Aug 06

Chapter 7 bankrputcy and meeting your creditors

When you file for Chapter 7 bankruptcy, you will have a meeting with someone who represents your creditors (called a “trustee”). At this meeting you, the trustee and your attorney will review your bankruptcy filing and the trustee will ask a few questions about your financial circumstances. These meetings typically take place in a courtroom and you will be sworn in like at a jury trial so everything you say will be under oath.

The meeting will last anywhere from five minutes for the least complicated filings, to one hour. If there are questions about your filing and the trustee challenges you, she will not go over every detail on the spot, but will refer your case to a different court on a different date. For most people this will not happen and there is no reason to be intimidated. Routine filings do not require a judge be present, and while you creditors are legally permitted to be present to question you, it is not common.

Pro tip: try to schedule your meeting as late in the day as possible (Fridays are best) because by that time the trustee and your lawyer will be ready to go home!

Jul 19

How does bankruptcy affect co-signers?

A co-signer is someone who is legally committed to fulfilling a loan obligation for someone else if that person cannot fulfill their own obligation. In most cases, a co-signer must have a credit rating high enough that they could get the loan on their own. If you file for bankruptcy, how the loan affects the co-signer will depend on whether you are filing for Chapter 7 or Chapter 13 bankruptcy.

If you receive a discharge through Chapter 7, the responsibility for paying the debt will fall entirely on the co-signer, and creditors can and will take actions to collect from them.

If you file for Chapter 13, you will be required to continue paying on the debt, and your co-signer will be safe, credit rating-wise. However, if you are late on and debt payments, your co-signer’s credit rating will be damaged.

Bankruptcy is a particular problem if you have co-signers who are family members or friends. Co-signers cannot influence any decision you make regarding your bankruptcy, but it might be best to consult them first. If you are in this situation, you should speak with an attorney for the best course of action.

Jun 19

Undischargeable debts under bankruptcy law

A bankruptcy discharge occurs when a court relieves a debtor of the liability of paying a debt (which is not the same thing as having a debt forgiven).

Not all debt is dischargeable. Here is a list of some the things that are not:

  1. Fraudulent debt, i.e., debt which was incurred with no intent to pay off.
  2. Debt incurred as the result of criminal restitution
  3. Most debt incurred at the time of a divorce, including alimony, marital property settlements and child support
  4. Fines including parking tickets, toll road fees, and bad checks.
  5. Debts incurred if you injured someone while drunk
  6. Some, but not all taxes
  7. Student loans. Interest does not stop during the filing process, but you will owe no payments during that time.