Frequently Asked Questions re: Bankruptcy





	Frequently Asked Questions: How much does it cost to file bankruptcy? What documents should I bring to my consultation? Can I keep my car if I file bankruptcy? Will the bank take back my car? Will the Bankruptcy Court take my household things? Is someone going to go through my house and things? What is the Homestead exemption? Can I keep any family heirlooms? Who is a debtor? Who is a creditor? Are there different kinds of debt? How much does it cost to file bankruptcy? I charge a flat fee of $600 plus court costs for preparing and filing a Chapter 7 bankruptcy (used by 90-95% of my clients, the most common type of bankruptcy). Court costs are $216 for a single filer and $232 for married filers filing jointly. I also recommend that clients obtain a credit report which they can either obtain themselves or through my office. If you order a credit report through my office, the credit reporting agency charges us $20 for single filers and $30 for married filers filing jointly. I will charge additional fees if you fail to keep your office appointment or if you engage in bankruptcy fraud. You can very easily avoid these fees by keeping your appointments and by not engaging in bankruptcy fraud. Unlike some other attorneys, I do not charge an additional fee for preparing reaffirmation agreements. I charge a flat fee of $1,200 plus court costs for preparing and filing a Chapter 13 bankruptcy (used by about 5-10% of my clients. Court costs are $185. I also recommend that clients obtain a credit report which they can either obtain themselves or through my office. If you order a credit report through my office, the credit reporting agency charges us $20 for single filers and $30 for married filers filing jointly. I will charge additional fees if you fail to keep your office appointment or if you engage in bankruptcy fraud. You can very easily avoid these fees by keeping your appointments and by not engaging in bankruptcy fraud. If, after your Chapter 13 plan is confirmed, you need to change it due to changed circumstances, I will charge an additional fee for preparing those changes. Before you can pay any additional fees, the Bankruptcy Judge must review the additional fees and find that they are both reasonable and necessary. back to the top What documents should I bring to my consultation? A bankruptcy petition is primarily a detailed financial statement. The following documents help us prepare an accurate petition: --The DEED and the DEED OF TRUST to your real estate. The DEED is the document showing your ownership of the real estate. You probably received it in the mail about a week after you purchased the real estate. It is usually wrapped in blue or brown paper. The DEED OF TRUST is the document showing that the bank or finance company has a lien on the real estate. The bank or finance company retains the original, but you were probably given a copy in the package of documents you received when you purchased your real estate. Some people have both a first and a second DEED OF TRUST. If you do, please bring both. If you can't locate these documents, you may obtain copies from the Clerk of the Circuit Court in the city or county in which the real estate is located. The Clerk of the Circuit Court will charge a small fee for these documents, usually fifty cents per page. --Your most recent REAL ESTATE TAX BILL, even if it has been paid. Many people pay these taxes through their mortgage. If you do, or if you simply can't find your REAL ESTATE TAX BILL, you may obtain a copy from the Commissioner of Revenue in the city or county in which your real estate is located. --A list of your PERSONAL PROPERTY and its FAIR MARKET VALUE. PERSONAL PROPERTY is everything you own except real estate. Use your common sense in making your list, putting items in reasonably sized groups. FAIR MARKET VALUE is the price that a willing buyer would pay a willing seller, usually yard sale, flea market or classified ad prices, NOT the purchase price. Even PERSONAL PROPERTY that you received as a gift could be sold and has a FAIR MARKET VALUE. --Your most recent BANK ACCOUNT STATEMENTS. If you have more than one bank account, bring a BANK ACCOUNT STATEMENT from each. It is NOT necessary to bring multiple statements from the same account. --Your most recent PERSONAL PROPERTY TAX BILL, even if it has been paid. PERSONAL PROPERTY TAX BILLS may cover motor vehicles, boat, business property, airplanes or other large items of personal property. If you do not have your most recent PERSONAL PROPERTY TAX BILL, you may obtain a copy from the Commissioner of Revenue in the city or county where the property is located, usually the city or county in which you reside. --Your ORIGINAL LOAN DOCUMENTS on all secured accounts (loans with collateral) or finance company accounts. If you do not have these documents, you can usually obtain them from the lender. --All PAYMENT BOOKS, which may be issued on a home loan, car loan, personal loan or even a Fingerhut account. --All EVIDENCE OF OUTSTANDING TAXES. If you owe back due taxes, please bring any documents you have received from the taxing authority or any other documents you may have evidencing your obligation to pay the tax. --Your most recent MONTHLY STATEMENTS on all other outstanding bills. You do NOT need to organize these bills, as we will reorganize them even if they are already organized. Also, please do NOT tear off the payment coupons from your MONTHLY STATEMENTS, as there is usually helpful information on these coupons. --All WARRANTS IN DEBT or GARNISHMENT SUMMONS you have received within the last year. If you receive a WARRANT IN DEBT or a GARNISHMENT SUMMONS while we are preparing your bankruptcy petition, do NOT panic, but bring it to our attention immediately. --Recent PAYCHECK STUBS. If you have worked in the same job since January 1 and your PAYCHECK STUB shows year-to-date income and deductions, only one PAYCHECK STUB is necessary. If you have worked more than one job this year, or if your PAYCHECK STUB does not show year-to-date income, bring five or six current and consecutive PAYCHECK STUBS so that we can average your income over time. This is particularly important if you work outdoors and your income is affected by the weather. --Your FEDERAL INCOME TAX RETURNS for the last three years and your most recent STATE INCOME TAX RETURN. --A current CREDIT REPORT. You may obtain a current CREDIT REPORT by clicking on the "Links" tab above and then clicking on the link for any of the three major credit reporting agencies (Experian, Equifax or TransUnion). Each of these sites will charge you a fee of approximately eight dollars for each credit report which will be charged to a credit card. Married couples should obtain a credit report for both the husband and the wife. We can order a credit report for you, but it will cost more if you order it through our office. If you do not have or cannot find any of the documents listed above, DO NOT PANIC!!! Everything listed is helpful but none of it is mandatory. When we file your bankruptcy petition, we certify under penality of perjury that it is true and correct to the best of our knowledge and belief, we do not certify that it is perfect. Only God reaches perfection, we do our best. If you do your best, we will be able to do a better job for you. back to the top Can I keep my car if I file bankruptcy? Usually. Virginia law allows you to keep a vehicle with an equity value of up to $2,000. Equity is equal to the blue book value of the car less what you owe the bank or finance company. Even if you have equity of more than $2,000, you may still be able to keep your car by protecting the rest of your equity under a different exemption. back to the top Will the bank take back my car? Usually not as long as you are current on your car payments. You will usually have to sign a new agreement with the bank called a reaffirmation agreement. back to the top Will the Bankruptcy Court take my household things? No. Under Virginia law, each individual may keep household goods with a value of $5,000. A married couple may keep up to $10,000 in household goods. You do not have to use your homestead exemption to protect these items. back to the top Is someone going to go through my house and things? It would be very unusual for the Bankruptcy trustee to go through your house and things. It has never happened to one of my clients. But it is possible in cases involving fraud. back to the top What is the Homestead exemption? Under Virginia law, each individual is entitled to keep up to $5,000 in real estate, personal property or both. Married couples are each entitle to keep up to $5,000. This can be equity in your home, your tax refund, your mobile home, cash, or any other property that doesn't qualify for another exemption. You get another $500 for each dependent and an additional $2,000 if you are a disabled military veteran with a service related disability of more than 40%. Do you mean that I get $5,000 in household goods, $2,000 equity in a car and another $5,000 under the Homestead Exemption? Yes. back to the top Can I keep any family heirlooms? Yes. Virginia law allows you to keep up to $5,000 in family heirlooms if they came from at least as far back as a grandparent. back to the top Who is a debtor? If you owe anyone money, then you are a debtor. The debt might be for credit cards, automobile loans, hospital bills, furniture you've purchased, you home mortgage, or a loan from a finance company. Whatever the reason for the debt, you are a debtor if you owe someone money. Of course, almost everyone in our country is a debtor, since our economy runs on credit. back to the top Who is a creditor? The person or business to whom you owe the money is called a creditor. back to the top Are there different kinds of debt? Yes. The Bankruptcy Code divides debts into three categories: 1. Secured debts are debts for which you have put up collateral. In other words, you have given the creditor the legal right to repossess (take back) a particular item of your property if you don't pay the debt on time. Common examples of secured debts are home mortgages and car loans. 2. Priority debts are debts that the bankruptcy trustee pays first before he pays other debts if you have available funds in your bankruptcy estate. A common example of unsecured priority debts are taxes. 3. Unsecured, non-priority debts are debts for which you have not put up collateral and which the bankruptcy trustee does not give priority. Common examples of unsecured, non-priority debts are credit card bills and medical expenses. back to the top