FAQ

COVEY LAW, P.C.
San Diego Bankruptcy Attorneys

Answers to Commonly Asked Questions about
Bankruptcy

CALL TODAY!
(619) 241-2860
Offices in San Diego and El Cajon

www.619BANKRUPTCY.com

Required Disclosure: Covey Law, P.C. is classified as a debt relief agency under the
Bankruptcy Code. Among other services provided, we help people file for bankruptcy.

What documents are needed in order to file
for bankruptcy?

Click the icons below for a document checklist and a
questionnaire that will need to be completed before
your case can be filed.

Additional Questions ? Give us a Call.

Please give us a call if you have any additional
questions about how bankruptcy may be able to
help you.

What Can Bankruptcy Do for Me?
Bankruptcy may make it possible for you to:

1. Eliminate the legal obligation to pay most or all of your debts.
This is called a "discharge" of debts. It is designed to give you a
fresh financial start.

2. Stop foreclosure on your house or mobile home and allow you an
opportunity to catch up on missed payments. (Bankruptcy does not,
however, automatically eliminate mortgages and other liens on your
property without payment.)

3. Prevent repossession of a car or other property, or force the
creditor to return property even after it has been repossessed.

4. Stop wage garnishment, debt collection harassment, and similar
creditor actions to collect a debt.

5. Restore or prevent termination of utility service.

6. Allow you to challenge the claims of creditors who have
committed fraud or who are otherwise trying to collect more than
you really owe.

What Bankruptcy Can Not Do:
Bankruptcy can not cure every financial problem. Nor is it the right
step for every individual. In bankruptcy, it is usually not possible to:

1. Eliminate certain rights of "secured" creditors. A creditor is
"secured" if it has taken a mortgage or other lien on property as
collateral for a loan. Common examples are car loans and home
mortgages. You can force secured creditors to take payments over
time in the bankruptcy process and bankruptcy can eliminate your
obligation to pay any additional money on the debt if you decide to
give back the property. But you generally can not keep secured
property unless you continue to pay the debt.

2. Discharge types of debts singled out by the bankruptcy law for
special treatment, such as child support, alimony, most student
loans, court restitution orders, criminal fines, and most taxes.

3. Protect cosigners on your debts. When a relative or friend has
co-signed a loan, and the consumer discharges the loan in
bankruptcy, the cosigner may still have to repay all or part of the
loan.

4. Discharge debts that arise after bankruptcy has been filed.

What Does It Cost to File for Bankruptcy?
It now costs $299 to file for bankruptcy under chapter 7 and $274 to
file for bankruptcy under chapter 13, whether for one person or a
married couple. The court may allow you to pay this filing fee in
installments if you can not pay it all at once. If you hire an attorney
you will also have to pay the attorney fees you agree to.

If you are unable to pay the filing fee in installments in a chapter 7
case, and your household income is less than 150 percent of the
official poverty guidelines (for example, the figures for 2007 are
$20,535 for a family of two and $30,975 for a family of four), you may
request that the court waive the chapter 7 filing fee. The filing fee can
not be waived in a chapter 13 case, but it can be paid in
installments.

What Must I Do Before Filing Bankruptcy?
You must receive budget and credit counseling from an approved
credit counseling agency within 180 days before your bankruptcy
case is filed. The agency will review possible options available to
you in credit counseling and assist you in reviewing your budget.
Different agencies provide the counseling in-person, by telephone, or
over the Internet. If you decide to file bankruptcy, you must have a
certificate from the agency showing that you received the counseling
before your bankruptcy case was filed.

Most approved agencies charge between $30/-/$50 for the pre-filing
counseling. However, the law requires approved agencies to provide
bankruptcy counseling and the necessary certificates without
considering an individual's ability to pay. If you can not afford the fee,
you should ask the agency to provide the counseling free of charge
or at a reduced fee.

What Property Can I Keep?
In a chapter 7 case, you can keep all property which the law says is
"exempt" from the claims of creditors. It is important to check the
exemptions that are available in the state where you live. (If you
moved to your current state from a different state within two years
before your bankruptcy filing, you may be required to use the
exemptions from the state where you lived just before the two-year
period.) In some states, you are given a choice when you file
bankruptcy between using either the state exemptions or using the
federal bankruptcy exemptions. If your state has "opted" out of the
federal bankruptcy exemptions, you will be required to chose
exemptions mostly under your state law. However, even in an
"opt-out" state, you may use a special federal bankruptcy
exemption that protects retirement funds in pension plans and
individual retirement accounts (IRAs).

In determining whether property is exempt, you must keep a few
things in mind. The value of property is not the amount you paid for
it, but what it is worth when your bankruptcy case is filed.
Especially for furniture and cars, this may be a lot less than what
you paid or what it would cost to buy a replacement.

You also only need to look at your equity in property. That means
you count your exemptions against the full value minus any money
that you owe on mortgages or liens. For example, if you own a
$50,000 house with a $40,000 mortgage, you have only $10,000 in
equity. You can fully protect the $50,000 home with a $10,000
exemption.

While your exemptions allow you to keep property even in a chapter
7 case, your exemptions do not make any difference to the right of a
mortgage holder or car loan creditor to take the property to cover the
debt if you are behind. In a chapter 13 case, you can keep all of
your property if your plan meets the requirements of the bankruptcy
law. In most cases you will have to pay the mortgages or liens as
you would if you didn't file bankruptcy.

What Will Happen to My Home and Car If I File Bankruptcy?
In most cases you will not lose your home or car during your
bankruptcy case as long as your equity in the property is fully
exempt. Even if your property is not fully exempt, you will be able to
keep it, if you pay its non-exempt value to creditors in chapter 13.

However, some of your creditors may have a "security interest" in
your home, automobile, or other personal property. This means that
you gave that creditor a mortgage on the home or put your other
property up as collateral for the debt. Bankruptcy does not make
these security interests go away. If you don't make your payments
on that debt, the creditor may be able to take and sell the home or
the property, during or after the bankruptcy case.

In a chapter 13 case, you may be able to keep certain secured
property by paying the creditor the value of the property rather than
the full amount owed on the debt. Or you can use chapter 13 to
catch up on back payments and get current on the loan.

There are also several ways that you can keep collateral or
mortgaged property after you file a chapter 7 bankruptcy. You can
agree to keep making your payments on the debt until it is paid in
full. Or you can pay the creditor the amount that the property you
want to keep is worth. In some cases involving fraud or other
improper conduct by the creditor, you may be able to challenge the
debt. If you put up your household goods as collateral for a loan
(other than a loan to purchase the goods), you can usually keep
your property without making any more payments on that debt.

Can I Own Anything After Bankruptcy?
Yes! Many people believe they can not own anything for a period of
time after filing for bankruptcy. This is not true. You can keep your
exempt property and anything you obtain after the bankruptcy is
filed. However, if you receive an inheritance, a property settlement,
or life insurance benefits within 180 days after filing for bankruptcy,
that money or property may have to be paid to your creditors if the
property or money is not exempt.

Will Bankruptcy Wipe Out All My Debts?
Yes, with some exceptions. Bankruptcy will not normally wipe out:
1. Money owed for child support or alimony;
2. Most fines and penalties owed to government agencies;
3. Most taxes and debts incurred to pay taxes which can not be
discharged;
4. Student loans, unless you can prove to the court that repaying
them will be an "undue hardship";
5. Debts not listed on your bankruptcy petition;
6. Loans you got by knowingly giving false information to a creditor,
who reasonably relied on it in making you the loan;
7. Debts resulting from "willful and malicious" harm;
8. Debts incurred by driving while intoxicated;
9. Mortgages and other liens which are not paid in the bankruptcy
case (but bankruptcy will wipe out your obligation to pay any
additional money if the property is sold by the creditor).

Will I Have to Go to Court?
In most bankruptcy cases, you only have to go to a proceeding
called the "meeting of creditors" to meet with the bankruptcy trustee
and any creditor who chooses to come. Most of the time, this
meeting will be a short and simple procedure where you are asked a
few questions about your bankruptcy forms and your financial
situation.

Occasionally, if complications arise, or if you choose to dispute a
debt, you may have to appear at a hearing. In a chapter 13 case,
you may also have to appear at a hearing when the judge decides
whether your plan should be approved. If you need to go to court,
you will receive notice of the court date and time from the court
and/or from your attorney.

What Else Must I Do to Complete My Case?
After your case is filed, you must complete an approved course in
personal finances. This course will take approximately two hours to
complete. Many of the course providers give you a choice to take
the course in-person at a designated location, over the Internet
(usually by watching a video), or over the telephone. Your attorney
can give you a list of organizations that provide approved courses, or
you can check the website for the United States Trustee Program
office at www.usdoj.gov/ust. If you can not afford the fee, you should
ask the agency to provide the course free of charge or at a reduced
fee. In a chapter 7 case, you should sign up for the course soon
after your case is filed. If you file a chapter 13 case, you should ask
your attorney when you should take the course.
Will Bankruptcy Affect My Credit? There is no clear answer to this
question. Unfortunately, if you are behind on your bills, your credit
may already be bad. Bankruptcy will probably not make things any
worse.

The fact that you've filed a bankruptcy can appear on your credit
record for ten years from the date your case was filed. But because
bankruptcy wipes out your old debts, you are likely to be in a better
position to pay your current bills, and you may be able to get new
credit.

If you decide to file bankruptcy, remember that debts discharged in
your bankruptcy should be listed on your credit report as having a
zero balance, meaning you do not own anything on the debt. Debts
incorrectly reported as having a balance owed will negatively affect
your credit score and make it more difficult or costly to get credit.
You should check your credit report after your bankruptcy discharge
and file a dispute with credit reporting agencies if this information is
not correct.

What Else Should I Know?

Utility services--Public utilities, such as the electric company, can
not refuse or cut off service because you have filed for bankruptcy.
However, the utility can require a deposit for future service and you
do have to pay bills which arise after bankruptcy is filed.

Discrimination--An employer or government agency can not
discriminate against you because you have filed for bankruptcy.
Government agencies and private entities involved in student loan
programs also can not discriminate against you based on a
bankruptcy filing.

Driver's license--If you lost your license solely because you couldn't
pay court-ordered damages caused in an accident, bankruptcy will
allow you to get your license back.

Co-signers--If someone has co-signed a loan with you, and you file
for bankruptcy, the co-signer may have to pay your debt. If you file
under chapter 13, you may be able to protect co-signers.