Bankruptcy Frequently Asked Questions – F.A.Q.
1. How Does it Work?
First, you will speak with one of our highly trained legal assistants who will gather information from you regarding your income to debt ratio, your marital status, and how to contact you. After your intake form is reviewed, you will meet with a Kansas bankruptcy attorney for your free consultation. If you are married and are considering filing jointly, it is usually much better for both of you to attend the initial appointment. Click here for a list of documents we ask that you bring to the appointment if you have them available.
IF YOU DO NOT HAVE ALL OF THE ABOVE, COME ANYWAY. WE WILL STILL BE ABLE TO MEET AND DISCUSS YOUR OPTIONS. THE ABOVE PAPERWORK IS RECOMMENDED, BUT NOT ABSOLUTELY NECESSARY FOR THE FREE CONSULTATION.
If you decide to go forward, the law requires you to attend a form of credit counseling called “pre-bankruptcy certification.” You can do this either online or by phone. Any fees associated with that (usually ranging from $5 to $50) must be paid directly to the provider at the time the counseling is done.
Your attorney and our staff will work with you to gather the information and documents we need to draft all the paperwork necessary to file. Once we have “pre-drafted” the pleadings, to draft the paperwork, we will make you an appointment with your attorney to review the paperwork and sign it. It will then be filed with the Court.
Once your case is filed with the Court, all collection activity must stop immediately. Your creditors will receive a notice from the Court, telling them that they cannot:
- Sue you;
- Garnish your paycheck or bank account;
- Repossess or seize any property of yours;
- Send you any letters; or
- Call to harass you for payment.
If they violate this order, notify our office immediately.
Approximately 25 – 40 days after filing, you will go to Court for a “meeting of creditors.” (This is a bad choice of names, since creditors rarely show up at these meetings). You will meet with the Trustee, and will be asked a few questions to make sure you understand how bankruptcy works. It usually last only a few minutes, and there are no “trick questions”, nor will there be any attempts to criticize or harass you.
Usually, this will be the only time you will have to go to Court. Approximately four months later, in most Chapter 7 cases, you will receive your discharge order in the mail, and you are finished with the process. However, the important thing to remember is that the protection and relief of bankruptcy starts on the day the paperwork is filed.
In Chapter 13, you will go to the creditors meeting as well. At that meeting, the Trustee will give you a booklet explaining your rights and responsibilities to his office on your payments, and will review your plan with you. In Chapter 13, about one to two months later, the Court will hold a “confirmation hearing”. You do not have to attend the second hearing; only your attorney has to be there. You will continue to make your payments, and after all payments have been made, then you will receive a discharge order.
Usually, there will be only one time you will have to go to court. You will, however, have to complete a “Financial Management Course” before receiving your discharge. In Chapter 7, you must do it and we must file the certificate of completion not later than 45 days after you go to court. In Chapter 13, you can do it any time prior to your discharge (although we recommend you get it out of the way as soon as possible). As with the credit counseling, you can do it online or over the phone (cost ranges from $12.50 – $75). Finally, the Chapter 13 Trustee (for Chapter 13 filers only) offers his own course, which you can attend the same day you go to court. There is no charge for that course, featuring a video presentation by Dave Ramsey, the radio host and best-selling author of Total Money Makeover. It is usually held in the afternoon. We think the last option is the best, provided you can accommodate your schedule to attend.
2. Do I need to list everyone I owe, even if I plan on paying them?
You should list all creditors, even those you want to pay. Your house and car loans must be listed, and usually this is not a problem, since the bank knows that they will be taken care of (they must be paid in one way or another if you want to keep the property). Some people don’t want to list the family doctor, for example, because they want to make sure he/she gets paid and will continue to treat them. Remember, bankruptcy doesn’t prevent you from paying your creditors – it only means they can’t force you to pay them. You can list the family doctor, and still pay him if you choose to.
In Chapter 13, you have an additional option. You can create “special class creditors”. These are creditors whose debts would normally not be paid, but that you want to pay for some valid reason. For example, the most frequently-created class is “doctors to be paid so that they will continue to see me.” You can also pay co-signed debts as a special class. If you do this, the creditor is prohibited from taking any adverse action against your cosigner, including putting any bad marks on their credit report. Special class creditors are also paid through the plan payments you make to the Trustee.
3. Will bankruptcy stop garnishments, repossessions, and other collection actions, and when?
The day the papers are filed, all collection actions must stop immediately. Although bankruptcy cannot get back money already collected by garnishment prior to the filing, it can stop future garnishments. Even if the creditor already has a judgment against you, the debt will be wiped out.
With repossessions, if the vehicle has been repossessed and sold prior to filing, unfortunately, we cannot force them to give it back. However, if the vehicle has not been repossessed prior to filing, we can keep them from taking it. If it has been repossessed, but has not yet been sold, we can force them to return it. (However, you should know that most lenders try to get the vehicle to an auction within 1 week after repossession. If you have not already started the process with a bankruptcy attorney before the repossession, it is highly doubtful you can get on file in time to get the car back prior to sale.) If any collection agencies bother you after the filing, refer them to us and we will deal with them. The penalties for creditors who violate the Court’s order to stop can be very severe, and can even include jail.
4. What is the cost, and when must I pay it?
Legal fees, like surgery bills, differ based on the type of work done and the complexity of the case. Your decision to hire an attorney, like hiring a doctor, should not be based on price alone. However, we understand that it is a significant investment. We try to make it affordable as well as understandable. At the time of your in-person consultation with your attorney, after careful evaluation of your case, you will receive a fee quote – in writing.
In Chapter 7, the Bankruptcy Code requires the attorney fees be paid prior to the filing of the case. The US Trustee for the District of Kansas has advised attorneys in this District that, in their opinion, any agreement providing for payment of attorney fees after filing in a Chapter 7 is not allowed under federal law (although, in some cases, assignments of future tax refunds are permitted if filed at the time the case is filed). Some attorneys may disagree with the US Trustee’s interpretation. If so, you should ask them to show you, in writing, a Bankruptcy Court decision in Kansas(less than 10 years old) proving they are right. If they can’t, you must decide whether it is in your best interest to hire that attorney.
There is also a filing fee of $325, which goes to the Court (we don’t get any of that; we just get the fun of collecting it for them!). These fees are due before the bankruptcy can be filed. You do not need to bring any money to the initial appointment with us. There is no charge for that meeting.
For an individual basic Chapter 13, the attorney fees and the filing fee of $325 are not required to be paid before the case is filed – those are paid out of the payments you make to the court. You can pay all or part of those fees upfront, but you don’t have to, and it makes no difference to us. So, even if you don’t have the money, you can still get your case on file, and get immediate protection, with no legal fees or filing fees required to be paid upfront.
Again, you do not need to bring any money with you to the initial appointment.
Disclaimer: Cloon Legal Services, is a Debt Relief Agency. We help people file for Kansas Bankruptcy Relief under the Bankruptcy Code. The information contained on this website is not to be construed as legal advice. It is not intended to solicit or form an attorney-client relationship. We do not guarantee any result and prior results do not guarantee a similar outcome. This is an attorney advertisement and this website is for informational purposes only.