© 2019 by Larry D. Stout

The Law Office of Larry D. Stout has been designated a Federal Debt Relief Agency by an Act of Congress and the President of the United States.

 

Bankruptcy Frequently Asked Questions

 

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Q: Can I still file for “Bankruptcy”?  I heard you can’t anymore.

Q: How do I know if I qualify for a Chapter 7 Bankruptcy?

Q: How much money can I make and still qualify for a Chapter 7 Bankruptcy?

Q: What happens if my income is above the monthly average for my household size?

Q: Will I lose my home, my car or other property if I file for bankruptcy?

Q: Can I give my property to friends or family before filing to keep it away from the Court?

Q: Should I continue to pay my credits cards until I actually file?

Q: If I stop paying my credit cards won’t creditors garnish my wages?

Q: How long does a bankruptcy case take?

Q: Can my employer fire me if I file for bankruptcy..?

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Q: Can I still file for “Bankruptcy”?  I heard you can’t anymore.

 

A: Yes, you can still file a Chapter 7, which is what most people think of when they hear the term “bankruptcy”.   Even though Congress made wide-sweeping changes to the US Bankruptcy Code in 2005, most people who would have qualified for a Chapter 7 complete discharge will still qualify.  (Back to Top)

 

Q: How do I know if I qualify for a Chapter 7 Bankruptcy?

 

A: Whether you qualify for a Chapter 7 depends on the amount of income you have received in the six months preceding the month you file in.  It also depends on your household size.  For example, if you were to file in July, your income look back period would be from January 1st through June 30th.  (Back to Top)

 

Q: How much money can I make and still qualify for a Chapter 7 Bankruptcy?

 

A: The following table lists the filing threshold for different household sizes, as of 11/01/2019:

 

Household Size   Annual         Monthly

 

          1                  $66,309        $5,526

          2                  $78,823        $6,569

          3                  $90,921        $7,577

          4                  $105,568      $8,797

          5                  $114,568      $9,547

               6                  $123,568      $10,297   

                                                                                                                                                                                              (Back to Top)

 

Q: What happens if my income is above the monthly average for my household size?

 

A: If you are over the threshold, then additional calculations are done, taking into account secured payments like houses and cars, deductions for payroll taxes, retirement, insurance and other such deductions.  So even if your monthly gross income exceeds the average you may still be able to file for protection under Chapter 7.  If not, then you may consider a Chapter 13 to manage your debt. (Back to Top)

 

Q: Will I lose my home, my car or other property if I file for bankruptcy?

 

A: In most cases, no.  The bankruptcy code gives people who file for bankruptcy the right to “exempt” equity they have in various types of property, including your home, your car, household goods, retirement accounts, etc. up to set dollar values.  The truth is that most cases are “no-asset” cases, meaning that you have no assets that the Court or creditors can reach. (Back to Top)

 

Q: Can I give my property to friends or family before filing to keep it away from the Court?

 

A: No.  And don’t even think about it.  The Bankruptcy system has seen every trick that people have tried to avoid claiming all your assets in Bankruptcy.  If you try to be clever, the only person you are likely to outsmart is yourself.  Before you transfer any assets to friends or relatives, consult an experienced bankruptcy attorney.  (Back to Top)

 

Q: Should I continue to pay my credits cards until I actually file?

 

A: Generally speaking, no.  If you have made the decision that you are going to file you should stop making payments on all accounts that you do not intend to keep.  If you have a home or a car that you are making payments on and want to keep them, then keep making those payments.  But it makes not sense to make partial payments on accounts that you are going to eliminate in your case. (Back to Top)

 

Q: If I stop paying my credit cards won’t creditors garnish my wages?

 

A: While creditors do have the right to force collection of amounts due through a wage garnishment, they first have to file a lawsuit against you to obtain a judgment.  But the truth is that you can stop paying on your credit cards and it will be months before your creditors get around to filing a lawsuit against you.  By that time your case will have been filed and your creditors will be prevented from filing any lawsuits against you to collect amounts owing. (Back to Top)

 

Q: How long does a bankruptcy case take?

 

A: Chapter 7 cases take roughly ninety (90) days to complete once the case is filed.  Chapter 13 cases can last a few months or up to five years, depending on the facts of your case.  Please see the Chapter 7 and Chapter 13 sections for specific information about each chapter. (Back to Top)

Q: Can my employer fire me if I file for bankruptcy..?

 

A: No.  As to government employment, 11 U.S.C. §525(a) provides in pertinent part that a governmental unit may not…deny employment to, terminate the employment of, or discriminate with respect to employment against, a person that is or has been a debtor under this title or a bankrupt or a debtor under the Bankruptcy Act, or another person with whom such bankrupt or debtor has been associated, solely because such bankrupt or debtor is or has been a debtor under this title or a bankrupt or debtor under the Bankruptcy Act, has been insolvent before the commencement of the case under this title, or during the case but before the debtor is granted or denied a discharge, or has not paid a debt that is dischargeable in the case under this title or that was discharged under the Bankruptcy Act.

 

As to private employment, 11 U.S.C. §525(b) provides that “No private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title, a debtor or bankrupt under the Bankruptcy Act, or an individual associated with such debtor or bankrupt, solely because such debtor or bankrupt – (1) is or has been a debtor under this title or a debtor or bankrupt under the Bankruptcy Act; (2) has been insolvent before the commencement of a case under this title or during the case but before the grant or denial of a discharge; or (3) has not paid a debt that is dischargeable in a case under this title or that was discharged under the Bankruptcy Act. (Back to Top)