1. How do I know I’m in financial trouble?
2. What should I look for in a bankruptcy attorney?
3. How do I know what kind of bankruptcy to file?
4. I’m married; does my spouse need to file bankruptcy with me?
5. What are the benefits of filing bankruptcy?
6. Will I lose any property?
7. Will the Bankruptcy Court wipe out all of my debts?
8. Which debts do I have to list in my bankruptcy?
9. Can I protect my co-signer?
10. Will I have to appear before a Judge?
11. Will my employer find out that I filed bankruptcy?
12. How will bankruptcy affect my credit?

1. How do I know I’m in financial trouble?
Some of the warning signs include: having difficulty paying bills and meeting rent or mortgage payments on time; being extended beyond your credit limit; making only minimum payments on credit cards; having little or no savings; getting frequent calls and letters from bill collectors; or getting threats of foreclosure, repossession, garnishment or lawsuits.
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2. What should I look for in a bankruptcy attorney?
As not all attorneys are the same, it is not wise to just shop for the lowest price. Bankruptcy law can be very complex, so you should look for an attorney with several years of experience in bankruptcy practice. He or she should belong to local and national bankruptcy legal associations in order to keep up with the latest developments in the field; pre-eminent bankruptcy attorneys even speak at their conventions.
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3. How do I know what kind of bankruptcy to file?
There are several chapters of bankruptcy available to help people and organizations in financial distress. Most people need to file either a Chapter 7 (liquidation) bankruptcy, or a Chapter 13 (debt restructuring plan) bankruptcy. [Chapter 11 is available to people or organizations with larger amounts of debt. Chapter 12 is available for farmers.]

In a Chapter 7, some debts, such as credit cards, medical bills, utility bills, and personal loans are wiped out completely. Debts with collateral, however, like mortgages, car payments, and secured loans, remain due and payable, unless the property is returned to the creditor. The law specifies the income limits for people who may file Chapter 7s. In addition, if a Chapter 7 debtor has too much equity in any asset (bank accounts, house, car, etc.) the asset may be sold, and the proceeds given to his or her creditors.

In a Chapter 13, all debts are consolidated into one monthly payment. Some debt amounts can be reduced, and some may even be eliminated, making for a monthly payment that is more affordable for the debtor.

The choice of which type of bankruptcy should be filed will depend on the specifics of your individual situation and goals. A qualified bankruptcy attorney should be consulted to explain your bankruptcy and non-bankruptcy options.
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3. I’m married; does my spouse need to file bankruptcy with me?
Married people can file separate bankruptcies, or one spouse can file bankruptcy alone. However, if both spouses are responsible for an obligation, and only one spouse files for bankruptcy, the other spouse will still owe the debt. The creditors will have the right to come after the non-filing spouse as if a bankruptcy had not been filed. In circumstances where parties have recently married and most of the debt is from only one of the spouses, only the spouse that owes the debt needs to file bankruptcy.
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4. What are the benefits of filing bankruptcy?
As soon as your bankruptcy is filed with the Court, all of your creditors are forbidden to continue to try to collect on their debts. That means that any foreclosure proceeding is stopped, repossession prevented, garnishments halted, and utilities kept on or restored. In addition, and perhaps just as importantly, threatening phone calls and letters from collection agencies must stop. If your debts are overwhelming and you can see no way out, bankruptcy can give you a fresh start. If your income has declined so that you can’t meet your obligations, bankruptcy can reduce your obligations, or possibly eliminate some of them, so you can support yourself in a reasonable manner. Bankruptcy also offers peace of mind, by taking away the burden of dealing with creditors. Moving forward, bankruptcy helps you get a new start and equips you with useful new financial skills.
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5. Will I lose any property?
One of the most common misconceptions about filing bankruptcy is that it will cause you to lose all of your property. This is not true! Under the law, you are allowed to keep certain property that will help you to get a fresh financial start. Those items which cannot be taken from you are called your exempt property. An experienced attorney will be able to provide you with sound legal advice as to what property, if any, stands a chance of being lost. If any of your property may be at risk of loss in a Chapter 7, the attorney may suggest filing a Chapter 13 instead, so that you will be able to keep it.
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6. Will the Bankruptcy Court wipe out all of my debts?
No, certain debts cannot be wiped out (discharged) in a bankruptcy. These include most taxes, student loans, alimony or child support payments, criminal restitution, debts from substantial use of credit cards immediately before filing, and any debts resulting from fraud. Exceptions to discharge can be difficult to understand and apply, so this is an area where the advice of an experienced attorney is generally required.
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7. Which debts do I have to list in my bankruptcy?
You must list every creditor to whom you owe a debt. This includes your credit cards, medical bills, personal loans, payday loans, student loans, mortgage, car note, and even loans to family members and friends. All creditors are listed under penalty of perjury, so it is important that you list them all. If you forget about some until after your case has been filed, please contact your attorney’s office to see if they can still be added and how much the court will charge for the addition. You will need to provide your attorney’s office with the creditor’s name and address, your account number, the amount that you owe, and the date the debt was incurred.
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8. Can I protect my co-signer?
A Chapter 7 will not protect co-debtors, co-makers, co-signers, guarantors, or any other party who may also be liable to your creditors for a joint debt. However, should you file a Chapter 13, any of these guarantors should be protected to the extent the Chapter 13 proposes to repay the debt. As long as the Chapter 13 is in effect, the creditor should not be able to collect all or any part of the debt, including filing a lawsuit against the co-signer, as long as the debtor is making the required plan payments. The purpose of this provision of Chapter 13 is to allow the debtor the opportunity to repay the debt without permitting the creditor to bring undue pressure on the debtor by approaching the co-debtor for payment.
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9. Will I have to appear before a Judge?
Few debtors will have to appear before a Judge at a Court hearing. However, all debtors have to appear at a hearing called the First Meeting of Creditors, which takes place one to two months after the bankruptcy is filed. Although this meeting often takes place in a Court building, and the debtors are sworn in under penalty of perjury, the hearing is conducted by a trustee or hearing officer rather than by a Judge. At this meeting, the debtors are asked about the debts and assets listed in their bankruptcy. The debtors will have previously reviewed and signed all of the documents, so there should be no surprises. The testimony should not take long, and the debtors’ attorneys are also present to represent them at the hearing. Creditors may also attend the hearing, although most of them do not.
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10. Will my employer find out that I filed bankruptcy?
Employers are not notified when an employee files a Chapter 7. However, for a Chapter 13 wage earner plan, all clients in the Southern District of Illinois, and some clients in the Eastern District of Missouri, will be required to have their plan payment sent to the Trustee directly from their employer’s payroll department. Regardless of the District, historically the Chapter 13 cases which have the greatest rate of success are those which are paid through a wage order to the debtor’s employer.
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11. How will bankruptcy affect my credit?
Since a bankruptcy most often occurs after financial difficulties arise, in most cases an individual’s credit report has already been damaged before a filing takes place. Chances are one or more creditors have already turned in reports of delinquent accounts or judgments. However, it is possible that future creditors may consider the reasons that caused you to file bankruptcy, such as loss of a job, illness, unexpected expenses, divorce or a death in the family. You can also get a secured credit card, which is secured by your own bank account.

A Chapter 13 bankruptcy will remain on your credit report for 7 years, and a Chapter 7 bankruptcy will remain on the report for 10 years; however bankruptcy will also remove the discharged debts from the calculation of your debt to income ratio. While the filing of a bankruptcy will likely have a negative effect on your credit score, it is possible to rebuild your credit. Some practical suggestions to accomplish this are to hold a steady job, don’t move from place to place, take out a loan and repay it early, pay your bills after the bankruptcy on an ongoing basis, or save some money in a bank account to show you have the responsibility to put money aside.

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