to all creditors, the U.S. trustee, the trustee in the case, and the trustee's attorney, if any. The debtor and the debtor's attorney also receive copies of the discharge order. The notice, which is simply a copy of the final order of discharge, is not specific as to those debts determined by the court to be non-dischargeable, i.e., not covered by the discharge. The notice informs creditors generally that the debts owed to them have been discharged and that they should not attempt any further collection. They are cautioned in the notice that continuing collection efforts could subject them to punishment for contempt. Any inadvertent failure on the part of the clerk to send the debtor or any creditor a copy of the discharge order promptly within the time required by the rules does not affect the validity of the order granting the discharge.

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. Bankruptcies 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.

What Else Should I Know?

- Utility Services - 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 that arise after bankruptcy is filed.

- Discrimination - An employer or government agency cannot discriminate against you because you have filed for bankruptcy.

- Driver's License - 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.

- 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.

Will I Have to Go to Court?

In most bankruptcy cases, you only have to go to a proceeding called the "meeting of creditors" to 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 Wipe Out All My Debts?

Yes, with some exceptions.

Bankruptcy will not normally wipe out:

-money owed for child support or alimony fines, and some taxes;

-debts not listed on your bankruptcy petition;

-loans you got by knowingly giving false information to a creditor, who reasonably relied on it in making you the loan;

-debts resulting from "willful and malicious " harm;

-student loans owed to a school or government body, except if, the court decides that payment would be an undue hardship;

-mortgages and other liens that are not paid in the bankruptcy case (but bankruptcy will wipe out your obligation to pay any additional money if the property is sold by the creditor).

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, a property settlement, or life insurance benefits within 180 days after filing for bankruptcy, that money or property may have to be paid to your creditors if the property or money is not exempt.

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. Even if your property is not fully exempt, you will be able to keep it, if you pay its non-exempt value to creditors in chapter 13.

However, some of your creditors may have a "security interest" in your home, automobile or other personal property. This means that you gave that creditor a mortgage on the home or put your other property up as collateral for the debt. Bankruptcy does not make these security interests go away. If you don't make your payments on that debt, the creditor may be able to take and sell the home or the property, during or after the bankruptcy case.

There are several ways that you can keep collateral or mortgaged property after you file bankruptcy. You can agree to keep making your payments on the debt until it is paid in full. Or you can pay the creditor the amount that the property you want to keep is worth. In some cases involving fraud or other improper conduct by the creditor, you may be able to challenge the debt. If you put up your household goods as collateral for a loan (other than a loan to purchase the goods), you can usually keep your property without making any more payments on that debt.

What Property Can I Keep?

In a chapter 7, you can keep all property that the law says is "exempt" from the claims of creditors. You can choose between your exemptions under your state law or under federal law.

In many cases, the federal exemptions are better.

Federal exemptions include:

- $20,200 in equity in your home;
- $3,225 in equity in your car;
- $525 per item in any household goods up to a total of $10,775
- $2,025 in things you need for your job (tools, books, etc.)
- $1,075 in any property, plus up to $10,125 of the unused exemption in your home;
- The right to receive certain benefits such as child support, alimony, social security, unemployment compensation, veteran's benefits, public assistance, and pensions.

The amounts of the exemptions are doubled when a married couple files together.

In determining whether property is exempt, you must keep a few things in mind. The value of property is not the amount you paid for it, but what it is worth now. Especially for furniture and cars, this may be a lot less than what you paid or what it would cost to buy a replacement.
You also only need to look at your equity in property. This means that you count your exemptions against the full value minus any money that you owe on mortgages or liens. For example, if you own a $50,000 house with a $40,000 mortgage, you count your exemptions against the $10,000 that is your equity if you sell it.

While your exemptions allow you to keep property even in chapter 7, your exemptions do not make any difference to the right of a mortgage holder or car loan creditor to take the property to cover the debt if you are behind. In a chapter 13, you can keep all of your property if your plan meets the requirements of the bankruptcy law. In most cases you will have to pay the mortgages or liens as you would if you didn't file bankruptcy.

What Different Types of Bankruptcy Should I Consider?

There are five types of bankruptcy provided under the law:

· Chapter 7 is known as "straight" bankruptcy or liquidation. It requires a debtor to give up property that exceeds certain limits called "exemptions", so the property can be sold to pay creditors. Most people keep all their property.

· Chapter 13 is called "debt adjustment". It requires a debtor to file a plan to pay debts (or parts of debts) from current income.

· Chapter 11, is known as "reorganization", is used by businesses and a few individual debtors whose debts are very large.

· Chapter 12 is reserved for family farmers and commercial fishermen.

· Chapter 15 is reserved for Ancillary and Other Cross-Border Cases.

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.

Chapter 7 (Straight Bankruptcy)

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 (discharge) your debts in exchange for your giving up property, except for "exempt" property, which the law allows you to keep. In most cases, all of your property will be exempt. But property that 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 a car loan, a Chapter 7 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.

Chapter 13 (Reorganization)

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 can make the payments which the bankruptcy law requires to be made to your creditors. In most cases, these payments will be at least as much as your regular monthly payments on your mortgage or car loan, with some extra payment to get caught up on the amount you have fallen behind.

You should consider filing Chapter 13 plan if you:

- own your home and are in danger of losing it because of money problems;
- are behind on debt payments, but can catch up if given some time;
- have valuable property which is not exempt, but you can afford to pay creditors from your income over time

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 Bankruptcy Can and Cannot Do for You.

What Can Bankruptcy Do for Me?

Bankruptcy may make it possible for you to:

· Eliminate the legal obligation to pay most or all of your debts. This called a "discharge" of debts. It is designed to give you a fresh financial start.

· Stop foreclosure on your house or mobile home and allow you an opportunity to catch up on missed payments. (Bankruptcy does not, however, automatically eliminate mortgages or other liens on your property without payment.)

· Prevent repossession of a car or other property, or force the creditor to return property even after it has been repossessed.

· Stop wage garnishment, debt collection harassment, and similar creditor actions to collect a debt.

· Restore or prevent termination of utility service.

· Allow you to challenge the claims of creditors who have committed fraud or who are otherwise trying to collect more than you really owe.

What Bankruptcy Cannot Do.

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

· 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 secured creditors to take payments over time in the 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.

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

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

· Discharge debts that arise after bankruptcy has been filed.

What is Bankruptcy?

Basically, bankruptcy is a legal proceeding in which a person who cannot pay his or her bills can get a fresh financial start. The right to file for bankruptcy is provided by federal law, and all bankruptcy cases are handled in federal court. Filing bankruptcy immediately stops all of your creditors from seeking to collect debts from you, at least until your debts are sorted out according to the law.

Can I File a Chapter 7 By Myself, Without an Attorney?

You certainly have the right to file a Chapter 7 case by yourself. The forms are available either on-line or at an office supply store. There are also several books about how to do this.

Here are the problems:

1. Bankruptcy has become significantly more complicated since October 2005, when the BAPCPA changes to the bankruptcy laws were enacted. Many lawyers who used to file the occasional Chapter 7 have given up the practice because of the complications. Particularly, you need to fully understand how the means test works. If you do the calculations incorrectly, you could end up in a deposition at the United States' trustee's office, face a motion to dismiss, or face a motion to convert to Chapter 13.

2. You need to understand about the pre-filing credit counseling requirement as well as the pre-discharge financial management course requirement

3. In order to actually file your case, you will need to have your petition and schedules scanned into PDF format for filing with the Bankruptcy Clerk. You can do this at the Bankruptcy Court and I believe that this process is not particularly complicated, but I have not done it since I file electronically from my office.

4. You may not be able to dismiss a Chapter 7 voluntarily if you change your mind. For example, if you file, but it turns out that you earn too much or own too many assets the judge may not let you out of your case, at least until after your assets are liquidated.

5. You need to understand how the bankruptcy exemption law works and how it applies in Chapter 7 to protect property that the law allows you to protect. If you don't properly declare property as exempt even if the law would otherwise allow you to protect it, then you could lose your property anyway.

6. You will not receive advice from the Chapter 7 trustees or the U.S. Trustees. Their interest is to maximize the recovery of the estate (i.e. your creditors). They are not your friends.

I do not think it is a good idea to try to file bankruptcy without counsel. I have always been willing to work with Chapter 7 debtors with straightforward cases and not a lot of money.

Top 10 Bankruptcy Myths

Myth 1: Filing for bankruptcy hurts your credit for 10 years.

Not True. Bankruptcy stays on your credit about 7 to 10 years. Although the bankruptcy will stay on your credit, you can start rebuilding your credit once your bankruptcy is discharged. You will get credit card offers and be extended credit right after the discharge of your bankruptcy. Bankruptcy wipes out debt, which in turn helps your credit score.

Myth 2:Everyone will know you filed for bankruptcy.

Not True. Bankruptcy is public record but unless you are famous, people aren’t going to go looking. The only people who are going to know are those who you tell and those who have access to the bankruptcy court record system.

Myth 3:It's hard to file for bankruptcy.

Not True. The bankruptcy reform act changed only the method in which Debtors qualify for the different types of bankruptcy. It doesn’t prevent people from filing and in most situations people are still able to get the same relief now as before the law changed. There is a lot of paperwork involved, but having a skilled attorney makes the process much smoother. Filing bankruptcy is electronic these days, which minimizes paperwork on your part.

Myth 4:You are a bad person/failure for filing bankruptcy.

Not True. There is a reason that over one million people file for bankruptcy each year and it is not because they are bad people. Bankruptcy is a means for good people who are going through bad times to get relief. Many times people have to file because they have lost their job, gone through divorce, or experienced medical illness. Bad times don’t make a person bad. Bankruptcy can provide the relief that good hardworking people need to get them out of the bad time. It provides hard working people with the fresh start that they deserve, but are not able to obtain.

Myth 5:You will lose everything you own.

Not True. Bankruptcy allows you to keep your property. Outside of bankruptcy you could lose your property to creditors, but once you have filed for bankruptcy you and your property are protected. Bankruptcy doesn’t always wipe out liens, which means if you want to continue to keep the property you will need to continue to pay the lien.

Myth 6:Both you and your spouse have to file bankruptcy together.

Not True. You can file together or separately, that is your choice. In many cases it makes sense for husband and wife to file together, but in some instances the spouse might not want to file. This is absolutely fine and definitely allowed by the court.

Myth 7:You can't get rid of back taxes in bankruptcy.

Depends. You can get rid of income taxes that are more than three years old by filing bankruptcy. There are several qualifications that have to be met in order for the taxes to be wiped out, but having a portion wiped out is better than none at all.

Myth 8:You can only file bankruptcy once.

Not True. You can file for bankruptcy as many times as you like. Although, you are limited by how often you can receive a discharge. You can receive a discharge from Chapter 7 once every 8 years. You can receive a discharge from Chapter 13 every 2 years. If you get discharged in a Chapter 7 you have to wait 6 years before getting a discharge from Chapter 13. If you get a Chapter 13 discharge then you need to wait 4 years to get discharged from a Chapter 7. However, there is no waiting period if your case is dismissed. You can file back to back should you choose.

Myth 9:Creditors can still harass you if you file for bankruptcy.

Not True. When the bankruptcy is filed, automatic protection is put onto you and all of your property instantly. Creditors are not allowed to contact you for any reason, which includes calling or even billing you. If they persist in harassing you, you do have remedies available through the Federal Bankruptcy laws.

Myth 10:Filing bankruptcy is emotional devastating.

Not True. Bankruptcy eliminates debt and eliminates financial stress. Filing bankruptcy is the solution to the problem, not an additional problem. Although making the decision to file bankruptcy might be difficult one, the relief provided will lift a huge weight off of you. You will be able to answer the phone, check the mail, and answer the door without fear that the contact is from a creditor or collection agency.