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Bankruptcy FAQ

What chapter of bankruptcy can I file?
    To determine which chapter a debtor may file is based on the amount of income for the debtor’s
household and the number of people in that household.

What is the difference between chapter 7 and chapter 13?
    Chapter 7 is the process where all legal obligations to pay debts are discharged.  A chapter 13
is a repayment plan based on the claims made by creditors and the priority of the claims made.

What is a claim?
A claim is a statement filed by a creditor which states how much the debtor owes the creditor.

What is a claim  priority?
    Claims are categorized by a priority system which determines which claims get paid and in which
order.  Secured claims are paid first, then unsecured priority claims and then general unsecured
claims are paid last.

What are secured claims?
Secured claims are claims in which the actual debt is secured by a piece of property.  Typically
this is a house or a car.  Other debts can be secured debts if the actual contract specifically claims a
security interest in the items purchased or pledged as collateral on the credit account.

What are unsecured priority claims?
    Unsecured priority claims are claims for debts that have a priority of repayment such as unpaid
taxes, etc. but are not secured by any piece of property or an asset.

What are general unsecured claims?
General unsecured claims are claims for debts that are not secured by any property and have no
priority of repayment like personal loans from banks, quick cash facilities or payday loan companies,
personal friends or family members, credit card accounts without a security agreement, medical bills,
and dental bills.

Do I have to list all my debts because I want to pay some of them?
The bankruptcy code requires all debts that have a balance to be listed even if you plan to repay them.

Do I have to list all of my property?
Yes, all of the property or assets of the debtor must be listed.  The debtor’s assets or property includes
any claims or lawsuits that the debtor may have against someone else.  It also includes any inheritance
that the debtor may be entitled to receive due to the death of someone within 180 days (6 months) of the
filing of the bankruptcy petition.

Will I lose my property, house, or car?
    All property is subject to the ability of the bankruptcy trustee to take the property of the debtor and have it
sold to pay the debts of the debtor.  The debtor has the ability to apply specific exemptions to property so that
the debtor may keep that property.
If the property such as a house or car is worth less than the loan against them then no exemption is needed
as the secured debt will allow the debtor to keep that property as long as they continue to make the payments
for the property.

Can I file against my child support? Or Will it affect my child support?
    Filing bankruptcy cannot terminate an obligation to pay child support or alimony.  A court order to pay child support or alimony is not discharged by the filing of a bankruptcy petition.  When filing a bankruptcy petition the debtor is required to keep making their child support or alimony payments and keep them current to obtain his
or her discharge on their other debts.  If the debtor is owed child support or alimony from someone they will
continue to receive those payments.  The amount of monthly support received or paid is required to be listed
in the schedules of the bankruptcy petition.

How do I protect my property in bankruptcy?
    Your property is protected in two different ways when filing bankruptcy.  First it is protected if it secures a
debt and is worth less than the balance of the debt.  If it is worth more than the balance of the debt then a
debtor may apply exemptions to protect the property that they own.  The exemptions allowed, in the State of Missouri, are based on Missouri law and are limited in amounts per the type of property.

Can I file against my student loans?
Debtors are required by the bankruptcy code to list all creditors including student loan lenders. Filing
against a student loan however does not mean that the student loan will be discharged.  Generally a
student loan is not dischargeable.  A student loan can be dischargeable if by a determination of the
Department of Education or of the bankruptcy court that the repayment of the student loan would cause
the debtor an undue hardship.  The undue hardship is a very difficult standard to meet.  It requires
substantial evidence and documentation to prove the undue hardship.

Will my employer learn about my filing bankruptcy?
Generally a debtor’s employer will not be notified about the debtor’s bankruptcy unless the debtor owes
the employer a debt which would require the employer to be listed as a creditor.  An employer may be
notified if a debtor files a chapter 13 and requests that their plan payments to the trustee be made by a
wage assignment.

Can my employer fire me for filing bankruptcy?
In either case the employer cannot terminate a debtor for filing unless in some government positions
the filing of bankruptcy would place the debtor and the governmental agency they work for in a
compromising position.

If I have a lawsuit pending how does filing bankruptcy affect my case?
    Filing a bankruptcy while pursuing a lawsuit can affect a debtor’s lawsuit.  The lawsuit must be listed as
an asset on the bankruptcy schedules.  Any proceeds sought by the lawsuit or actually received as a result of
the lawsuit are an asset of the bankruptcy estate and can be applied to the repayment of the debtor’s debts.

Does filing bankruptcy ruin my credit?
No it does not ruin the debtor’s credit.  It may initially lower a debtor’s credit score but it does not hurt the
credit score nearly as bad as not making payments toward the debts or paying them slowly.  Generally by
the time a debtor decides to file bankruptcy their credit score is already starting to be lowered due to missed or delinquent payments on the debtor’s debts.

How long does bankruptcy last?
The length of a bankruptcy case depends on which chapter is filed.  A chapter 7 case generally runs
between five and seven months long. A chapter 13 case is set to run for a three year to five year period
as it is a repayment plan.  The length of the repayment plan is based on the income of the debtors.


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