DISCHARGE, What debts are dischargeable?
11 U.S.C. § 523 lists exceptions to discharge. In general, all other debts are dischargeable.
Some debts listed in 11 U.S.C. § 523, such as those based on fraudulent conduct, embezzlement or willful and malicious injury to another, are discharged unless a complaint to deny discharge of that debt is timely filed with the bankruptcy court. Ordinarily, these complaints must be filed within sixty (60) days of the first date set for the meeting of creditors.
Additionally, debts that were not listed on your bankruptcy schedules or that were incurred after you filed bankruptcy are generally not discharged.
DISCHARGE, Does every Debtor get discharged of every debt?
A discharge is a court order that forgives a debtor of certain specific debts. The discharge order prohibits a creditor from attempting to collect from a debtor a debt that has been discharged. However, not all debts are dischargeable. Parties can file written requests (adversary complaints) to have the court determine if a debt is dischargeable.
Some unsecured debts are not dischargeable because Congress has determined they are types of debts that should not be discharged because of public policy reasons. These debts are listed in Section 523 of the Bankruptcy Code.
Spousal and child support obligations; Certain tax debts; Most educational loans Debts related to injuries or death caused by driving while intoxicated; and Debts arising from fraudulent conduct.
It is also possible for a debtor to be denied a discharge of all unsecured debts if a debtor has not been honest, forthcoming, or cooperative in the bankruptcy case. These scenarios are listed in Section 727 of the Bankruptcy Code and usually involve the U.S. Trustee, a trustee, or a creditor filing a lawsuit in a chapter 7 bankruptcy case to determine that the debtor should be totally denied a discharge.
Debts that are secured by real or personal property are not dischargeable. For example, a creditor may be able to seize property even after a discharge is granted because the debtor has not kept up with payments. Even though the creditor may not collect on the unsecured portion of the debt, the property can still be foreclosed upon (residence, automobile, etc.).
Debtor asks the court to determine if a debt can be discharged -- Some creditors have obtained court judgments, and then filed a "lien" which can be used to sell property of the debtor. In some situations, a debtor may file a motion asking the court to remove such a lien. Also, a debtor may file an adversary proceeding asking the court to rule that other debts are dischargeable.
DISCHARGE, Do I have to do anything else to receive my discharge?
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 includes several new bars to the granting of a discharge. For example, all individual debtors must complete an instructional course concerning personal financial managements, and submit a certification of completion. Chapter 13 debtors must certify that any domestic support obligations are current. In some circumstances, a case may be closed without the discharge being granted. If that happens, the debtor will have to pay a fee to reopen the case and file the missing documents to get the discharge.
DEBT, How do I know if a debt is secured, unsecured, priority or administrative so I can fill out my schedules correctly?
A. Secured Debt
A secured debt is a debt that is backed by property. A creditor whose debt is"secured" has a right to take property to satisfy a "secured debt." For example, most homes are burdened by a "secured debt." This means that the lender has the right to take the home if the borrower fails to make payments on the loan. Most people who buy new cars give the lender a "security interest" in the car. This means that the debt is a "secured debt" and that the lender can take the car if the borrower fails to make payments on the car loan.
B. Unsecured Debt
A debt is unsecured if you have simply promised to pay someone a sum of money at a particular time, and you have not pledged any real or personal property as collateral for that debt.
C. Priority Debt
A priority debt is a debt entitled to priority in payment, ahead of most other debts, in a bankruptcy case. A listing of priority debts is given, in general terms, in 11 U.S.C. § 507 of the Bankruptcy Code. Examples of priority debts are claims for domestic support obligations, some taxes, and wage claims of employees. If you have questions deciding which of your debts are entitled to priority status, you should consult an attorney.
D. Administrative Debt
An administrative debt is also a priority debt and is one created when someone provides goods or services to your bankruptcy estate. The best example of an administrative debt is the fees generated by attorneys and other authorized professionals in representing the bankruptcy estate.
CREDIT REPORT, How do I get a bankruptcy removed from my credit report?
The Bankruptcy Court has no jurisdiction over credit reporting agencies. The Fair Credit Reporting Act, 6 U.S.C. Section 605, is the law that controls credit reporting agencies. The law states that credit reporting agencies may not report a bankruptcy case on a person's credit report after ten years from the date the bankruptcy case is filed. Other bad credit information is removed after seven years. The larger credit reporting agencies belong to an organization called the Associated Credit Bureaus. The policy of the Associated Credit Bureaus is to remove chapter 11 and chapter 13 cases from the credit report after seven years to encourage debtors to file under these chapters.
You may contact the Federal Trade Commission, Bureau of Consumer Protection in Washington, D.C. by calling (202) 326-2222. This office can provide further information on reestablishing credit and addressing credit problems. For information on credit practices, contact (202) 326-3224 or https://www.ftc.gov/about-ftc/bureaus-offices/bureau-consumer-protection
Credit Counseling vs. Personal Financial Management, what are the differences?
An individual debtor must complete TWO DIFFERENT CLASSES to obtain a discharge. The names for these courses are: 1) Credit Counseling; and 2) Personal Financial Management. The courses are different in two ways: (a) When the class must be taken; and (b) What type of individual debtor must take the class. If a bankruptcy case is filed jointly, each spouse must take both courses.
CREDIT COUNSELING, Before Filing For Bankruptcy – The Bankruptcy Code ordinarily requires an individual debtor (not a business debtor) to complete an approved course in Credit Counseling within 180 days before filing a bankruptcy case. See list of providers approved by the U.S. Trustee (link is external). The course can be completed in person, over the internet, or by telephone, and the credit counseling service will provide a certificate that the course was completed.
PERSONAL FINANCIAL MANAGEMENT, Very Soon After Filing for Bankruptcy - In order to obtain a discharge of debts, an individual debtor (not a business debtor) must complete an approved course in Personal Financial Management within 60 days after the 341(a) Meeting of Creditors. See list of providers approved by the U.S. Trustee. (link is external) The course can be completed in person, over the internet, or over the telephone, and the course provider will provide a Certificate of Completion.
CO-SIGNER, My ex-spouse has filed bankruptcy. He/she has listed me as a co-signer on a scheduled debt. What can I do? Does my divorce decree protect me?
If you are a co-obligor with your ex-spouse on a debt, the creditor can require the entire payment of that debt from you even though the divorce decree assigns the debt to your ex-spouse. Depending on the terms of your divorce decree, you may be able to have certain support obligations under it determined to be non-dischargeable by the bankruptcy court or in state court. You should seek legal advice for a thorough explanation of your rights and obligations in this area as soon as you find out that your ex-spouse has filed a bankruptcy.
Can the case filing fee be waived?
Only in a very limited circumstance and with court approval can the case filing fee be waived. For chapter 7 individual cases only, there is a procedure for proceeding In Forma Pauperis if the debtor’s income is less than 150 percent of the official poverty line applicable to your family size and you are unable to pay the fee in installments. If you cannot afford to pay the fee either in full at the time of filing or in installments, then you may request a waiver of the filing fee by completing Form B3B and filing it with the Clerk of Court. A judge will decide whether you have to pay the fee.
Alternatively, an individual debtor (but not a corporation or partnership) who is unable to pay the full fee at the time of filing may, at the time of commencing the case, file an application to pay the fee in installments using official Form B3A. If you file an application to pay in installments, you are required by Local Rule 1006-1(c) to pay 25% of the fee at the time you commence your case, and the remainder of the fee in continued payments of 25% commencing within thirty (30) days of the petition date and every twenty-five (25) days thereafter.
Can I get a copy of my Bankruptcy Petition when I file it?
If you would like to have a confirmed (file stamped) copy of the bankruptcy documents you file with the Clerk's office, you must make one extra copy of these documents for yourself. The Clerk will file stamp the extra copies and return them to you. If you are mailing your documents to the Clerk's office, you must include an extra copy and provide a self addressed, stamped envelope with enough postage to cover return postage for these documents.
You should keep copies of all legal documents, including your bankruptcy petition and discharge order, if granted, in a safe place as you may need them in the future to secure mortgages, loans, and/or to dispute credit reports
Can I fax documents to the Clerk’s office for filing?
No. Faxed documents are not accepted for filing.
Can I contact the Judge?
You are prohibited from contacting a judge. Federal Bankruptcy Rule 9003 prohibits parties from "ex parte" meetings or communications with the court concerning matters affecting any party.
Can I attend a bankruptcy court hearing by telephone?
Attendance at hearings by telephone is generally permitted unless another party to the proceeding objects. The local rule addressing this matter is contained in LBR 9074-1. Individuals wishing to appear at a hearing by telephone must notify the courtroom deputy prior to the hearing to request telephonic attendance. When asking for a telephonic appearance, a party must provide the courtroom deputy with the case number, day and time of hearing, and a contact phone number where the party can be reached. Since many hearings are scheduled at the same time, the party participating by telephone must remain available at the number given until the Court places the call.
What can bankruptcy do for me?
Bankruptcy may make it possible for you to:
Eliminate the legal obligation to pay most or all of your debts. This is called a“discharge” of debts. It is designed to give you a fresh financial start. Stop foreclosure on your house or mobile home and allow you an opportunity to catch up on missed payments. (Bankruptcy does not, however, automatically eliminate mortgages and other liens on your property without payment.) Prevent repossession of a car or other property, or force the creditor to return property even after it has been repossessed. Stop wage garnishment, debt collection harassment, and similar creditor actions to collect a debt. Restore or prevent termination of utility service. Allow you to challenge the claims of creditors who have committed fraud or who are otherwise trying to collect more than you really owe.
What bankruptcy can not do
Bankruptcy cannot cure every financial problem. Nor is it the right step for every individual. In bankruptcy, it is usually not possible to:
Eliminate certain rights of “secured” creditors. A “secured” creditor has taken a mortgage or other lien on property as collateral for the loan. Common examples are car loans and home mortgages. You can force secured creditors to take payments over time in the bankruptcy process and bankruptcy can eliminate your obligation to pay any additional money if your property is taken. Nevertheless, you generally can not keep the collateral unless you continue to pay the debt.
Discharge types of debts singled out by the bankruptcy law for special treatment, such as child support, alimony, certain other debts related to divorce, most student loans, court restitution orders, criminal fines, and some taxes.
Protect cosigners on your debts. When a relative or friend has co-signed a loan, and the consumer discharges the loan in bankruptcy, the cosigner may still have to repay all or part of the loan.
Discharge debts that arise after bankruptcy has been filed.
What are the consequences of filing bankruptcy?
Depending on a debtor's financial situation and reasons for filing, the consequences of filing for bankruptcy protection may outweigh the benefits. Those considering bankruptcy should be aware of the following:
Filing for bankruptcy protection is not free. Please refer to the Fee Schedule Not all debts are dischargeable.
Example: Secured creditors retain some rights which may permit them to seize property, even after a discharge is granted. Spousal and child support obligations, most student loans and most tax debts are not dischargeable.
Within 14 days of the filing of the bankruptcy petition, schedules of the debtor’s assets and liabilities must be filed. Failure to timely file the appropriate schedules may result in dismissal of the case and the barring of the debtor from filing again for 180 days (six months). 11 U.S.C. §521 mandates that a chapter 7 or chapter 13 case “shall be automatically dismissed effective on the 46th day after the date of filing of the petition” if the debtor fails to file “all information required by 11 U.S.C. §521(a)(1)” within 45 days of filing. If the case is dismissed and a discharge is entered by the court, the debtor is prohibited from being granted another discharge in chapter 7 and 11 within eight years. Fraudulent information or acts by the debtor are grounds for denial of a discharge and may be punishable as a criminal offense.