What can Bankruptcy do for me?
Bankruptcy levels the playing field for ordinary people against the big corporations that have no problem putting you out on the street. The same big corporations that got bailed out by the government with your taxpayer dollars but will not cut you any slack during these difficult economic times.
Bankruptcy can provide you with a "fresh start", allow you to write off (discharge) most, if not all, of your debts, stop foreclosure on your house, prevent repossession of your car, stop creditor harassment, and restore utility services.
What do I need to begin the Bankruptcy process?
You will need to schedule a FREE consultation with our Bankruptcy Lawyers and complete the Pre-Consultation Questionnaire to bring with you to your FREE consultation.
In order to actually File Bankruptcy you will need to have completed the Credit Counseling program, have the filing fees to pay to the Bankruptcy Court and the legal fees to pay to the Bankruptcy Lawyer.
For a more detailed description of Filing Bankruptcy please visit our Filing Bankruptcy and Filing Bankruptcy Frequently Asked Questions pages.
What are the main differences between Chapter 7 Bankruptcy and Chapter 13 Bankruptcy?
Chapter 7 Bankruptcy allows you to receive a discharge of most, if not all, of your debts in a short period of time while keeping the assets that are most crucial to your continued survival. As a result, Chapter 7 Bankruptcy is often referred to as a "straight" bankruptcy providing the debtor with a "clean slate" or "fresh start".
For a more detailed description of Chapter 7 Bankruptcy please visit our Chapter 7 Bankruptcy and Chapter 7 Bankruptcy Frequently Asked Questions pages.
Chapter 13 Bankruptcy allows you to keep your assets and receive a discharge of most, if not all, of your debts but only after successfully making all of your payments under the Chapter 13 Bankruptcy Repayment Plan, which can last up to 5 years. As a result, Chapter 13 Bankruptcy is often referred to as a "reorganization" bankruptcy providing the debtor with breathing room to satisfy debts over time.
For a more detailed description of Chapter 13 Bankruptcy please visit our Chapter 13 Bankruptcy and Chapter 13 Bankruptcy Frequently Asked Questions pages.
What is the "Means Test"?
The "Means Test" is a mathmatical calculation designed to determine whether you have the ability to repay your debts. The "Means Test" applies to you if your debts are primarily consumer debts and you file Bankruptcy under Chapter 7. If you fail the "Means Test" the Bankruptcy Court can dismiss your Chapter 7 Bankruptcy case or allow you to convert your Chapter 7 Bankruptcy case to a Chapter 13 Bankruptcy case.
The test was added to the Bankruptcy Law by Congress in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Credit card companies lobbied very hard to get this provision added to the Bankruptcy Law because the credit card companies can usually extract more money out of you if you file Bankruptcy under Chapter 13.
How does Bankruptcy affect my credit?
Bankruptcy typically stays on your credit report for approximately 7-10 years. You may or may not find it more difficult to obtain credit after filing Bankruptcy. Some lenders will consider you a better credit risk after your debts have been discharged than if you are burdened with significant debt. Often, those who receive their Bankruptcy discharge immediately begin receiving credit card offers, typically with higher interest rates than before.
What are the differences between Bankruptcy and debt consolidation?
Bankruptcy provides you with an automatic stay, which protects you from harrassing creditors seeking to confiscate your assets. Debt consolidation does not give you the protection of the automatic stay.
Bankruptcy under Chapter 7 Bankruptcy allows you to discharge the debts without paying more than you currently have which is not even possible in debt consolidation.
Bankruptcy under Chapter 13 Bankruptcy generally allows you to discharge the debts in a shorter time period of time than debt consolidation.
What are the advantages of Bankruptcy over debt settlement?
Bankruptcy provides an option for those who lack the large sums of cash necessary for debt settlement (i.e. for paying less than the balance owed). Further, fees associated with Filing Bankruptcy are not affected by the amount of debt discharged, whereas fees associated with a debt settlement services are usually paid as a percentage of the money saved in the debt settlement. Under a debt settlement, you may have to pay taxes on the amount of debt you do not pay back. Debts discharged in Bankruptcy are not taxable.
Will I have to attend Court?
Yes. You must attend the meeting of the creditors, where you will meet with the Bankruptcy Trustee and any creditor that actually shows up. This meeting is typically very short, and you may be asked a few questions about your financial situation and the Bankruptcy forms.
What is a Chapter 7 Bankruptcy case and how does it work?
A Chapter 7 Bankruptcy case begins by filing a Bankruptcy Petition with the U.S. Bankruptcy Court. The Court will impose an automatic stay that protects you and your assets from creditors' collection actions. A Chapter 7 Bankruptcy Trustee is appointed to collect all of your non-exempt property to sell and pay to your creditors. Once all of this happens, you receive a discharge of all the remaining dischargable debt.
If I file for Chapter 7 Bankruptcy, do I get to keep anything?
Yes. You get to keep your exempt property. An "exemption" is a statutory right that allows debtors to keep certain property after filing for Bankruptcy. In South Carolina, there are statutory exemptions for your house, vehicle, retirement, social security, worker's compensation, cash, and business. The amount of each exemption varies - allowing you to keep some or all of your property safe from creditors.
What is a Chapter 7 Bankruptcy discharge?
A Chapter 7 Bankruptcy discharge is a court order which states that all of your dischargable debts do not have to be repaid and that creditors are prohibited from attempting to collect them from you. Some debts - nondischargable debts - cannot be discharged and you will still be responsible for paying those debts. These nondischargable debts include some taxes, child support and alimony, most student loans, court fines, and some personal injury debts.
I've heard I cannot discharge taxes through Bankruptcy. Is that true?
No. Some taxes can be discharged through a Chapter 7 Bankruptcy. It depends on many factors, including what type of tax you owe, how long the taxes have been outstanding, whether the IRS has filed a Federal Tax Lien with respect to the taxes, and many other issues. For example, if there is a tax fraud involved, if the IRS filed a substitute for return (SFR) for you, or if you have been assessed the Trust Fund Recovery Penalty for payroll taxes, then those taxes cannot be discharged in Bankruptcy. However, income tax, excise tax, and gift tax may be discharged through a Chapter 7 Bankruptcy under certain circumstances. Our Bankruptcy Lawyers are very experienced in the tax laws and can tell you whether or not your taxes are dischargable.
Can my student loans be discharged?
Yes. Generally you cannot discharge student loans unless you can prove hardship. Proving hardship typically requires that you demonstrate you cannot provide a minimum standard of living for yourself and your dependents if you have to repay the loan. Our Bankruptcy Lawyers can tell you whether or not your student loans are dischargable.
Will I lose my social security payments or my retirement accounts if I file for Bankruptcy?
No. Generally, social security and most pensions, 401k's, and IRA's are "exempt" property and will be protected by the Chapter 7 Bankruptcy Trustee.
Do I have to list all of my debts?
Yes. You must include all of your debts on your Bankruptcy documents.
What is the trustee's role in a Chapter 7 Bankruptcy case?
A Chapter 7 Bankruptcy Trustee collects your nonexempt property, liquidates the property, and pays the expenses of the estate and the claims of creditors. In addition, the Chapter 7 Bankruptcy Trustee makes sure that both you and your creditors play by the Bankruptcy Court's rules. If you do not cooperate with the Trustee, your Chapter 7 Bankruptcy case can be dismissed without getting a discharge.
How are secured and unsecured creditors dealt with in a Chapter 7 Bankruptcy case?
Creditors with valid mortgages or liens against property are called secured creditors. A secured creditor generally may repossess or foreclose on its secured property up to the amount owed to the creditor upon court approval, but is not paid by the trustee. Unsecured creditors (i.e. those without a valid lien or mortgage against the debtor's property) may file claims with the court against assets that are nonexempt. When the trustee liquidates the nonexempt property, the trustee distributes funds to unsecured creditors according to priority rules set forth in the Bankruptcy Code.
What is a Chapter 13 Bankruptcy case?
A Chapter 13 Bankruptcy case begins by filing a Bankruptcy Petition with the U.S. Bankruptcy Court. The Court will impose an automatic stay that protects you and your assets from creditors' collection actions. Once the U.S. Bankruptcy Court approves your Chapter 13 Bankruptcy Repayment Plan, you will need to make all of the payments under the plan. A Chapter 13 Bankruptcy Trustee collects your payments and distributes the payments to your creditors according to the Chapter 13 Bankruptcy Repayment Plan. Once all payments have been made you can receive a discharge of all of your remaining dischargable debts.
When is a Chapter 13 Bankruptcy case preferable to a Chapter 7 Bankruptcy case?
Chapter 13 Bankruptcy is generally preferable for a person who wants to keep their property and has the ability to make payments over the next three to five years. Also, Chapter 13 Bankruptcy is preferable for those people that need the protection of the automatic stay but are unable to file Bankruptcy under Chapter 7 Bankruptcy due to failing the "Means Test".
For a more detailed description of Chapter 7 Bankruptcy please visit our Chapter 7 Bankruptcy and Chapter 7 Bankruptcy Frequently Asked Questions pages.
What is a Chapter 13 Bankruptcy discharge?
A Chapter 13 Bankruptcy discharge is an order from the court releasing the debtor of his or her dischargeable debts and prohibiting creditors from collecting them from the debtor.
What types of debts are not dischargeable in a Chapter 13 case?
If you complete the payments as required by the Chapter 13 Bankruptcy Repayment Plan, all debts are discharged other than debts paid outside the plan and not covered by the plan, alimony, child support, debts for death or personal injury caused by the debtor's operation of a motor vehicle, some tax debts, and debts for most student loan obligations.
What debts must be paid under a Chapter 13 plan?
While priority debts (for example, alimony or taxes) and fully secured debts must be paid in full under a Chapter 13 Bankruptcy Repayment Plan, other debts may be paid under Chapter 13 only in an amount the debtor can reasonably afford to pay.
How much of his or her income must the debtor pay to the Chapter 13 trustee under the Chapter 13 plan?
Under a Chapter 13 Bankruptcy Repayment Plan, you generally must pay to the Chapter 13 Bankruptcy Trustee all of your disposable income for a period of 3-5 years. Disposable income is the money you have left over after providing for the support of yourself and your dependents.
Is it necessary for all creditors to approve a Chapter 13 plan?
No. It is only necessary for the Bankruptcy Court to approve the Chapter 13 Bankruptcy Repayment Plan.
What happens if the court does not approve a Chapter 13 plan?
You can modify the plan so that the Court will approve the Chapter 13 Bankruptcy Repayment Plan. If you choose not to modify the Chapter 13 Bankruptcy Repayment Plan, you can either convert the case to a Chapter 7 Bankruptcy case or the Court will dismiss the Chapter 13 Bankruptcy case.
What happens if I am temporarily unable to make my Chapter 13 payments or am unable to complete my Chapter 13 payments?
If you are temporarily unable to make the Chapter 13 payments, the plan can generally be modified so you can resume payments when you are able.
If you are unable to complete the Chapter 13 payments, you can either seek dismissal of the Chapter 13 case, convert the Chapter 13 case to a Chapter 7 case, or close the case and receive a partial Chapter 13 discharge (only if circumstances beyond your control prevent completion of the plan).
What happens if the debtor incurs new debts or needs credit during a Chapter 13 case?
There are two types of debts that may be included in a Chapter 13 plan despite the fact that they were incurred after the case was filed, namely (1) tax debts that become payable while the Chapter 13 case is pending and (2) consumer debts arising after the Chapter 13 case was filed if they are necessary expenses for the debtor's performance under the plan and the debtor obtains prior approval by the Chapter 13 trustee. Any other debts or credit obligations the debtor incurs after the debtor files the Chapter 13 case must be paid by the debtor outside the plan. Courts may issue an order prohibiting the debtor from incurring new debts during the Chapter 13 case without prior approval by the trustee.
Will filing Bankruptcy get creditors off my back?
Yes. When you file Bankruptcy, the "automatic stay" prevents creditors from harrassing you and taking your property. Collection attempts, foreclosures, repossessions, threatening phone calls, and the like are a thing of the past. Once the automatic stay is in place, the automatic stay protects you and your property from your creditors. If a creditor tries to collect a debt without permission from the Bankruptcy Court, the creditor may be in violation of the automatic stay.
I've filed Bankruptcy before. Can I file again?
Yes. If you previously filed Bankruptcy and received a discharge under Chapter 7 Bankruptcy then you will have to wait eight years to receive another discharge under Chapter 7 Bankruptcy or four years to file Bankruptcy under Chapter 13 Bankruptcy.
If you previously filed Bankruptcy and received a discharge under Chapter 11 or 12 Bankruptcy then you will have to wait four years to receive a discharge under Chapter 13 Bankruptcy.
If you previously filed Bankruptcy and received a discharge under Chapter 13 Bankruptcy then you will have to wait two years to receive a discharge under Chapter 13 Bankruptcy.
If you are not eligible to file yet, we can provide you with reasonable alternatives to help meet your financial goals.
Can an employer refuse to hire me or fire me because I filed for bankruptcy?
No. Section 525 of the Bankruptcy Code prohibits discriminatory treatment in hiring and firing based on filing for Bankruptcy. Therefore, an employer cannot refuse to hire or fire you because you filed for Bankruptcy.
Does my spouse have to file for bankruptcy with me?
No. Spouses are not required to file Bankruptcy together. Similar to filing income taxes, you have a choice whether to file separately or jointly with your spouse. However, if a spouse does not join in your Bankruptcy he or she cannot reap its benefits. For example, if your spouse is also responsible for a joint debt, they will still be responsible for that debt if you file Chapter 7 Bankruptcy. If you file Chapter 13 Bankruptcy they will still be responsible for the unpaid amounts under the Chapter 13 Repayment Plan.
How long will I be in Chapter 7 or Chapter 13?
The bankruptcy process under Chapter 7 typically takes about 4 to 6 months, while the bankruptcy process under a Chapter 13 repayment plan takes about 3 to 5 years.
Are there tax consequences from filing for bankruptcy?
Discharge of debt in bankruptcy is excluded from the Internal Revenue Code's definition of income. If you choose not to file bankruptcy, then cancellation of debt may be treated as income for tax purposes.
How does a bankruptcy filing affect cosigners?
Cosigners continue to be responsible for debts that are discharged in another person's Bankruptcy. You can protect cosigners if you file Chapter 13 Bankruptcy and your Chapter 13 Repayment Plan proposes to pay the cosigned claim in full.
If I'm filing bankruptcy anyway, can I just max out my credit cards?
No. The Bankruptcy Court would consider these actions fraud and such actions would most likely initiate a non-dischargeability complaint being filed by that creditor. Further, it may impair your ability to discharge other debts as well if the court determines that your filing was in bad faith.
How is an action filed in a bankruptcy case?
A petition, notice, and list of all creditors and their addresses are filed with the clerk of the Bankruptcy Court in Columbia, South Carolina along with a filing fee. You get to choose which Chapter Bankruptcy you will file under and you may file a joint petition with your spouse.
How much does it cost to file for bankruptcy?
The filing fee in South Carolina is currently $299 for a Chapter 7 Bankruptcy and $274 for a Chapter 13 Bankruptcy. These filing fees are charged by the U.S. Bankruptcy Court in order for you to file your petition. Attorney's fees are separate fees and vary on a case-by-case basis taking into consideration the complexity of the case.