Other Things you may be wondering about Bankruptcy…

Will the filing of a Bankruptcy stop my bill collectors from taking action?

When you file for bankruptcy protection, an automatic stay is immediately imposed upon your creditors that preclude them from taking any further action against you to collect a debt, including the prosecution of court judgments, wage garnishments and repossession. For example, if you have been served with a summons by one your creditors to appear in court regarding the repayment of a debt, the bankruptcy filing will immediately stop this lawsuit and the creditor, and its attorney, must abide by the requirements of the bankruptcy law.

Can I keep any of my existing credit cards accounts after bankruptcy?

The law requires a debtor to schedule all outstanding debts that are owed by the debtor as of the date of the filing of a bankruptcy petition. If you have a credit card account that has a zero balance as of the time you file your petition, this account does not have to be scheduled in your bankruptcy petition as, technically, the lender or servicing agent on this card is not a creditor, and thus will not be discharged in bankruptcy.

Even if you have an outstanding balance when you file, you may still be able to keep your account. In order to do this, you usually must agree with the creditor to repay part or all of your outstanding balance as of the time of filing. When you make an agreement of this nature, you and your creditor will execute a document known as Reaffirmation Agreement that, in most cases, requires the approval of the Bankruptcy Court before taking effect.

How are my creditors notified that I have filed for bankruptcy?

Normally, within 7-10 business days of the filing bankruptcy petition, the Bankruptcy Court mails a notice of the bankruptcy filing to the creditors listed in your petition. Sometimes, it may be necessary for you to contact an individual creditor directly to obtain immediate relief and supply that creditor with your case number and the date of the filing of your petition. Once a creditor has been notified of your filing, they must immediately stop all collections efforts against you.

How long does a typical bankruptcy case take?

The life of a typical Chapter 7 bankruptcy case is normally 4-6 months. A Chapter 13 bankruptcy case takes anywhere to 3-5 years to complete.

Will I have to go to Court?

In a Chapter 7 bankruptcy proceeding, the only Court appearance that is required is your appearance before the Court appointed Trustee at your Meeting of Creditors. This meeting usually takes place between 20-45 days after a petition is filed.

In a Chapter 13 bankruptcy case, you are also required to appear at a Meeting of Creditors with your Chapter 13 trustee. In addition, your appearance may also be required at the hearing in which the Bankruptcy Court considers final approval of your plan of repayment. This hearing, called a Confirmation Hearing, usually takes place approximately 3-6 months after a Chapter 13 petition is filed.

How many years will a bankruptcy filing show on my credit report? How long will it take me to obtain new credit after I file for bankruptcy?

Under the provisions of the Fair Credit Reporting Act, the filing of a Chapter 7 bankruptcy petition shall remain on an individual’s credit report for 10 years, but only 7 years from the filing of a Chapter 13  bankruptcy petition.

With respect to obtaining new credit after the filing of a bankruptcy petition, the decision to grant credit in the future is strictly up to an individual creditor and varies from creditor to creditor and state to state depending on the type of credit requested. While there is no law that prevents an individual from extending credit to you immediately after obtaining a discharge in bankruptcy, you should anticipate a period of time in which you would have to establish credit. In most cases, the easiest manner in which to reestablish credit is to obtain a secured credit card from a major grantor of credit after you obtain your discharge.

How often can I file for protection under Chapter 7?

An individual debtor can obtain relief under Chapter 7 every eight years. Please note however that the 8-year period does not run from the date of the filing of the first petition, but rather from the date the court issues the bankruptcy discharge. If you have filed for Chapter 7 protection in the past, you can file a second Chapter 7 petition so long the applicable time period have past since the issuance of the discharge in your prior case.

Can utility bills be discharged in a bankruptcy proceeding, and if so, will my utility services be terminated?

Obligations to utility services can be listed in a bankruptcy petition. In addition, it is a violation of Public Service Commission regulations for a utility service to terminate the service to a bankrupt on a basis of their filing a bankruptcy petition. However, a utility may, and in most cases, will, require that you pay a security deposit to that utility to guarantee that post petition obligations shall be paid in a timely fashion.

Can my employer discriminate against me because I have filed for a bankruptcy?

The best answer is generally not.  Although some Courts outside of New York have take the position that an employer may consider bankruptcy among various factors in considering employment,  Federal law prohibits governmental units and private employers from discriminating against you because you file a bankruptcy petition or because you have failed to pay a dischargeable debt.  Practically speaking though, an employer or prospective employer can always find reason to deny employment opportunities without relying on the fact that you have filed for bankruptcy.

Will Bankruptcy affect my Immigration status?

There is presently no immigration law, statute, or regulation that specifically forbids individuals who have filed for bankruptcy from applying for Naturalization. Additionally, there is no specific question on Form N-400, Application for Naturalization, inquiring into bankruptcy. Please note however, that your immigration status can be affected if you have not filed required tax returns or if you owe money to the IRS.

The INS is basically looking to see if an individual seeking naturalization has evidence of “poor moral character” which could be grounds to deny an application. The filing of a bankruptcy petition as a consequence of financial hardship clearly does not rise to the level of “poor moral character.”

If you are facing any type of immigration issue, you should disclose that fact to your bankruptcy lawyer at your initial consultation as well as discuss your potential bankruptcy filing with your immigration counsel.

Are student loans dischargeable in bankruptcy?

Generally, student loans are not dischargeable in a bankruptcy proceeding. 11 U.S.C. Section 523(a)(8) cites two exceptions to this general rule:

  • The student loan maybe discharged if it is neither insured or guaranteed by a governmental unit, nor made under any program funded in whole or in part by a governmental unit or non-profit institution.
  • The student loan maybe discharged if paying the loan will “impose an undue hardship on the debtor and debtor’s dependents.”
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