Law Offices of PamelaBankruptcy Info
Bankruptcy Information
Frequently Asked Bankruptcy Questions
Q: What debts will be eliminated in a Chapter 7 Bankruptcy?
A: Generally all your credit card debt (except cash advances in excess of $750 taken within 60 days of filing), medical bills, and debts owed due to repossession of a vehicle. Some debts are not dischargeable including Student Loans, funds procured by fraud, criminal fines and restitution payments, and income taxes less than three years old.
Q: How much money can I make per year and still file for Chapter 7?
A: The Bankruptcy Reform and Consumer Protection Act of 2005 have imposed certain eligibility requirements for debtors seeking Chapter 7 relief. Your eligibility is determined by the means test. The means test looks at your gross income for the past 6 months prior to filing. If your income is below the median income for your state, then you are eligible for Chapter 7. If your income is above the median, then you must complete the means test. Median incomes will change periodically. In South Carolina the annual median incomes effective November 1, 2010 are as follows:
Household Size 1 - $ 36,457
Household Size 2 - $ 49,685
Household Size 3 - $ 51,887
Household Size 4 - $ 62,056
For additional information go to:
www.justice.gov/ust/eo/bapcpa/20101101/bci_data/median_income_table.htm
Q: What is the automatic stay?
A: When a Chapter 7 Bankruptcy petition is filed an “automatic stay” which prohibits any further collection efforts is imposed upon all creditors. This will stop collection agencies from calling you and will stay any court proceeding to collect money from you. There are certain exceptions to the automatic stay including criminal actions, actions to enforce or modify a domestic support order and IRS Tax Audits. Further, a secured creditor may ask the court to lift the automatic stay if the debtor has no equity in the asset or if the secured creditor is not “adequately protected”. The automatic stay in Chapter 7 remains in place until it is lifted by the court, the debtor is discharged or the property is no longer part of the estate. If a creditor violates the automatic stay, said creditor may be sanctioned by the Bankruptcy Court.
Q: Will I lose all my property in a Chapter 7 Bankruptcy?
A: South Carolina state law has various exemptions which will allow you to retain a good amount of your property when you file bankruptcy. For example, if you own your home, South Carolina will allow you to keep up to $51,450 in equity if you are single and $102,900 in equity if you are married and your spouse jointly owns the home. These amounts are periodically adjusted. Additionally, most pension plans, private retirement plans and IRAs are exempt in their entirety.
Q: What is Chapter 13 Bankruptcy?
A: Chapter 13 Bankruptcy is officially titled “Readjustment of Debts for Individuals with Regular Income”. Chapter 13 debtors are usually individuals who are either attempting to bring current delinquent mortgage payments, ineligible for Chapter 7 because of the means test, have received a Chapter 7 discharge within the last 8 years prior to the petition or have non-exempt assets they desire to retain. A Chapter 13 debtor must be an individual with regular income and with unsecured debts less than $307,625 and secured debts less than $922,975. These amounts are periodically adjusted. A Chapter 13 debtor enters into a payment plan over which he or she pays back a portion of his or her debts. After completing the plan, the Debtor is discharged from any remaining liability with some exceptions including amounts acquired by fraud, student loans, and domestic support obligations.
Q: How much will my monthly payment be under a Chapter 13 plan?
A: Your plan payment depends on several factors. First, general unsecured creditors must receive an amount equal to or greater than the amount they would receive under hypothetical Chapter 7 liquidation. For example, a Chapter 13 debtor with $25,000 in non-exempt property must pay the creditors at least $25,000 in present value terms over the duration of the plan. Second, the debtor must commit all of his or her disposable income to the plan for the duration of the plan. Disposable income is computed in a similar manner to method used to determine Chapter 7 eligibility. There are other requirements such as that the plan must be presented in good faith and, as mentioned previously, that all priority creditors must be paid in full.
Q: Can I be fired from my job for filing bankruptcy?
A: No. The U. S. Bankruptcy Law specifically prohibits discrimination based upon a debtor filing for protection under the bankruptcy laws.
Q: If I am financing my car, do I have to continue making the monthly payments?
A: If you want to keep your vehicle, it will be necessary for you to continue making the monthly payments. In a Chapter 7, you have the right to return the vehicle to the finance company if you do not want to keep your car. In a Chapter 13 plan the vehicle payments are made in accordance to the plan and usually results in a significant reduction in monthly payments.
Q: How much does it cost to file for bankruptcy?
A: Currently, the court cost to file a Chapter 7 case is $ 299 and the chapter 13 case is $274. In a chapter 13, the court cost must be paid by the time the case is filed; although in some instances the court cost may be paid in installments. The attorney fees for a Chapter 13 case will depend on the nature and complexity of the case. The fees must be approved by the court. Typically, a portion of the fee is paid before the filing of the Chapter 13 bankruptcy, and the balance of the attorney fee is paid through the Chapter 13 plan. During your consultation we will be able to quote you an exact fee. The chapter 7 court cost and attorney fee must be paid prior to the filing of the petition.
Q: Will my credit be ruined for 10 years after the bankruptcy?
A: The bankruptcy will be the first step in re-establishing your credit. Typically, the debtor's credit is ruined, or about to be ruined, at the time the debtor seeks legal advice. The Chapter 7 bankruptcy will discharge all outstanding debt and the credit reports will reflect that the outstanding debt is reduced to $0.00. The average debtor is typically able to re-establish good credit within 18 to 30 months.
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