Bankruptcy - Frequently Asked Questions

What is bankruptcy?

Bankruptcy refers to a state of being unable to satisfy your debt obligations, and actively exercising your legal rights to have all or some debts discharged (erased) or restructured in a manner that enables you to pay off the debt while easing the financial stress. Bankruptcy is completely legal, ethical and a viable option for tens of thousands of people who have found themselves in an unmanageable debt crisis. Bankruptcy is a formal legal process that is conducted through the Federal courts system, and is best managed by a skilled bankruptcy attorney.

What is Chapter 7 bankruptcy?

You begin a chapter 7 bankruptcy proceeding by filing a petition with the bankruptcy court. The person filing a Chapter 7 is referred to as the "debtor." The debtor is required to disclose to the court all his or her property and debts and turn over all nonexempt property to the bankruptcy trustee, who then converts it to cash for distribution to the creditors. However, most chapter 7 bankruptcies are "no asset" cases and no property is turned over to the trustee.

About 30 to 40 days after filing the bankruptcy petition, you will have to attend a hearing presided over by a bankruptcy trustee. This hearing is called the First Meeting of Creditors. The trustee is not a judge, but an individual appointed by the United States Trustee to oversee bankruptcy cases. At the First Meeting of Creditors, the trustee will ask you questions under oath regarding the content of your bankruptcy papers, your assets, debts and other matters. Creditors will also be permitted to ask you questions, although in the majority of cases creditors do not ask questions at the First Meeting of Creditors. The debtor ultimately receives a discharge of all dischargeable debts.

After the initial meeting you normally do not need to return to court. However, if a creditor or the trustee files a motion or an adversary action, you may have to appear in court with your attorney.

What is Chapter 13 bankruptcy?

A chapter 13 bankruptcy, similar to a chapter 7 bankruptcy, is commenced when a bankruptcy petition (case) is filed with the bankruptcy court. A chapter 13 bankruptcy is different from a chapter 7 bankruptcy in that the debtor in a chapter 13 bankruptcy must make fixed monthly payments to the bankruptcy trustee based on a plan that is prepared by the debtor’s attorney and confirmed by the bankruptcy court. A chapter 13 bankruptcy may be advisable when a debtor has substantial non-exempt assets and a regular income.

How can I afford an attorney?

A good bankruptcy attorney can walk you through the math but it is easier than you probably think. If you are eligible to file for bankruptcy, and do so, the Automatic Stay will put a freeze on bill collectors and relieve you from having to make payments. This will free up funds that you can use to pay for your legal fees. Obviously you cannot pay for your legal fees with your own credit cards, however the legal fees can be paid also by a friend or relative. And the truth is that you can't afford to not hire a bankruptcy attorney! It's all really just a matter of working out the timing and allocation of funds.

Don't be fooled by ads for the "$299" bankruptcy. Place your trust in a bankruptcy attorney that will tell you the truth. The last thing you need is to get hit with unexpected costs. Even without attorney fees, there are filing fees and other miscellaneous fees which alone can total around $500. The various fees include:

  • Filing fee (Chapter 7, $245 or Chapter 13, $235)
  • Administrative fee $46
  • Trustee surcharge $15 (Chapter 7)
  • Pre-filing Credit Counseling $35-$100
  • Debt Management Course $50-$80
  • Court area parking $10-$40
  • Filing guides or self-help books $35 and up

While most bankruptcy attorney fees can run from $1,000 to $3,000 it is money well spent. Filing bankruptcy is not a process where "saving money" by doing it yourself is advised. The courts are under no obligation to help you, a mistake can get your case rejected and maybe block refiling, and leave you in a worse place than before.

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What property can I keep in bankruptcy?

In a chapter 7 case, you can keep all the property which is exempt from the claims of creditors. In determining whether property is exempt, you must keep a few things in mind. The value of property is not the amount you paid for it, but what it is worth now. Generally the trustee is interested in the resale value of your property. Therefore, for most personal effects, you look to determine the garage sale value of your property.

In a chapter 13 case, you can keep all of your property if your plan meets the requirements of the bankruptcy law. In most cases, you will have to pay the mortgages or liens as you would if you didn't file bankruptcy.

What about foreclosure? Will I lose my home if I file for bankruptcy?

Possibly, but not necessarily. The factors that impact your ability to keep your home are:

  • The value of your home.
  • The amount owed on your mortgage or mortgages.
  • The status of your loan.
  • The type of bankruptcy you are filing (Chapter 7 or Chapter 13).

What about repossession? Will I lose my car or other real property?

Possibly, but not necessarily. The factors that impact your ability to keep your real property are:

  • The value of the asset(s).
  • The amount owed on the asset(s).
  • The status of your loan(s).
  • The type of bankruptcy you are filing (Chapter 7 or Chapter 13).

What debts can I get discharged?

Generally, you can discharge most unsecured consumer debt. There are non-dischargeable debts such as student loans, alimony, child support and most tax debts. If you are allowed to keep property that is considered a secured debt (i.e., a home with mortgage, or vehicle with payments, etc.) you will need to continue making payments. For secured debt you may be asked to, but are not required to, "reaffirm the deby". If you reaffirm the debt, you are fully liable as if nothing had happened, however if you do not reaffirm the debt you can later "walk away from" the debt without fear of reprisal from the creditors.

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The Automatic Stay stops bill collectors from contacting you.

Yes. Upon the filing of your bankruptcy petition, the Automatic Stay goes immediately into effect. The Automatic Stay stay prevents bill collectors from taking any action to collect debts including making phone calls or sending letters. The Automatic Stay provides immediate protection from bill collectors.

How long after filing will the creditors stop calling?

Once a creditor or bill collector becomes aware of a filing for bankruptcy protection, it must immediately stop all collection efforts. After you file the bankruptcy petition, the court mails a notice to all the creditors listed in your bankruptcy schedules. This usually takes a couple of weeks. Creditors will also stop calling if you inform them that you filed the bankruptcy petition, and supply them with the "docket number" for your case. In some cases, you or your attorney should contact the creditor immediately upon filing the bankruptcy petition, especially if a law suit is pending. If a creditor continues to use collection tactics once informed of the bankruptcy, the creditor may be sanctioned by the court and may be assessed attorney fees for this conduct.

How long does a bankruptcy stay on my credit report?

Bankruptcies remain on credit reports anywhere from 7 to 10 years. Many companies offer special financing plans for those who have filed for bankruptcy and need to buy major items such as a car. You can rebuild your credit to a high level but should be on guard against placing yourself once again in a bad financial situation.

What is the bankruptcy process?

There are a few differences between Chapter 7 and 13, and depending upon your particular situation, however the general process goes something like this:

You meet with an attorney for an initial consultation, and can complete a basic Means Test which determines which (if any) bankruptcy option you may file. Assuming you pass the MEans Test, you hire a bankruptcy attorney and begin ther process which should take about 60 days. You will then need to identify, organize and document ALL debts (you cannot be selective or leave any out). Your attorney will prepare you case, and file for bankruptcy on your behalf, with the closest Federal Bankruptcy Court. If the court is in agreement, and accepts your case, you will be assigned a court appointed Trustee to manage your case form the court's side. You will be required to make a formal meeting with the Trustee (341 Meeting) to review the facts of your filing and case, and testify to it's accuracy and validity. The court will then handle a myriad of details and work with your attorney to arrive at a final resolution. In the interim you will have to meet or complete certain tasks such as completing a Debtor Education Course, also called a Debt Management or Credit Counseling course. Finally, you will make a second appearance in Federal Court for the formal discharge declaration.

Your court appearances are not like a trial on television. You will be in a room with many other people who have filed bankruptcy papers. You will wait for your name to be called, sit at a table with the Trustee who will ask specific questions and record your answers. Although you may wait for an extended period of time, your "interview" will last about 15 minutes. Your attorney will be with you at every meeting with the Trustee.

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What does the bankruptcy trustee do?

The trustee's job is to:

  • Administer the bankruptcy;
  • Make sure creditors get as much money as possible;
  • Run the first meeting of creditors (also called the "section 341 meeting");
  • Collect and sell non-exempt property (in a chapter 7 case) or collect and pay out money on a repayment plan (in a chapter 13 case); and
  • Obtain information from you and documents related to your bankruptcy.

Does the spouse of a married person also have to file bankruptcy?

No. In some cases where only one spouse has debts, or one spouse has debts that are not dischargeable, then it might be advisable to have only one spouse file.

Will I have to fill out forms?

Filing bankruptcy means filling out forms. The attorney you hire may ask you to fill out forms to provide him or her with the information needed to file the bankruptcy petition. The attorney will use the information you provide to complete the official forms.

Are there alternatives to bankruptcy?

Yes. Sometimes payment plans can be negotiated with creditors. Obtaining loan extensions, compromises and workout agreements require negotiation skills and experience. These alternatives may alert your creditors to the existence of nonexempt property that the creditor could reach and can involve considerable expense. You also have the option of doing nothing. In any event, you should seek professional advice in evaluating the above alternatives.

What should I do to prepare for filing bankruptcy?

First, you should consult with an attorney. An attorney can help you plan for the bankruptcy, decide when to file a bankruptcy petition, or even avoid filing for bankruptcy. A few specific items are worth mentioning.

  • 1. Don't transfer your assets to friends, family and business associates to protect the assets from your creditors. The transfer may be considered a fraudulent conveyance. If it is, you may lose both the property and your right to a bankruptcy discharge.
  • 2. Don't destroy any business or financial records. You can lose your right to a bankruptcy discharge as a result.
  • 3. Carefully choose the creditors you pay. Some creditors, such as landlords, secured creditors, and some utilities should be paid under most circumstances. If you pay a credit card debt that eventually will be discharged, you may be throwing money away. Your attorney should advise you on what debts should and should not be paid while you prepare to file a bankruptcy petition.

Can I file a bankruptcy for my debts, but not include my assets?


Do I have to disclose all of my assets?

Yes. If you knowingly and fraudulently conceal an asset from the court, you have committed a federal felony (BIG mistake!!!). In addition, the court can deny you a discharge, and dismiss or convert your bankruptcy proceeding. DO NOT play games with the court!

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Bankruptcy Provides Relief!

When you file for bankruptcy, you automatically are protected under Federal laws. Filing for bankruptcy will

  • STOP Creditor Harrassment
  • STOP Collection Agencies
  • STOP Home Foreclosure
  • STOP Car Repossession
  • STOP Wage Garnishments
  • STOP Creditor Lawsuits

Bankruptcy can allow you to keep your personal property such as your home, cars, furniture and more. Call us to learn how bankruptcy can help you.


Bankruptcy Courts

Atlanta Division
75 Spring Street
Atlanta, Georgia 30303
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Rome Division
600 East First Street
Rome, GA 30161
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Gainesville Division
121 Spring Street
Gainesville, GA 30501
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Newnan Division
18 Greenville Street
Newnan, GA 30264
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National Association of Consumer Bankruptcy Attorneys

Pursuant to 11 USC §528, all bankruptcy attorneys have been designated "debt relief agents" and are required to disclose that we help people file for bankruptcy relief under the Bankruptcy Code.