Will bankruptcy affect me negatively?

Consider that in 2004 nearly 1.6 million people sought relief from debts and claims of creditors by filing for bankruptcy. Federal Bankruptcy Code was established to help people erase the crushing effects—emotionally and economically—of excessive debt. The experienced bankruptcy attorneys of The Debt Doctors will guide you through this process, and prepare you for life after debt while helping devise a strategy that will minimize any negative effects.

I see a lot of people entering into bankruptcy, why shouldn’t I?

Bankruptcy is not something that is for everyone. In fact, often there are alternatives to bankruptcy that may produce far better results. We’ll provide you with honest information so that you can decide the course that is best for you.

Before you file for bankruptcy, make sure to consult with a bankruptcy attorney. There are critical issues regarding proper disclosure of your assets and the correct timing for filings that have to be done properly or you risk losing everything. And with modifications to the Bankruptcy Code taking effect in October, it’s even more important to ensure that you are working with a professional who is well-versed in the nuances of the new bankruptcy laws.

Are there different types of bankruptcy?

Yes. They’re known by the title of the Chapter of the Federal Bankruptcy Code in which they appear. Each "Chapter" contains a different set of laws and rules, including:

Chapter 7:
The most common form of bankruptcy, a Chapter 7 case is a liquidation proceeding, where unexempt property is sold to raise money to pay off the majority of debts. However, in most Chapter 7 cases The Debt Doctors can devise an exemption plan to protect the items that are important to you. It is available to individuals, married couples, partnerships and corporations.

Chapter 11:
This is bankruptcy for corporations or business owners and individuals not eligible for Chapter 7 or 13 relief.  It is a reorganization proceeding in which the debtor may continue in business or in possession of its property as a fiduciary in order to reorganize their finances.

Chapter 12:
This section of the bankruptcy code deals with farmers. Chapter 12 is a reorganization plan with certain benefits for family farmers whose debts fall within certain parameters.

Chapter 13:
An interest-free debt repayment plan where debts are consolidated and payments are made over a three-to-five-year period. Once confirmed by the bankruptcy judge, chapter 13 filing is often used to prevent foreclosure of a house or repossession of a car.

How does bankruptcy work?

A bankruptcy case begins with the filing of a petition and several forms in bankruptcy court. On the forms you’ll list all of your assets, debts, income, expenditures, as well as other personal background and financial information.

In a Chapter 7 case, generally the court will appoint a trustee to represent the interests of your creditors. About a month or so later, you’ll have to attend a 341 meeting (also called a meeting of creditors) with the trustee to answer questions regarding your assets, debts, and so forth. Despite the name, creditors rarely attend these meetings. After the meeting, the trustee liquidates (sells) unexempt property or enters a report that no assets will be sold. Then after a period of time your case will be discharged, meaning that you no longer legally owe your creditors and they are forbidden from attempting to collect any percentage of the unpaid balances you have with them.

A Chapter 13 case is a little different. It begins by your filing the same papers as under a Chapter 7. In addition to that paperwork, you have to file a plan for repaying your debts with the bankruptcy court. After the court approves the plan, then you will begin sending payments directly to the chapter 13 trustee. The trustee then pays your creditors according to the terms of the court-approved plan. The plan will prioritize the order in which creditors are paid. When you have followed the plan to the end and your creditors have been paid in accordance to it, the court will discharge your case.

Does bankruptcy wipe out all of my debts?

No. In fact, it’s the key reason to consult with a bankruptcy attorney, to ensure that you’re able to most effectively erase your debt. After all, if bankruptcy isn’t going to help, why go through the process.

But in general, most common debts that will be discharged are: utility bills; credit card bills; legal, medical and accounting bills; unsecured loans; and loans from friends and families.

Will I be able to get credit again?

Yes, there is life after debt—particularly when it comes to credit. But keep in mind that, before filing for bankruptcy, your credit was not good and isn’t going to be good right after your case is discharged. However, if you take the right steps, after a few years the bankruptcy will disappear from your credit report. Debt Doctors attorneys can guide you on the path that will eventually enable you to secure lower rates on loans and credit cards.

How do I get started?

Your first appointment with The Debt Doctors is always free. Our main goal is to give you honest advice based on your financial situation and provide you with enough information to allow you to make an informed decision whether bankruptcy is right for you. In order to schedule an appointment call us at 1-877-Debt-Dox of complete a free legal evaluation form.

How can I pay for the bankruptcy procedures when I can’t pay my bills?

The Debt Doctors offer affordable payment options. You can retain the Debt Doctors for as little as $100. Once you pay the minimum $100 retainer, The Debt Doctors will help you manage your creditors to free up money to pay attorney fees and be available for legal advice and pre-petition planning. During this time you can set up weekly, bi-weekly, or monthly payment plan. Once you have provided The Debt Doctors with the full balance of your attorneys’ fees filing fees, costs, and all requested information we will prepare your petition and file your case.

I’ve heard that new bankruptcy laws will be taking effect. How could that affect me?

The new bankruptcy laws require more from debtors, including more documentation and more fees, making it critically important to follow the rules of the revised codes.
The new laws also require pre-filing consultations with an approved consumer credit counseling service, in an attempt to force consumers to pay debts outside of bankruptcy. And an income-based "means-test" will be implemented for the debtor over their states median income level. Those who do not pass the means test would be forced into a Chapter 13 or be forced to dismiss the case. These are only a few changes that will occur October 17th when the legislation takes affect.

If I’m getting credit counseling, do I still need a bankruptcy attorney?

Absolutely. In fact, your first stop should be to an attorney who is thoroughly educated in the new laws. Any missteps taken in the pre-filing stages could seriously affect your ability to declare bankruptcy and achieve debt relief. A Debt Doctors attorney can help you avoid the pitfalls and set the stage for you to enjoy life after debt.