Bankruptcy

The information contained in this page is intended neither as legal advice, nor to create an attorney-client relationship. Bankruptcy law is very complicated and you should always consult with an attorney before taking any action. Mr. Ross does provide initial consultations regarding matters in Texas and can often help locate attorneys in other states. He can be reached at (940)692-7800.

Please note that the on-line version of statutes referenced may not be up to date and the statute may have changed. Consult a current version of the statute before taking any action.

What happens if I file a chapter 7 bankruptcy?
You commence a chapter 7 bankruptcy proceeding by filing a “petition” with the bankruptcy court. The person filing a Chapter 7 is referred to as the “debtor.” The debtor is required to disclose to the court all his or her property and debts and turn over all nonexempt property to the bankruptcy trustee, who then converts it to cash for distribution to the creditors. The debtor then receives a discharge of all dischargeable debts.
Who can file a Chapter 7 bankruptcy petition?
Almost any individual, partnership, corporation or Texas business trust may file a chapter 7 bankruptcy petition if he or she resides, has a domicile, a place of business, or property in the United States, or a municipality, and their income and assets qualify them for it. If you filed a prior bankruptcy petition and the prior proceeding was dismissed within the last year, you may not be able to file a second petition.If you were granted or denied a chapter 7 discharge in a prior case within the last 8 years or completed a chapter 13 plan in a prior case, you might not be entitled to receive a discharge in bankruptcy and probably are not a candidate for a chapter 7 bankruptcy proceeding. This rule does have some exceptions.
What are the most common reasons for a Chapter 7 bankruptcy?
The most common reasons for consumer bankruptcy are: unemployment; large medical expenses; seriously over-extended credit; marital problems and other large unexpected expenses.
Who can file a chapter 13 bankruptcy petition?
  • Individuals may file chapter 13 bankruptcy petitions if they:
    • reside, have a domicile, a place of business, or property in the United States, or a municipality;
    • have a source of regular income; and
    • on the date the petition is filed owe less than $307,675.00 in noncontingent, liquidated, unsecured debts and less than $922,975.00 in noncontingent, liquidated, secured debts.
  • Corporations and partnerships may not file a chapter 13 bankruptcy petition.
  • If you filed a prior bankruptcy petition and the prior proceeding was dismissed within the last year, you may not be able to file a second petition and should check.
Will the bankruptcy stop bill collectors from calling
Yes. The automatic stay prevents bill collectors from taking any action to collect debts.
How long after filing will the creditors stop calling?
Once a creditor or bill collector becomes aware of a filing for bankruptcy protection, it must immediately stop all collection efforts. After you file the bankruptcy petition, the court mails a notice to all the creditors listed in your bankruptcy schedules. This usually takes a couple of weeks. Creditors will also stop calling if you inform them that you filed the bankruptcy petition, and supply them with the “docket number” for your case. In some cases, you or your attorney should contact the creditor immediately upon filing the bankruptcy petition, especially if a law suit is pending. If a creditor continues to use collection tactics once informed of the bankruptcy they may be liable for court sanctions and attorney fees for this conduct.
Who notifies the creditors and bill collectors?
After the bankruptcy petition is filed, the court mails a notice to all the creditors listed in the schedules. This usually takes a couple of weeks.
Who deals with my creditors and bill collectors during the bankruptcy?
Usually, your attorney deals with all creditors.
Will my employer and landlord find out about my bankruptcy?
Bankruptcy petitions are public records. However, under normal circumstances, unless your employer or landlord is a creditor, it will not know you filed a bankruptcy petition. If your employer or landlord is a creditor it must be listed as a creditor on the schedules and receive notice required to make payments through wage garnishment and their employer will learn about the bankruptcy.
Can my employer fire me for filing bankruptcy?
No. Bankruptcy laws prohibit government units and private employers from discriminating against you because you filed a bankruptcy petition or because you failed to pay a dischargeable debt.
Can I go to jail if I file bankruptcy or don’t pay my debts?
No. There are no debtor’s prisons in the United States.
Does the spouse of a married person also have to file bankruptcy?
No. In some cases where only one spouse has debts, or one spouse has debts that are not dischargeable then it might be advisable to have only one spouse file.
Can I keep any credit cards?
Under some circumstances you may be able to keep some credit cards if the creditor agrees. There are many factors which must be considered. Some of those include the credit card balance at the time of the bankruptcy, what the credit card company is willing to do and your ability to pay the present and future credit card debt.
Will I have to fill out forms?
Filing bankruptcy means filling out forms. The attorney you hire may ask you to fill out forms to provide him or her with the information needed to file the bankruptcy petition. The attorney will use the information you provide to complete the official forms, usually using a specialized computer program.
Will I have to go to court?
About 30 to 40 days after filing the bankruptcy petition, you will have to attend a hearing presided over by a bankruptcy trustee. This hearing is called the First Meeting of Creditors. The trustee is not a judge, but an individual appointed by the United States Trustee to oversee bankruptcy cases. At the First Meeting of Creditors the trustee will ask you questions under oath regarding the content of your bankruptcy papers, your assets, debts and other matters. Creditors will also be permitted to ask you questions, although in the majority of cases creditors do not ask questions at the First Meeting of Creditors.

After the initial meeting you normally do not need to return to court. However, if a creditor or the trustee files a motion or an adversary action you may have to appear in court with your attorney.

Are there alternatives to bankruptcy?
You could try to negotiate directly with your creditors to lower your debt payments to a manageable level. You could contact your local consumer credit counseling office to see if they can negotiate a payment plan with your creditors that you can manage.
Should I try to negotiate with creditors?
Obtaining loan extensions, compromises and workout agreements require negotiation skills and experience. These alternatives may alert your creditors to the existence of nonexempt property that the creditor could reach and can involve considerable expense. You also have the option of doing nothing. In any event you should seek professional advise in dealing with most of these alternatives.
What should I do to prepare for filing bankruptcy?
First, you should consult with an attorney. An attorney can help you plan for the bankruptcy, decide when to file a bankruptcy petition, or even avoid filing for bankruptcy. A few specific items are worth mentioning.

  1. If you intend to file bankruptcy you should stop using your credit cards. If you borrow money with the specific intent of discharging the debt in bankruptcy instead of paying it back the debt is not dischargeable. In addition, three specific circumstances are worth mentioning: (a) certain luxury purchases over $500.00 within 90 days of the bankruptcy filing are presumed nondischargeable; (b) cash advances aggregation $750.00 within 70 days of the bankruptcy filing are presumed nondischargeable; and, (c) debts involving materially false financial statements are nondischargeable under certain circumstances.
  2. Don’t transfer your assets to friends, family and business associates to protect the assets form your creditors. The transfer may be considered a fraudulent conveyance. If it is, you may lose both the property and your right to a bankruptcy discharge.
  3. Don’t destroy any business or financial records. You can lose your right to a bankruptcy discharge as a result.
  4. Carefully choose the creditors you pay. Some creditors, such as landlords, secured creditors, and some utilities should be paid under most circumstances. If you pay a credit card debt that eventually will be discharged, you may be throwing money away. Your attorney should advise you on what debts should and should not be paid while you prepare to file a bankruptcy petition.
Can I file a bankruptcy for my debts, but not include my assets?
No.
Can I file bankruptcy to delay a creditor?
The Bankruptcy Rules require you or your attorney to certify that your petition is not filed “for any improper purpose, such as to harass or to cause unnecessary delay.” Bankruptcy is intended as a tool for dealing with debts that can not otherwise be paid. You should not file a bankruptcy petition for the sole reason of delaying a creditor’s actions.
Do I have to disclose all of my assets?
Yes.
What if I fail to disclose all of my assets?
You have committed a felony and can be fined up to $5,000.00, imprisoned for up to five years, or both. In addition, the court can deny you your discharge, or dismiss or convert your bankruptcy proceeding.
What if my question isn’t answered here?
Contact the Law Office of Gregory A. Ross and we will try to help you.

Contact us at 940-692-7800 to discuss your bankruptcy questions.