Bankruptcy Frequently Asked Questions

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• Your Appointment
• General Questions
• Consumer Law Litigation
• Chapter 7 Bankruptcy
• Chapter 13 Bankruptcy
• Violations of Stays and Injunctions

Do you have a question that we have not answered? Please feel free to call our office at (207) 283-3777 for any assistance with your bankruptcy concerns.

Your Appointment with Molleur Law Office

"How do I schedule an appointment?"

Please contact our office: (207) 283-3777, or email to schedule an appointment.

"How long will the initial consultation last, and what do I need to bring?"

The initial consultation will last approximately 1 hour, and you should bring:

• Your last 2 years income tax returns
• Recent pay stub
• List of assets
• List of debts and outstanding bills
  
• Any pending litigation
• Proposed monthly budget
• Watch My Video on Preparing for our Consultation

Additionally, you may fill out Schedule I- Current Income, and Schedule J- Current Expenditures if you are seriously considering bankruptcy and would like to further prepare for our meeting.

"What is the cost of the initial consultation?"

The cost of the initial conference is built into the cost of filing; if a bankruptcy case is not filed, there is no charge for the initial consultation.

• See cost for Chapter 7 bankruptcy
• See cost for Chapter 13 bankruptcy

"Who will I meet with at the initial appointment?"

You may first meet with a paralegal who will review all the documents you have brought to the meeting. The paralegal will also help you complete worksheets which will allow the attorney to completely evaluate your financial circumstances. The attorney will then meet with you to review your legal alternatives and explain how each type of bankruptcy might assist you.

What will we discuss with the attorney at the initial meeting?

The attorney will consider all of your bankruptcy as well as your non-bankruptcy alternatives to help you out of the financial problems you are experiencing. Both types of bankruptcy (Chapters 7 and 13) will be explained, and possible workouts or negotiations with creditors will also be discussed, keeping in mind your particular financial condition.

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Bankruptcy Filing and General Questions

"What are exempt assets?"

State and Federal law permit individuals (debtors) to retain certain types and amounts of property when they file bankruptcy. The property debtors can retain is called "exempt property". Exempt property or "exemptions" enable debtors to start over financially with some property after bankruptcy and, hopefully, reduce the likelihood that debtors will be forced into financial trouble in the future.

"Will creditors and bill collectors stop calling me after I file bankruptcy?"

Yes. One of the most important provisions of the Bankruptcy Code is called the "automatic stay". This part of the Code prohibits creditors from calling, writing, suing, or taking any other action against a debtor in an effort to collect a debt. If creditors persist in contacting a debtor after filing bankruptcy, the Court may sanction the creditors by ordering the creditors to pay compensatory and/or punitive damages, plus attorneys fees incurred by the debtor in bringing the matter before the Court.

> Read more about Stays and Injunctions

"Who notifies the creditors that I filed bankruptcy?"

The Bankruptcy Court sends a notice to all creditors listed on your bankruptcy petition, schedules, statements and mailing matrix. You are required to provide the Court with an accurate list of your creditors for the Court to perform this function. The notice alerts the creditors of the bankruptcy filing, invites them to the meeting you have with the Trustee, and instructs them to take no further steps to try to collect their claims against you.

"Must I list all my creditors when I file bankruptcy?"

Yes. It is critical that you list every creditor to whom you owe money when you file. Even if you do not believe you owe the creditor money, but the creditor believes you owe money, you should list the creditor. In listing creditors, it is particularly important to list friends and relatives from whom you borrowed money.

"Can I negotiate a settlement of my debts with creditors without filing bankruptcy?"

Yes, it is possible to negotiate a settlement of debts with creditors, provided that the creditors are willing to work with you. Frequently, however, creditors will not agree to settle your debts because the debt was recently incurred (within the past year), or the creditors will insist upon payment settlement terms which you cannot meet. For example, creditors may require that a settlement be paid in cash immediately upon reaching an agreement with you.

If you do not have access to enough cash to pay the settlement, you may lose the opportunity to settle. Creditors also move accounts from one collection agency to another while they try to collect from you. Simply because you can reach an agreement with one collection agency for settlement doesn’t mean you can reach that same agreement with the subsequent collection agency if you are unable to come up with the cash to complete the deal initially.

Finally, creditors who settle with you frequently send you a 1099 form at the end of the year which will label the money you did not pay them in the settlement as income to you. Example: If you owe a credit card company $10,000, and the company agrees to settle with you for $7,000, the company may send you a 1099 form at the end of the year showing that you had income of $3,000. You may have to pay both federal and state income taxes on that income.

"Will my bankruptcy filing be in the newspaper?"

Bankruptcy filings are public records and can appear in the newspaper. However, in the southern part of the State of Maine, the newspapers have not listed bankruptcy filings for the past few years. It is unlikely that your bankruptcy will show up in print.

"What is the effect of bankruptcy on my credit report?"

A bankruptcy filing will appear on your credit reports and remain there for 7 years if you file a Chapter 13 and 10 years if you file a Chapter 7. Notwithstanding the fact that the bankruptcy will be listed, many people find that it is easier for them to obtain credit after they file bankruptcy than it was immediately prior to filing bankruptcy. The reason bankruptcy makes future credit easier to obtain is that bankruptcy stops the continued negative notations on your credit report and permits your positive future credit to stand out more clearly on your reports. This is particularly true if you take the steps to repair your credit reports after your bankruptcy filing, and if you continue to pay for a car loan or mortgage that you had before you filing bankruptcy. Many mortgage companies, when trying to assist someone in getting a home mortgage, will encourage a borrower with less than stellar credit to consider filing bankruptcy to discharge unsecured debt and thereby make it easier to pay for a mortgage.

"How long will it take for me to re-establish my credit after bankruptcy?"

In the past, it took years before a person filing bankruptcy could get credit again for cars or home loans. Today, the credit markets are much more willing to allow a person who just filed bankruptcy to obtain a car loan or mortgage immediately after receiving their bankruptcy discharge. I have had clients who bought new vehicles days after receiving their discharge, and buying houses months after their discharge. Of course, each person’s situation is different and future lenders place considerable importance upon the stability of that person’s employment and the amount of their income. Another reason why creditors are willing to provide new credit so quickly after an individual files bankruptcy is that you can only file a Chapter 7 once every 8 years. You can file Chapter 13 much more frequently, which is why Chapter 13 can be a safety valve for individuals who experience repeated financial problems.

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"What happens if I fail to list a creditor on my bankruptcy schedules?"

You will not be able to discharge that debt if you don't list the debt. This rule applies in both a Chapter 7 and Chapter 13.

"What is a discharge?"

The purpose in filing bankruptcy is to eliminate debt. At the end of every bankruptcy that is successfully completed, a debtor receives an order from the Bankruptcy Court known as a “discharge”. The one page discharge order is the paper every debtor seeks through the bankruptcy process. If a debtor files bankruptcy and does not receive a discharge, the experience will probably have been an expensive waste of time since creditors will be able to pursue and collect the bills after the bankruptcy is completed.

"Must I list all my assets when I file bankruptcy?"

Yes. It is very important to list all of your property when you file bankruptcy, no matter what Chapter you file, and no matter where the property is located or the nature of your interest in the property. Your failure to accurately list your property could cause you to lose your right to a discharge, and also cause you to be criminally prosecuted by the U.S. Attorneys Office in Federal Court.

"If I do not want to discharge a debt, may I continue to pay it?"

At the end of a bankruptcy, even if a debt is discharged, you may continue to pay it, if you wish. The discharge simply legally prohibits the creditor from forcing you to continue the payments.

If you have secured debts (such as a house mortgage or car loans), and you wish to retain the house or vehicles, and you file a Chapter 7 bankruptcy, you can enter into a written “reaffirmation agreement” with the creditors that must also be signed by your counsel and approved by the Court. If you reaffirm such debts, they will survive the bankruptcy and you will legally owe the debts, just as if you had never filed bankruptcy with respect to the debts. Bankruptcy Courts are careful about debtors seeking to reaffirm debts because the Court does not want a debtor to stay in debt over his or her head by reaffirming too many secured obligations.

Reaffirmation agreements only apply in Chapter 7. In Chapter 13, retained cars are paid for through the Chapter 13 plan, and house mortgage payments are paid outside the plan (except for past due mortgage arrearages, which are also paid through the plan).

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Consumer Law Litigation

"What protection does the State of Maine offer consumers?"

There are extensive legislative efforts in the state of Maine to protect consumers from corrupt business practices. We have counseled consumers through litigation regarding a number of credit consumer law violations, including:

• Violations of stays and injunctions against creditors
• Incorrect credit reporting
• Unreasonable repossession conduct

I have also initiated lawsuits on behalf of consumers using:

• Fair Debt Collection Practices Act litigation
• Truth in Lending Act litigation
• Real Estate Settlement Practices Act litigation
• Maine Consumer Credit Code
  

Please feel free to call our office at (207) 283-3777 if you feel that your consumer rights have been violated.

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Chapter 7 Bankruptcy

"What is the fee for filing a Chapter 7 (discharge of debts in approximately 3½ months after filing)?"

Every case is different and the fees in your case will depend on the facts of your case.  Our minimum retainer for Chapter 7 cases is $1,500 and must be paid prior to filing.

Total filing fees for Chapter 7 are $299 (current 1/10).

Read our information and advice regarding recent Bankruptcy Reform legislation.

"Who can file a Chapter 7 bankruptcy?"

Any individual or business entity unable to pay his, her, or its debts as they come due can file a Chapter 7 bankruptcy. There is no debt ceiling or threshold for a Chapter 7 bankruptcy. For some people, owing a few thousand dollars is more than they can financially handle, while others do not file a Chapter 7 unless their debts exceed tens or hundreds of thousands.

"What role does the Trustee play in a Chapter 7 bankruptcy?"

In Chapter 7, the Trustee is charged with the responsibility of reviewing the debtor’s documentation filed with the Court, meeting with the debtor and debtor’s counsel at the meeting of creditors, liquidating any non-exempt assets, and distributing the funds to creditors under the supervision of the Court.

"What must I do to receive a discharge in a Chapter 7 bankruptcy?"

If a debtor accurately lists his or her debts, assets, income, and expenses, correctly answers the questions posed on the Statement of Financial Affairs, cooperates with the Trustee in providing any additional information requested, and likewise is honest and forthright with the Court, the debtor will receive a discharge. If a particular creditor believes that a certain debt should not be discharged because of the nature of the debt or the conduct of the debtor before filing bankruptcy, the creditor can request the Court to not allow the debtor to receive a discharge with respect to that debt. Even if the creditor is successful in convincing the Court that that one debt should survive the bankruptcy, all the remaining debts will be discharged.

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Chapter 13 Bankruptcy

"What is the fee for filing a Chapter 13 (3 -5 year payment plan)?"

Beginning May 1st, 2009, our practice has increased our up front fees for both Chapter 7 and 13.  Our new minimum retainer for Chapter 13 cases is $2,000 and must be paid prior to filing. Any other fees incurred will be paid through the Chapter 13 plan.

Filing fees for Chapter 13 are $274 (current 1/10).

Read our information and advice regarding recent Bankruptcy Reform legislation (4/20/05).

"Who can file a Chapter 13 bankruptcy?"

Any individual who is a wage earner or operating a sole proprietorship can file a Chapter 13 bankruptcy, provided that their unsecured debts do not exceed $336,900 and their secured debts do not exceed $1,010,650. In addition, the individual must have sufficient income to live on a cash basis for three to five years (the length of the term of the payment plan) and be able to pay a Chapter 13 Trustee enough money so that the Trustee can pay creditors at least as much as those creditors could have received if the individual filed a Chapter 7 bankruptcy.

"What role does the Trustee play in a Chapter 13 bankruptcy?"

A Chapter 13 Trustee usually does not liquidate property for distribution to creditors. Instead, the Trustee collects the funds paid by the debtors over the three to five year payment plan (as well as other liquidated funds from the sale of property) and distributes the funds to creditors on a monthly basis. The Trustee also reviews the debtors' documents filed with the Court, meets with the debtors and counsel, and monitors the debtors’ progress with the payment plan. If debtors are unable to comply with the payment plan, the Trustee makes a report to the Court, and/or requests the Court dismiss the case or convert it to a more appropriate chapter (such as Chapter 7).

"What must I do to receive a discharge in a Chapter 13 bankruptcy?"

For a debtor to receive a discharge in Chapter 13, not only must the debtor perform the same tasks listed above for a Chapter 7 discharge, but the debtor must have successfully completed the three to five year payment plan by making all payments to the Trustee during the required time period and otherwise followed all of the other requirements of Chapter 13 by reporting changed income, filing income tax returns on time, and staying current on bills that come due after the filing of the Chapter 13 bankruptcy.

"If I am behind on my mortgage payments or car loan payments, which type of bankruptcy might help me keep my house and car?"

The only type of bankruptcy that can assist you to retain a home or vehicle when you are behind on your payments is Chapter 13. The three to five year payment plan can cause you to catch up on your mortgage payments and pay for your vehicle during the time you are in the plan.

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Violations of Stays and Injunctions

"Will creditors and bill collectors stop calling me after I file bankruptcy?"

Yes. One of the most important provisions of the Bankruptcy Code is called the "automatic stay". This part of the Code prohibits creditors from calling, writing, suing, or taking any other action against a debtor in an effort to collect a debt. If creditors persist in contacting a debtor after filing bankruptcy, the Court may sanction the creditors by ordering the creditors to pay compensatory and/or punitive damages, plus attorneys fees incurred by the debtor in bringing the matter before the Court.

> Read more about Stays and Injunctions

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