Bankruptcy Questions

What are typical debts?

• Credit card debt
• Personal loans
• Business related debt
• Medical and dental bills
• Personal injury and property injury claims
• Judgments
• Guarantees of third-party debt
• Taxes
• Student loans

Who are debtors?

• Most everyone. You are in good company.
• Personal debt levels are at an all-time high in the United States.
• Bankruptcy cases are on the rise with the subprime crisis.

I am in debt and want to reduce my debt level or eliminate my debt. What are my options?

• Do Nothing: An option when your income and your assets are exempt from collection by your creditors. If your income derives solely from an exempt source, such as social security disability, this may be the best option for you.
• Debt Consolidation: Transfer all of your debt to one source and then paying it off. For example, taking multiple high-interest credit cards and transferring your balances to one low interest credit card.
• Credit Counseling: Service companies owned or which collect fees from credit card companies. Typically, a servicer will negotiate with your creditors to lower the interest rate on credit card balances. In return, you pay the servicer a fee. Paying off your debt through such services usually takes years and in many cases the repayment is unsuccessful. Also, your access to the credit markets, for example new credit cards or a mortgage, is severely restricted during a pay-off.
• Debt Settlement: Negotiating directly with your creditors, or through a law firm on your behalf, to reduce to the amount of debt you owe. This process can result in clearing your debt in a shorter amount of time, and will allow you to avoid bankruptcy, but it will also negatively impact your credit. In addition, the amount of debt wiped away through settlement is considered taxable income.
• Bankruptcy: Chapter 7 (Liquidation) or Chapters 11 or 13 (Reorganization) of the United States Bankruptcy Code. A court-moderated process by which your debts are either liquidated (Chapter 7) or paid back either partially or fully during a three-to-five-year period (Chapter 13) or during a reasonable time (Chapter 11). Advantages of bankruptcy include immediate stop to all debt collection, including calls from credit card companies, and a potential court-ordered discharge wiping away non-exempt debt, i.e., credit card debt and medical bills.

How long does a Chapter 7 case last?

• Typically, the entire process lasts four to six months from filing of the bankruptcy petition to discharge by the bankruptcy court.

What is the automatic stay?

• Upon the filing of a bankruptcy petition, it is a statutory injunction that prohibits creditors from collecting debts and seizing assets.

Who is the Chapter 7 trustee?

• The Chapter 7 Trustee is a court-appointed individual who administers your Bankruptcy Case. The Chapter 7 Trustee's main job is to collect any non-exempt assets from the debtor to pay off creditors.

What is the Section 341 Meeting?

• This is the meeting of your creditors. It usually takes place approximately one month after your Bankruptcy Petition is filed. The Chapter 7 or 13 Trustee asks the debtor certain questions regarding his or her income, assets, and debts.

How long does a Chapter 7 remain on my credit record?

• A Chapter 7 bankruptcy filing will appear on your credit record for 10 years. That said, most debtors are able to get access to credit markets, including new credit cards, within a short time after debt discharge.

How do I pay for my Bankruptcy Case?

• Payment arrangements are worked out between you and the attorney at the time of your initial consultation. Payment plans are available upon request.

What Services are included in a Standard Representation?

• In a Standard Representation, Pelton Serpe LLP will conduct your initial client interview, prepare your Bankruptcy Petition and supporting papers, and attend a Meeting of Creditors with you (i.e., the Section 341 Meeting). In addition, all inquiries by your Creditors, including telephone calls and mail, will be answered by Pelton Serpe LLP. Services not provided under a Standard Representation include responding to U.S. Trustee investigations and Motions to Dismiss as well as Objections to Discharge by Creditors. These services can be provided by Pelton Serpe LLP at your request and are billed on an hourly basis.

Will an Attorney or a Paralegal handle my case?

• Your case will be handled from start to finish by an attorney—no exceptions. This includes your initial client interview and preparation of your bankruptcy petition.

What are the New Consumer Bankruptcy Law Amendments?

• The Bankruptcy Reform Act was signed into law by President Bush in April 2005. Most of the new law took effect October 17, 2005, or before that date. The new law introduces a “Means Test” for Debtors who file for bankruptcy under Chapter 7. To the extent a Debtor's income is above the state median income, the Debtor's filing will be scrutinized by the Chapter 7 Trustee, the U.S. Trustee and other parties to determine if the Debtor has enough excess income to repay some of his or her unsecured debt. If the Debtor does have excess income, he or she may have to convert their case to Chapter 13. In addition, the amendments require a Debtor to consult a credit counseling agency within 180 days of filing for bankruptcy. The Debtor is required to submit documentation to the Bankruptcy Court that such counseling has been provided.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.