Frequently Asked Questions

This is one of the main benefits of filing any type of bankruptcy. Generally, the filing of the bankruptcy case automatically stays certain collection and other actions against the debtor and the debtor’s property. There are some exceptions provided for in 11 U.S.C. Section 361. If a Creditor attempts to collect a debt or take other action in violation of the automatic stay, i.e. in violation of the Bankruptcy Code, they may be penalized.

Who can start a Bankruptcy?

Any person, partnership, corporation, or business trust may file bankruptcy. If the debtor (person or entity who owes the money) files a petition to start the bankruptcy, it is a voluntary bankruptcy.

How often can you file Bankruptcy?

An individual can file a Chapter 7 after 8 years after the date of filing their last petition. A person can file Chapter 13 anytime as long as a Chapter 7 or Chapter 13 is not pending/in the process, or unless there has been a bar to the filing.

What is a Joint Petition?

A joint petition is the filing of a single petition by an individual and the individual’s spouse. Only people who are married as of the date they file the petition may file a joint petition. Unmarried persons, corporations, and partnerships must each file separate cases. If you are an individual and have a business, you may not file a single petition for yourself and your business; each must be a separate bankruptcy case. If you are married, you are not required to file a joint petition.

What is the Pre-Bankruptcy Credit Counseling Requirement?

When you file for bankruptcy, you must fulfill several requirements. Included in these is the requirement that a debtor must receive credit counseling from an agency approved by the U.S. Trustee’s office within the 180-day period before you file for your bankruptcy. You’ll prove that you’ve taken the credit counseling course by filing the certificate of completion along with your bankruptcy paperwork.

Credit counseling gives you an idea of whether you really need to file for bankruptcy or whether an informal repayment plan would get you back on your economic feet. Counseling is required even if it is pretty obvious that a repayment plan isn’t feasible (that is, your debts are too high, and your income is too low) or you are facing debts that you find unfair and do not want to pay.

Bankruptcy law requires only that you participate in the counseling – not that you go along with whatever the agency proposes. Even if a repayment plan is feasible, you are not required to agree to it. Credit counseling agencies can charge a reasonable fee for their services. Generally, these fees are approximately $25.00 for single and $25.00 for joint debtors.

What is the Post-Bankruptcy Filing Financial Management Course Requirement?

Before you can receive a discharge in Chapter 7 or Chapter 13 bankruptcy, you must complete a course in personal financial management (also called the pre-discharge debtor education course). The purpose of the debtor education course is to teach you how to manage money and use credit wisely after bankruptcy. If you do not complete the debtor education requirement, the court will not issue a discharge in your bankruptcy.

When you take the debtor education course, you will typically learn about: budget preparation, money management, how to use credit wisely and effectively, consumer protection laws and agencies, and how to deal with an unexpected financial crisis.

If you file for Chapter 7 bankruptcy, you must take the debtor education course and file your certificate of completion (discussed below) with the court no later than 60 days after the first scheduled date of your meeting of creditors (also called the 341 hearing). In Chapter 13 bankruptcy, you must file the certificate of completion before you make your last plan payment or file a motion to request a hardship discharge. Generally, these fees are approximately $15.00 for single and $15.00 for joint debtors.

How Long are the Pre- and Post-Filing Debtor Education Courses?

The pre-filing credit counseling course takes approximately 60-90 minutes to complete. It can be done online or over the telephone. The post-filing debtor education course takes a minimum of 2 hours to complete (by law) and can also be done online or over the telephone.

What are Exemptions?

11 U.S.C. Section 522(b) allows an individual debtor to exempt real estate, personal, or intangible property from the property of the estate. Exempt assets are protected from distribution to your creditors under state and federal law. Typically, exempt assets include clothing, jewelry, vehicles up to a certain dollar amount, bank accounts up to a certain dollar amount, pension/profit-sharing/401k if set up according to IRS guidelines, household goods, and furnishings, the equity in your home up to a certain amount and tools of the trade.

Where do I go for my Section 341 Meeting of Creditors, i.e. Bankruptcy Court Hearing?

The bankruptcy court is a Federal Court. The hearing is held in the Gene Snyder Courthouse, also known as the Federal Building, also known as the “Old Post Office”. The address is:

Gene Snyder Courthouse
601 W. Broadway
Louisville, KY 40202-2264

You must enter the building through security on the 6th street side of the building. The hearing room is located on the same side of the building on the 5th floor.

What happens after I file Bankruptcy?

The court issues a notice of bankruptcy to all creditors advising them of the filing of the bankruptcy, the case number, information regarding actions creditors may take, the name of the trustee assigned to the case (if filed under Chapter 7 or 13), the date set for the Section 341 Meeting of Creditors, the deadline, if any, set for filing objections to the discharge of the debtor and/or the dischargeability of specific debts, objection to exemption deadlines, if applicable, and instructions for filing a claim.

In a Chapter 7 case involving an individual or joint debtors, the creditors generally have sixty (60) days from the first date set for the meeting of creditors to object to the discharge of the debtor and/or the dischargeability of a specific debt. If the deadline passes without any objections to the debtor’s discharge being filed and the debtor has met all requirements for discharge, the court will issue the discharge order. If any objections to the dischargeability of specific debts are filed, they will be heard by the court, but will not delay the granting of a discharge with respect to other debts. An objection to discharge or to the dischargeability of certain debts is considered a separate lawsuit (an adversary proceeding) within the bankruptcy and may result in a trial presided over by the judge assigned to the case. Corporate and partnership Chapter 7 debtors do not receive discharges.

If there are no assets from which the trustee can sell and pay all or a portion of a debtor’s debts, the trustee will prepare a report of no distribution and the case will be closed. If there are assets that are not exempt, funds will be available and the case will be closed. If there are assets that are not exempt, funds will be available for distribution to creditors. The court will set a claims deadline and notify all creditors to file their claims. The trustee will proceed to collect the assets, liquidate them and distribute the proceeds to creditors. When the assets have been completely administered, the trustee will prepare a final report and final accounting and the case will be closed. Note: in most Chapter 7 cases, the trustee does not take any assets from the debtor to sell and use the proceeds to payoff debt. Most Chapter 7 debtors’ property is exempt.

In a Chapter 13 case, creditors are given an opportunity to object to the plan. If no objections are filed by creditors or the trustee, the plan may be confirmed as filed. Once the plan is confirmed, the trustee will distribute the proceeds of the debtor’s plan payments to creditors until the debtor completes the plan or the court dismisses or converts the case. Upon completion of the Chapter 13 Plan, the trustee will prepare a final report, the court will issue a discharge order if the debtor has met all requirements for discharge and the case will be closed.

What Is a Bankruptcy Trustee? Who Is the United State Trustee? What Is the Difference?

In all Chapter 7,12,13 and in some Chapter 11 cases, a trustee is assigned. The trustee’s job is to administer the bankruptcy estate, by making sure creditors get as much money as possible, and to conduct the first meeting of creditors (also called the “Section 341 Meeting”). The trustee either collects and sells non-exempt estate property, as in a Chapter 7 case, or collects and pays out money on a repayment plan, as in a Chapter 13 case. The trustee can require you to provide, under penalty of perjury, information and documents, before, during or after the meeting of creditors. You should always cooperate with the trustee, since failure to cooperate with the trustee could be grounds to have your discharge denied. Trustees are not necessarily lawyers, and they are not paid by the court. They are appointed by the United States Trustee. Trustees report to the court, but their fees come out of the bankruptcy filing fee or as a percentage of the money distributed in the bankruptcy.

The United States Trustee’s Office is part of the U.S. Department of Justice and is separate from the court. The United States Trustee’s Office is a watchdog agency, charged with monitoring all bankruptcies, appointing and supervising all trustees and identifying fraud in bankruptcy cases. In monitoring cases, The United States Trustee reviews all bankruptcy petitions and pleadings filed in cases, and participates in many proceedings affecting the case, but they do not administer the case themselves. They can bring motions in the bankruptcy, such as ones to dismiss the case or to deny the debtor’s discharge.

What Is the Creditors’ Meeting? What Can I Expect to Happen at the Meeting?

A “meeting of creditors” is the single hearing all debtors must attend in any Bankruptcy proceeding. It is held outside the presence of the judge and usually occurs between twenty-one (21) and sixty (60) days from the date the original petition is filed with the court. In Chapter 7 and Chapter 13 cases, the trustee assigned by the court on behalf of the United States Trustee conducts the meeting.

The meeting permits the trustee or a representative of the United States Trustee’s Office to review the debtor’s petition and schedules with the debtor face-to-face. The debtor is required to answer questions under penalty of perjury concerning the debtor’s acts, conduct, property, liabilities, financial condition and any matter that may affect administration of the estate or the debtor’s right to a discharge. This information enables the trustee or representative of the United States Trustee’s Office to understand the debtor’s circumstances and facilitates efficient administration of the case. Additionally, the trustee or a representative of the United States Trustee’s Office will ask questions to ensure that the debtor understands the positive and negative aspects of filing for bankruptcy.

The meeting is referred to as the ” meeting of creditors” because creditors are notified that they may attend and question the debtor about the location and disposition of assets and any other matter relevant to the administration of the case. However, creditors rarely attend these meetings and, in general, are not considered to have waived any of their rights by failing to appear. The meeting usually lasts only a few minutes and may be continued if the trustee or a representative of the United States Trustee’s Office is not satisfied with the information provided by the debtor. If the debtor fails to appear at the meeting and/or fails to provide the information requested before or at the meeting or by an Order to Produce Documents, the trustee or a representative of the United States Trustee’s Office may request that the bankruptcy case be dismissed or that the debtor be ordered by the court to cooperate or be held in contempt of court for willful failure to cooperate.

How Long Does It Take for Creditors to Be Notified That a Bankruptcy Has Been Filed?

As long as the creditor was listed in the original mailing matrix that accompanied the filing of the petition, notification will typically be received within seven to ten days.

What Is a Discharge?

The discharge order is issued by the court and permanently prohibits creditors from taking action to collect dischargeable debts against the debtor personally; this does not prevent other creditors from pursuing property of the estate or secured creditors from seizing collateral if payments are not kept up; these secured creditors are generally auto loenders and home mortgages.

The granting of a discharge does not automatically result in the closing of a case. All contested matters, adversary proceedings, and appeals must be resolved, and the appointed trustee must file a final report and account and request entry of a final decree before the Clerk’s Office will close the case.

What Debts Are Dischargeable?

11 U.S.C. Section 523 lists exceptions to discharge. In general, all other debts are dischargeable, except for some debts such as those for back taxes, student loans, and domestic support obligations, i.e. maintenance, alimony, and child support. Some debts listed in 11 U.S.C. Section. 523, such as those based on fraudulent conduct, embezzlement or willful and malicious injury to another, are discharged unless a complaint to deny discharge of that debt is timely filed with the bankruptcy court. Ordinarily, these complaints must be filed within sixty (60) days of the first date set for the meeting of creditors. Additionally, debts that were not listed on your bankruptcy schedules or that were incurred after you filed bankruptcy are generally not discharged.

What Does It Mean If a Case Is Dismissed?

A dismissal order ends the case. Upon dismissal the “automatic stay” ends and creditors may start to collect debts, unless a discharge is entered before the dismissal and is not revoked. An order of dismissal itself will not free the debtor from any debt. Often, a case is dismissed when the debtor fails to do something he/she must do (such as attend the creditors’ meeting, answer the trustee’s questions honestly, produce books and records that the trustee requests), or if it is in the best interest of the creditors. Unless the debtor appeals the order or seeks reconsideration of the order within fourteen (14) days after entry of the order of dismissal, the Clerk may close the case.

What Is a Reaffirmation Agreement?

A reaffirmation agreement is an agreement by which a bankruptcy debtor becomes legally obligated to pay all or a portion of an otherwise dischargeable debt. Such an agreement must generally be filed within sixty (60) days after the first date set for the meeting of creditors.

The reaffirmation agreement must be filed on Form B2400A. If a reaffirmation agreement is filed without an attorney’s declaration or affidavit, or creates presumption of undue hardship, a hearing is required. You must appear in person at the hearing. The judge will ask you questions to determine whether the reaffirmation agreement imposes an undue burden on you or your dependents and whether it is in your best interest. Since reaffirmed debts are not discharged, the bankruptcy court will normally only reaffirm secured debts where the collateral is important to your daily activities. An example of debts often reaffirmed are automobile loans and mortgages.

Reaffirmation agreements are strictly voluntary. They are not required by the Bankruptcy Code or other state or federal law. You can voluntarily repay any debt instead of signing a reaffirmation agreement, but there may be valid reasons for wanting to reaffirm a particular debt.

Since a reaffirmation agreement takes away some of the effectiveness of your discharge, legal counsel is advisable before agreeing to a reaffirmation. Even if you sign a reaffirmation agreement, you have sixty (60) days after the agreement is filed with the court to change your mind or rescind. If your discharge date is more than sixty (60) days after the agreement is filed with the court, you have until your discharge date to change your mind. If you reaffirm a debt and fail to make the payments as agreed, the creditor can take legal action against you to recover any property that was given as security for the loan and you remain personally liable for any remaining debt, as if you did not file bankruptcy on the reaffirmed debt.

What Can I Do If a Creditor Attempts to Collect a Debt From Me After I Have Filed Bankruptcy?

If a creditor continues to attempt to collect a debt after the bankruptcy is filed, the creditor may be in violation of the automatic stay. You should immediately notify the creditor in writing that you have filed bankruptcy and provide them with either the case number and filing date, or a copy of the petition that shows it was filed. If the creditor still continues to try to collect, the debtor may be entitled to take legal action against the creditor to obtain a specific order from the court prohibiting the creditor from taking further collection action and, if the creditor is willfully violating the automatic stay, the court can hold the creditor in contempt of court and punish the creditor. Any such legal action brought against the creditor will be complex and will normally require representation by a qualified bankruptcy attorney.

What Documents Will I Need to Provide to My Attorney in Order for Them to Properly Prepare My Petition and Then to Turn Over to the Trustee on My Behalf?

The information contained in your petition, schedules, and statement of affairs is submitted under penalty of perjury. Some of the documents that need to be turned over to the trustee are copies of your tax returns for the prior two years, copies of your paystubs and/or proof of any income for the prior six months, copies of bank statements for the prior six months, copies of car titles, deeds, and mortgages. These documents need to be provided to your attorney prior to the petition being prepared to ensure that the information contained in the bankruptcy schedules is both true and accurate. You must be certain that it is correct when you sign these documents.

What Should I Do If I Cannot Make My Chapter 13 Plan Payment?

If the debtor cannot make a Chapter 13 payment on time according to the terms of the confirmed plan, the debtor should contact his or her attorney or the trustee by phone and by letter advising of the problem and whether it is temporary or permanent. Significant changes in the debtor’s circumstances may require that the plan be formally modified. If the problem is permanent and the debtor is no longer able to make payments to the plan, the trustee will request that the case be dismissed or converted to another chapter. The determination of whether to modify, dismiss or convert a case requires the same kind of analysis as is needed for the initial decision whether to file bankruptcy and under what chapter. Therefore, the debtor should seek legal advice from a qualified bankruptcy attorney before attempting to make such a decision. If the debtor delays making a voluntary decision and cannot make the plan payments, the court may dismiss the case.

How Many Years Will Bankruptcy Be Reflected on My Credit? How Long Does It Take to Get Credit After I File Bankruptcy?

The bankruptcy petition, schedules and plan are public documents and are available to the general public for viewing. Credit reporting agencies regularly collect information from the petitions filed and report the information on their credit reporting services. Bankruptcies normally will remain on your credit report for up to ten (10) years and may be taken into consideration by any person reviewing a credit report for the purpose of extending credit in the future.

There is no set time limit that a person has to wait to incur debt or borrow money. The decision whether to grant you credit in the future is strictly up to the creditor and varies from creditor to creditor depending on the type of credit requested. Oftentimes people find it surprising that after they file their bankruptcy petition, they receive numerous offers to purchase vehicles, to get credit cards and to get personal loans. Before filing bankruptcy, most people have poor credit and lenders do not wish to extend credit to them. After filing, many creditors consider the fact that the individual has discharged a significant amount of their debt, if not all of it, and they are not eligible to file Chapter 7 again for over eight years after the filing of their bankruptcy.

How do I get the bankruptcy removed from my credit report?

The bankruptcy court has no jurisdiction over credit reporting agencies. The Fair Credit Reporting Act, 6 U.S.C. Section 605, is the law that controls credit reporting agencies. The law states that credit reporting agencies may not report a bankruptcy case on a person’s credit report after ten years from the date the bankruptcy case is filed.

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