WHAT IS THE DIFFERENCE BETWEEN CHAPTER 13 and CHAPTER 7?
In short, Chapter 13 is a consolidation payment plan WITHOUT in most cases having to pay everyone back. Chapter 7 is NOT a payment plan, but you can lose your stuff in some cases.
HOW MANY YEARS DO I HAVE TO WAIT TO FILE A CHAPTER 7 AGAIN?
You can file a Chapter 7 bankruptcy every 8 years, measured from the date of filing. You can file a Chapter 13 at any time after filing Chapter 7, but you are only entitled to a discharge of your debts (meaning you will not owe those creditors) if you file the 13 at least 4 years after filing the Chapter 7. You can still be protected from creditor collections actions if you file your Chapter 13 within that time period, but you may want to dismiss and file another Chapter 13 later so that you can obtain a discharge of your debts.
HOW MUCH DOES IT COST TO FILE?
Since our office is paid by the Trustee in a Chapter 13, in most cases you just need to pay the filing fee, or $310. Attorney fees are almost never paid 'out of pocket' in a Chapter 13, but are paid through the Chapter 13 plan. Chapter 7s can be easy or complex, and the price will be determined after a phone or in-office consultation. For more information, contact our office.
DO I QUALIFY FOR CHAPTER 7 or 13?
While it's best to meet with us first, there are TWO tests to determine if you qualify. The first is the 'Means Test', which looks at your income for the past 6 months, on average. If you ABOVE the median income for your county, you may qualify for a Chapter 13, but not always. Even if you are below median, you might still qualify for a Chapter 13 because you have extra disposable income (the second test). In other words, if you live at home, and have no expenses, but make $30,000 per year, you probably pass the Means Test but not the Disposible income test.
CAN I STILL PAY FOR COLLEGE EXPENSES FOR MY CHILDREN?
This is a common question, and in most jurisdictions, including Colorado, the answer is no. The reason is that the bankruptcy code does not treat your adult (over 18) child as a dependent once they are attending college.
HOW DO I GET STARTED?
We need the following documents in order to begin a Chapter 13. Although we take $0 down for our attorney fees, you should have $310 (the Court filing fee ready) to begin. If you're filing a Chapter 7, prices vary, but in both Chapter 13 and Chapter 7 cases you need the following documents:
- The last two years of Federal Tax returns - Proof of income for 2 months (and just to be save, for the last 7 months if necessary) for both you and your spouse - The name, address and amount owed for everyone you owe money to, including personal loans. If you don't know this information, go to www.annualcreditreport.com for free and obtain a FREE credit report.
WHAT IS THE IMPACT ON MY CREDIT?
Well, let's look at it this way. Credit, or the ability to borrow, is what got you into this pickle in the first place! It's kind of like wanting to buy a gun after the gun went off and shot you in the foot. In general, borrowing is something we want to avoid. That being said, sometimes you might need to borrow after filing bankruptcy whether it is for a car, a house or an emergency credit card. While there is no simple answer, Chapter 7 is on your record for 10 years, and 13 for 7 years after filing. In short, the higher your income, the more likely it will be for you to be able to borrow again in the future.
DO I HAVE TO GO TO COURT?
While your attendance at a Trustee hearing called a 341 meeting of creditors is mandatory in both 13 and 7, in most cases you will NOT have to attend a Court hearing in front of a Judge. This is not like Judge Judy or The People's Court - it's more like a parent-teacher conference where you sit at a table, flash your ID and answer a few standard questions.
I AM MARRIED. HOW TO I EXCLUDE MY SPOUSE FROM THIS?
The first thing you should know is that unless you have physically and legally separated, your spouse will usually be included for the determination of household income. While your spouse does not need to file necessarily, you and your spouse are 'pooled' together for the purposes of determining household disposable income. Also, while some people may want to 'save the credit' of the other spouse, if they have a substantial amount of debt, in those cases it makes sense for both spouses to file jointly. That being said, if your spouse does not wish to file, your spouse's credit will NOT be affected.
WHAT IF I NEED A CAR DURING MY CHAPTER 13 CASE?
Most of my clients are able to get financed during their Chapter 13 case, and we can almost always obtain permission so long as the payment is reasonable.