Questions About Bankruptcy

Experienced Bankruptcy Attorney Margaret TravisYour Common Questions About Bankruptcy

We answered these common questions about bankruptcy to give you an idea of what may happen generally in a bankruptcy. However, a bankruptcy filing is a complex legal proceeding with many factors determining what will happen in your bankruptcy. You really need to consult an experienced bankruptcy attorney like Margaret Travis, who can help you sort through all the considerations that determine what you can expect. Our initial consultation is free, so call us today.

Q: I have a lot of bills. How do I know if bankruptcy will help me?

A: A bankruptcy may help structure and eventually discharge your debt. The bills you have, how much you owe, your assets, how much you make, and how many members in your household all go into determining whether Chapter 7 or Chapter 13 will work best for you. An experienced bankruptcy attorney can help you understand your options and answer common questions about bankruptcy.

Q: What is the difference between a Chapter 7 and a Chapter 13 bankruptcy?

A: An individual debtor, a married couple, or one individual in a married couple may file either a Chapter 7 or a Chapter 13 under the Bankruptcy Code. Each type of bankruptcy has specific requirements.

In a Chapter 7, also known as liquidation, we list everyone you owe money to, list everything you own, take all the exemptions you are allowed under the law, and at the end of the process you get a discharge. This means you are no longer personally liable for the debt. If you think you have unexempt assets, speak to your attorney before you do anything.

In a Chapter 13, also known as “reorganization of an individual wage earner,” we take all of the steps in a Chapter 7 but instead of an immediate discharge we formulate a plan where you will repay some, or all, of your debts over the next three to five years. At the end of the plan term, you receive a discharge. Chapter 13 requires you to have regular income and limits how much secured and unsecured debt you can list in your filing. Again, a knowledgeable bankruptcy attorney will assess your debts and assets and help you understand the requirements and what may work for your situation. She will also answer common questions about bankruptcy so you know what to expect.

Q: How do I know whether I need to file a Chapter 7 or a Chapter 13 bankruptcy?

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A: It depends on a variety of factors: your income, assets, number of dependents, debts, and your financial goals. We use the “means test” to determine whether you qualify to file a Chapter 7 or must file a Chapter 13. Under some circumstances, Chapter 13 might work best because some kinds of debt may be dealt with in a Chapter 13 where they cannot be in a Chapter 7. Again, consult a reputable attorney for help.

Q: I have a lot of medical debt. Will bankruptcy get rid of my medical debt?

A: Generally, yes, you can discharge your unsecured, non-priority debts, like medical debt. Be sure to discuss the specifics of what you owe with your attorney.

Q: What does “unsecured debt” mean?

A: Unsecured debts, like your credit card and medical bills, typically do not attach to property. With secured debts, like your car loans and mortgage, you put up property as collateral.

Q: Can I discharge my student loans?

A: Generally, no, you cannot discharge your student loans in bankruptcy. While you can discharge the vast majority of your unsecured, non-priority debts (like medical bills, credit card bills, utility bills, and personal loans), generally you cannot discharge your student loans. The Bankruptcy Code lists student loans as debt not dischargeable unless it “would impose an undue hardship on the debtor and the debtor’s dependents.” While this sounds good, you will likely find proving the required “hardship” impossible. (See text of 11 U.S.C. § 523). However, the law in this area is slowly changing.

Q: Will bankruptcy get rid of all my debts?

A: No. You cannot discharge some debts in bankruptcy, including: some tax debts, student loans, unpaid fines, child support, alimony, property settlement in a divorce, and some types of criminal damages, among others. If you have debts secured by exempt assets you wish to keep, you may, generally, keep them if you can afford to continue to pay for them.

Q: I own my home. What will happen to it?

A: You definitely need to ask a qualified bankruptcy attorney this question. There are many variables (whether you file Chapter 7 or Chapter 13, whether you owe money on your home, whether you can afford to keep making your payments, whether you are behind on payments, whether your home qualifies for an exemption) for us to answer in a general way. However, please be assured if you can afford to keep making your mortgage payments, you likely won’t need to give up your home. Your bankruptcy attorney will ask for documents on your home and will help you understand what to expect as well as answer common questions about this important asset.

Q: Can I keep my car?

A: Again, the biggest factor is whether you can afford your car payment. Your bankruptcy attorney will discuss your vehicles with you so you know what to expect.

Q: Where can I file for bankruptcy?

A: You may file in the state where you have lived for at least 180 days before filing.

Q: What happens when I file?

A: We have a page for Chapter 7 Bankruptcy and another page for Chapter 13 Bankruptcy. After you review this general information, we recommend you discuss your questions with your attorney.

Q: I’m married. Does my spouse need to take bankruptcy with me?

A: Be sure to ask Ms. Travis this question. Married individuals may file without their spouses. However, all household income and expenses must be accounted for.

Q: How much will a bankruptcy cost?

A: In Oklahoma, you can expect to pay both costs (court and other) and an attorney fee to file a bankruptcy. Costs include your filing fee, fees for two required online courses (the courses typically cost $10-20 each), and the fee to pull a credit report. If you have low income, you may qualify for a waiver to help with some of these costs. Discuss this option with your attorney.

In addition to the costs, you will pay your attorney a fee. Generally, bankruptcy attorneys require you to pay the fee prior to filing. Different attorneys charge different fees. We recommend you discuss the attorney fee and court costs for bankruptcy, and what the attorney will provide when you speak with an attorney. Ms. Travis will discuss her fee agreement when you meet with her.

Q: What will bankruptcy do to my credit?

A: Initially, your bankruptcy will have a big impact on your credit score, which will lessen over time. However, having late payments and judgments against you will also ruin your credit. Bankruptcy gives you the opportunity to begin rebuilding your credit.

Q: What documents and resources do I need to gather in order to file?

A: Before your lawyer agrees to file, she will want you to provide all the required documentation for the following:

  • Your household income (pay stubs for everyone)
  • Bank statements for all your accounts (including retirement)
  • Tax returns for the previous 4 years
  • Your deed, note, and mortgage if you own your house
  • Titles to vehicles in your name
  • All your bills
  • Collection letters and suit papers if filed
  • Your Social Security card and driver’s license

If you are serious about filing for bankruptcy, start gathering and organizing this documentation. Ms. Travis wants to have all of this before she makes an appointment with you.

Q: Why should I choose Margaret Travis and Travis Law Office to help with my bankruptcy?

A: Margaret Travis has the expertise to know what to do, the experience to know what issues may come up for you, and the compassion to understand what you are going through. Margaret’s satisfied clients picked her for the Oklahoman’s Reader’s Choice Awards Finalist in 2020 and Best for the previous two years. Call today to see how smoothly a bankruptcy can go when your attorney really cares about you.

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