If I file bankruptcy, will I lose my home or car?
Probably not. Of the various approaches to bankruptcy, only in Chapter 7 can a trustee liquidate the debtor’s property. And the trustee only gains anything if there is value in an asset beyond any liens plus the debtor’s exemption. For this reason, the overwhelming majority of Chapter 7’s are no-asset cases, where the trustee takes nothing and the unsecured creditors receive nothing.
Aside from any risk from the trustee, you must of course keep up the payments on any mortgage or car loan in order to retain the collateral.
Will filing bankruptcy keep bill collectors from harassing me?
Yes. When you file bankruptcy, an automatic stay goes into effect that prevents creditors and their agents from calling, sending past due letters, suing, repossessing, foreclosing, or doing almost anything else to collect their debts. If any of that activity has already started, it must stop.
Will my family and friends find out if I file bankruptcy?
Probably not. Your bankruptcy lawyer has an obligation to keep your business confidential except where necessary to represent you. And while records of the bankruptcy court here in Columbia are available to the public, it is rare and somewhat inconvenient for anyone unconnected with the bankruptcy system to get access.
Do I have to include all my creditors in my bankruptcy?
That depends on what you mean by “include.” Debtors are required to list all their debts and all their assets on schedules filed with the court, but that doesn’t mean all debts are treated the same way. Some may be discharged, while others may be paid. And if you can afford to, you can pay a debt after your case is completed even if it is discharged.
Discuss with your bankruptcy attorney which debts you may want to treat differently than others. For more on this subject, click here.
How much does it cost to file bankruptcy?
The biggest cost is the attorney’s fee, which varies widely depending on the complexity of your case. In most cases, you must also pay a filing fee to the court. We can only quote you a fair fee once we know your overall financial picture.
Can I file bankruptcy without an attorney?
Legally, you have the right to represent yourself. You also have the right to perform surgery on yourself, but that would be an equally bad idea. Bankruptcy is very specialized law, and we have represented several attorneys – including one bankruptcy attorney – who realized they should not attempt to file bankruptcy on their own.
What if I cannot afford the fees for bankruptcy?
In Chapter 13 cases, some or all of the attorney’s fee can be paid through the debtor’s plan. Most bankruptcy lawyers will defer a portion of their fees, thereby reducing the amount that must be paid before the case is filed. Some lawyers will agree to collect their entire fees through the plan. Our policy is to defer only a portion of the fee. Depending on the situation, that portion may be as much as half.
It is not possible to defer collection of fees for Chapter 7 cases because courts have held that uncollected fees are dischargeable. If you cannot afford Chapter 7 fees, you may qualify for the South Carolina Bar Pro Bono Program, depending on your income and household size. Under this program, you may be assigned to an attorney who volunteers to help you without charging a fee. You are still responsible for the filing fee.
Can I avoid paying the filing fee?
Possibly, depending on your income. The current filing fees are $306 for a Chapter 7 case and $281 for Chapter 13. The bankruptcy court has a procedure where the debtor’s attorney can apply for a waiver of the filing fee. If the court denies the waiver, it will usually allow the debtor to pay the fee in installments over three months or more.
What effect will bankruptcy have on my credit standing?
Bankruptcy damages your credit standing, though maybe no more so than the alternatives. The Fair Credit Reporting Act says a bankruptcy can remain on your credit history for up to ten years after you file. Foreclosures and other judgments also stay on for ten years and written-off accounts for seven years. The impairment of your credit standing is a major reason not to file bankruptcy without considering your alternatives.
I just moved to South Carolina. Can I file here?
You may file a bankruptcy case in the District of South Carolina if you have lived in this state for 180 days. If you have moved in that period, you may file here if you have lived here for the greater part of the period (90+ days). You may also file here if your principal place of business or principal assets have been here for the last 90 days or more.
What property can I protect?
State law determines the exemptions you may claim. Each person who lives in South Carolina and has lived here for the last two years can protect assets including
- $56,150 of equity in a home
- $5,625 of a car
- $4,500 of household goods
- $1,125 of jewelry, and
- $1,625 of tools of the trade
- most life insurance policies, retirement accounts, child support, public benefits, etc.
If you don’t need to exempt a home, you may exempt up to $5,625 of cash or other liquid assets. And if you don’t need to use the entire limit of any exemption, you may be able to exempt up to an additional $5,625 of any property.
If you recently moved to South Carolina, you may be able to claim the exemptions from your prior state or federal exemptions set out in the Bankruptcy Code.
You should expect any competent bankruptcy attorney you consult to advise you in detail about your exemptions and the best way to use them to protect your assets.
Should I file Chapter 7 or Chapter 13?
This is a complicated question that requires a broad look at your debt, assets, income, and expenses. If the problem is mostly unsecured debt – credit cards, medical bills, finance companies, etc. – you would probably benefit more from Chapter 7. If your mortgage is behind, or if you owe substantial past due taxes or domestic support, Chapter 13 may be indicated. With full information from you, an experienced bankruptcy attorney can explain the benefits and risks of each form of bankruptcy in your particular situation.
How can I learn more about my options?
Come see us for a consultation about your debt situation. For more information, click here.