WHAT HAPPENS IF I STOP MAKING PAYMENTS IN A CHAPTER 13 BANKRUPTCY?

As discussed in previous blogs, a Chapter 13 bankruptcy requires the debtor to make monthly payments to the bankruptcy trustee, who will then distribute the money to creditors in accordance with their priority.  If the debtor ceases making payments in a chapter 13 bankruptcy, the case will be dismissed with no resulting discharges.  For the debtor, it would be as if no bankruptcy was ever filed, and he or she would lose any of the money that was paid related to the bankruptcy.

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HOW IS A LEASED VEHICLE HANDLED IN A CHAPTER 7 BANKRUPTCY?

In a Chapter 7 bankruptcy, you have three options with a secured debt as previously discussed in this blog: redemption, surrender, and reaffirmation.  If you would like to retain your secured property, such as a house or vehicle, almost 99% of people choose reaffirmation, where you agree to continue making payments to the creditor of that debt.  If you are leasing a vehicle, there is obviously no equity in the vehicle because there is no ownership.  Therefore, the bankruptcy trustee cannot seize the property to settle creditor claims, and therefore, if you wish to retain the automobile, you can simply execute an assumption of the lease with the creditor, and your payments will continue just as they were prior to the bankruptcy filing.

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HOW OFTEN CAN I FILE BANKRUPTCY?

The bankruptcy laws specifically state when you can re-file bankruptcy after previously receiving a discharge.  If you file for a second time and the statutory period has not concluded from the first bankruptcy, you will not be able to obtain a discharge.  For example, you cannot receive a second Chapter 7 discharge within eight years of the filing of your last Chapter 7 bankruptcy.  Also, you cannot receive a discharge on a Chapter 13 bankruptcy case if it was filed within two years from the date your last Chapter 13 bankruptcy was filed.  Finally, if you previously receive a discharge from a Chapter 7 case, you cannot receive a discharge from a Chapter 13 case that was filed within two years of the filing date of your previous Chapter 7 case.  Understandably, this can be very confusing so if you have previously filed bankruptcy, but believe it is currently in your best interests to do so again, please contact one of our experienced bankruptcy attorneys for a free consultation.

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WHAT HAPPENS IF I DO NOT ATTEND MY 341 CREDITOR'S MEETING?

If a debtor fails to attend a 341 Creditor's Meeting, the trustee does have the option to dismiss the case, although this usually will not happen.  In most instances, the trustee will continue the 341 meeting to a future date and give the debtor one more opportunity to attend.  If you do miss a meeting, it is important that you contact your attorney immediately, if you have retained one, in order to resolve the situation and learn of the new meeting time if the trustee decided to continue it.  Either way, if you know you will have a conflict with a scheduled 341 meeting, it is best to have your attorney contact the trustee prior to the meeting date to make the appropriate arrangements.

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CAN YOU CONVERT FROM ONE CHAPTER TO ANOTHER IN BANKRUPTCY?

When a bankruptcy is filed, you must choose under what chapter you are filing.  If the filing individual's or business' circumstances change, many times debtors will want to change the chapter under which they filed.  Federal law allows debtor's one conversion to another chapter as long as it does not involve fraud or bad faith intent.  However, if you are converting to another chapter, you must still qualify for the other chapter.  Also, some bankruptcies will be converted by the trustee or the court under rights provided to them by law.  If you have filed a bankruptcy petition and you believe you would like to convert to another chapter, please consult your bankruptcy attorney for a full list of options.

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CAN A BUSINESS OR COMPANY FILE CHAPTER 7 BANKRUPTCY?

Yes, a business can file a chapter 7 bankruptcy, however, it will not achieve the same result as an individual or joint debtor filing a chapter 7.  Most people seeking debt relief will file a chapter 7 bankruptcy, and if the debtor has no assets above the exemption limit, all allowable debts would be discharged, meaning the debtor would no longer have any liability to those credtiors.  However, if a business files a chapter 7 bankruptcy, it will have to cease operating, and any assets will be distributed to creditors in the correct order.  It is not possible for a company to obtain a chapter 7 discharge and continue operating as a business going forward.

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CAN I CHOOSE WHICH DEBTS TO INCLUDE IN MY BANKRUPTCY PETITION?

The short answer is "no, you cannot select certain debts to include in your bankruptcy petition."  The federal statute clearly states that all debts of a debtor must be included in a debtor's bankruptcy petition, however, if a debtor would prefer that a certain debt not be discharged, he/she can reaffirm the debt if they wish.  Generally, only secured debts are reaffirmed, but legally, you can do so with any debt.  Debtors often ask if they can leave certain debts off their petition because they do not want a certain creditor learning that they have filed bankruptcy or would like to continue use of a certain account.

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