Will I lose everything by filing bankruptcy?
Do I qualify for bankruptcy?
What does it cost to file for bankruptcy?
What is the difference between bankruptcy and credit counseling?
Can I keep things like cars or furniture that I am still financing?
What does bankruptcy do to my credit report?
Can you do anything to negotiate with my creditors without filing for bankruptcy?
How much would I have to pay per month in a Chapter 13 reorganization?
Are there any debts that cannot be discharged in bankruptcy?
Can I eliminate judgment liens in a bankruptcy?
Can I stop collection of past due child support payments?
Q: Will I lose everything by filing bankruptcy?
A: No. The bankruptcy laws are designed to protect your property from your creditors. Under most cases all of your property (including your home and vehicle) is protected under the South Carolina exemptions pursuant to S.C. Code Section 15-41-30. If you have property that is not protected or is worth more than the protection limits, you may choose to simply avoid Chapter 7 and make provisions to retain the property under a Chapter 13 reorganization.
Q: Do I qualify for bankruptcy?
A: It is unusual that an individual will not qualify for bankruptcy protection without having filed a prior case or multiple cases or engaged in some type of intentional, underhanded behavior (called “bad faith” in the Bankruptcy Code). Bad faith is usually some form of egregious actions such as identity theft, spending sprees for luxury items immediately before filing for protection, etc. The question is more often, is it wise or prudent to seek protection under the Bankruptcy Code rather than if you are eligible.
You generally qualify for protection under Chapter 7 if you have not filed a prior case in the last eight years, you have not acted in bad faith and your budget does not have any money remaining for payments to your creditors after reasonable living expenses. You generally qualify for a Chapter 13 reorganization if you have not been prohibited by the court from filing another case, your debts are within the jurisdictional limits of Chapter 13 (currently no greater than $1,081,400 in secured debt and $360,475 in unsecured debt), and you have not engaged in actions that would rise to bad faith. There are other exceptions that apply to each Chapter and we can better address those more individualized, specific issues as we learn more about your case.
Q: What does it cost to file for bankruptcy?
A: The filing fee for Chapter 7 is $306.00 and Chapter 13 is $281. These are the fees charged by the U.S. Bankruptcy Court to file your petition. Attorney’s fees vary depending on the nature and complexity of the case. Each case is different and you will be quoted a flat fee during our first consultation. We understand that most clients simply don’t have funds available immediately and we will work with you on a payment plan that makes sense for both of us.
Q: What is the difference between bankruptcy and credit counseling?
A: Credit counseling is a method used by companies who, for a fee, seek to negotiate with your creditors to deal with your debts. Your creditors can choose to participate or to reject credit counseling as an option. Credit counselors cannot handle issues such as missed house payments, missed car payments or tax problems. There are also important tax consequences to forgiven debt outside of bankruptcy that must be considered before agreeing to credit counseling.
In bankruptcy the creditors do not have the option to reject participation. Collection activity must cease immediately upon filing or the court can impose severe sanctions on the creditors. You can prevent or stop foreclosures and repossessions in bankruptcy. The tax consequences that often surface outside of bankruptcy are not present within Chapter 7 and Chapter 13. Usually the payments made to creditors within a bankruptcy are substantially less than what a credit counseling company can obtain and the fees are often lower as well.
Q: Can I keep things like cars or furniture that I am still financing?
A: Yes. Bankruptcy cannot simply eliminate these debts if you want to keep the collateral, but you can keep the items if we provide for payment of the creditor’s lien. In Chapter 7 it is important that you are current on car loans, mortgages, furniture accounts, etc. if you intend to keep those assets. You simply continue to make the payments and those loans simply flow through your Chapter 7 case. In Chapter 13 you can deal with missed payments and redo the financing on most debts (except for mortgages on your home – you must resume paying those obligations based on your original terms shortly after you file your reorganization, but any missed payments are repaid as part of your bankruptcy plan). In Chapter 13 you can reduce the amount owed on your car loan or furniture loan to the current replacement value of the car or item and stretch that smaller amount over three to five years to lower your monthly payment on that debt.
Q: What does bankruptcy do to my credit report?
A: No doubt a bankruptcy isn’t great for your credit rating, but most people who contact our office have credit scores that have been negatively affected already due to the amount of outstanding obligations or delinquent payments. A bankruptcy can appear on your credit report for up to ten years pursuant to 15 U.S.C. § 1681(c). Generally you will find that you can obtain credit cards, finance the purchase of a home or automobile and get other loans fairly easily after your case is discharged, but usually at a higher interest rate. Be careful!
Q: Can you do anything to negotiate with my creditors without filing for bankruptcy?
A: Yes. We can negotiate with your creditors outside of bankruptcy, but we do not have the protections offered within the Bankruptcy Code to give us the leverage that is often necessary to reach a feasible resolution. In cases where it is advisable strategically to delay or avoid filing for protection, we can seek other solutions based upon your particular situation. In most situations, however, bankruptcy is the most efficient, cost-effective means of obtaining protection from your creditors and resolving debt problems.
Q: How much would I have to pay per month in a Chapter 13 reorganization?
A: In Chapter 13 you are allowed to file a plan of reorganization with the court that provides for monthly payments to your creditors based largely on your budget. Your monthly payment to the Chapter 13 varies with the amount of your debts, the length of the time of the plan and the nature of your obligations. There simply isn’t a reliable way to forecast your payments without a substantial amount of information, but a good rule of thumb in many cases is to add your car payments together plus about $100 to get a general idea of your total monthly payment to the court under a Chapter 13 plan that would include your car payment (for example: car payment = $300 + $100 = $400 as a ballpark idea of your total payment in a typical, straightforward case). That amount is often a good reflection of the disposable income available in your budget for a successful reorganization. Your payments will likely be larger in cases where you are far behind on your mortgage payments, if you have substantial tax liabilities or if your non-exempt assets are unusually valuable. Again, each case is different and your payment to the court under a Chapter 13 plan is determined by the specific circumstances of your case.
Q: Are there any debts that cannot be discharged in bankruptcy?
A: Yes. The limitations of Chapter 7 and Chapter 13 are different, but certain types of debts are generally protected against a bankruptcy discharge. These debts include:
- Alimony and child support obligations (although you obtain protection from the Family Court to catch up on missed alimony or child support payments in a Chapter 13);
- Debts not listed within your bankruptcy petition. This is why it is crucial that you provide us with any obligations whatsoever;
- Loans obtained by intentionally giving false information to a creditor who reasonably relied on that information;
- Student loans, unless we successfully bring a lawsuit within your bankruptcy that establishes an “undue hardship” (a very difficult and strictly interpreted limitation);
- Certain taxes depending on the type of tax and the date the tax return was filed;
- Debts resulting from willful and malicious harm;
- Debts resulting from an automobile accident that involved driving under the influence;
- Certain mortgages, although you can prevent a foreclosure by catching up the missed payments in a Chapter 13 reorganization.
Q: Can I eliminate judgment liens in a bankruptcy?
A: Yes, with limitations. Although the answer to this question depends heavily on the specific circumstances of your case, it is not unusual to eliminate or dramatically reduce your obligations pursuant to a judgment lien.
Q: Can I stop collection of past due child support payments?
A: Yes. You can stop collection of past due child support payments and catch those payments up in a Chapter 13 reorganization while under the protection of the bankruptcy court, but you cannot eliminate your continuing obligation to resume paying future child support obligations. For example, if you are behind $2,000 in your support payments you can obtain protection from the enforcement actions brought through the family court to catch up that arrearage by making payments to the recipient over an extended period of time through your plan of reorganization, but you must resume making your normal payments from the date you file your reorganization. If you fail to resume those regular payments, not only will you be exposed to collection actions and enforcement of a family court order, but your entire Chapter 13 case could be dismissed leaving you without any protection from your other creditors as well. Chapter 7 offers no protection against child support arrearages.
If you have any further questions regarding Chapter 7, Chapter 13, Chapter 11 or bankruptcy in general, please do not hesitate to contact our North Charleston or Columbia office or Myrtle Beach.
Often your telephone inquiries can be directed to an attorney when you call us. Our office hours are from 8:30 a.m. to 5:30 p.m. Monday through Friday.
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