Why Should I File for Bankruptcy?

Most people who come to our lawyer to file for bankruptcy have already tried everything else. They have tried debt counseling, borrowing money, and making payments. In the meantime, they may have faced harassment from an aggressive creditor. Many people are opposed to the thought of bankruptcy because they do not realize that a wide variety of benefits are available to them through this process.

People often file for bankruptcy to reduce the strain of debt. This can mean preventing a lawsuit, judgment, wage garnishment, repossession of a car, or foreclosure. While you may want one kind of bankruptcy, your financial situation will determine which type you qualify for and should pursue. If you are trying to stop foreclosure on your house, for example, you will need to pursue a Chapter 13 bankruptcy.

How Much Does Bankruptcy Cost?

There are numerous options for bankruptcy that can help you afford an attorney. When you work with Leonard V. Sominsky, ESQ., PC, you can make as many payments as you like. With us, paying an attorney is like lay away. The initial payment is $67. Beyond that, you can pay $50 here and there as necessary, without having to worry about interest rates. You can continue making small payments up to the point where you've accumulated your retainer amount and filing fees.

Because your bill payments are dramatically reduced after bankruptcy, you will be free to make more payments to your lawyer. If this is not the case, you can always make use of your tax refund. Finally, you may borrow money from a friend or family member and pay them back after you have finished the bankruptcy process.

That's how people finance and typically pay for bankruptcy. During this time, our office can provide some protection from collection calls. Our firm can take the collection calls from our clients. In the even that a collector calls you, you can direct them to call Leonard Sominsky. This should take them off of your back, at least for a short time.

Can All Debts Be Discharged in Bankruptcy?

While the bankruptcy process is designed to eliminate your debt and get you back on track for financial stability, there are certain debts that you simply cannot discharge in a Chapter 7 or Chapter 13 bankruptcy. These debts are generally associated with the federal government or legal obligations.

The following types of debt are not affected by bankruptcy:

• Child support
• Criminal restitution
• Student Loans
• Tax Debt
• Fraud

There are few exceptions to getting these types of debts cleared. In certain circumstances, you may be able to discharge student loans for undue hardship—but hardship is extremely difficult to prove. Likewise, income tax debt may be eligible for discharge if the return was due no sooner than three years ago and was filed at least two years ago. Call our office today to discuss your tax issues.

Can I Add Debt After I've Filed for Bankruptcy?

Absolutely! If you forgot a debt when first filing for bankruptcy, it has to be added while the case is still pending. For a Chapter 7 bankruptcy case, this means you have about five months to file.

If, during that time, you realize that you have forgotten a debt, you can add it in for a small fee. If your case has already been closed, you should contact us to find out if you can reopen the case. Reopening a case to add a creditor requires a larger court fee.

Can I Re-Open My Bankruptcy?

We help clients reopen their bankruptcies all the time. In many cases, a Chapter 7 or 13 trustee will reopen a case because they want to administer an asset, such as a tax refund, or list a creditor that they missed when filing. Reopening is generally accompanied by a small court fee and an attorney fee. After you reopen a bankruptcy, you can add in any necessary information. In a month or two, when the case is closed again, the debt owed that creditor will be discharged.

What Does It Mean If My Petition Is Dismissed?

A dismissal generally indicates that something went wrong during the filing process. Because bankruptcy is a very complex process, a dozen things could have led to a dismissal. Failure to submit the right documents is among the reasons a person might see a case dismissed. It is for this reason that you should hire legal representation.

You are supposed to submit the following for a bankruptcy:

• Pay stubs
• Tax returns
• Bank statements
• All the schedules
• Disclosures

There are certain time periods for when each of these items are supposed to be submitted. If any of these forms are not submitted, or are illegible or late, the bankruptcy will get dismissed. As a result the injunction, the automatic stay that was protecting you will go away. Creditors will be free to resume collections.

In most cases, the trustee will mail you a packet asking you for documentation. If you do not submit these, the trustee can dismiss your case for non-cooperation. Your case may also be dismissed if you do not appear at your creditor's meeting, which takes place about 5 weeks into a case in Phoenix. Finally, your case may be dismissed if you appear at the hearing without your driver's license or social security card.

Reinstating Your Case After a Dismissal

After your bankruptcy is dismissed, you should not waste any time working toward a renewal of your case. The claim can be reinstated quickly and easily if you fix the defect, supplying the documents that are missing or cooperating with the trustee. You can then request that your case to be put back on the docket. The automatic stay will come back and protect you again, but at that point, you might have to go to a court hearing and explain what happened before a judge.

A trustee might be hesitant to resume your case in these situations because bankruptcy claims operate on good faith. If the trustee presumes you have good faith but you suddenly fail to produce the paperwork required of you, they might question whether you are proceeding with the case in good faith. As a result, you might have to go over their heads and explain your problem to the judge.

Is There a Debt Requirement for Bankruptcy?

Absolutely not! Your eligibility for bankruptcy is determined by whatever amount of debt is too much for you. There is no minimum amount, but your case needs to make sense financially. When considering a bankruptcy claim you should ask yourself, can I handle the debt any other way? If you want to take advantage of a free consultation, our legal team can sit down and talk about all your options and help you a budget. This will help you understand where you can go and what you can do as you consider bankruptcy.

Who Will Know If I've Filed for Bankruptcy?

First of all, the people who know that you have filed for bankruptcy are the ones who get notices from the bankruptcy court that you filed. Those are your creditors, because you are going to create a list of everybody that you could potentially owe money to and put it in the bankruptcy. This is one of the requirements in bankruptcy.

You will then download a credit report or two so everyone on your credit report who thinks you owe money, including friends and relatives, will get a letter from the bankruptcy court. Outside of these notices, your case will be on public record, so anyone who accesses these records could learn that you have filed for bankruptcy.

When Should I Stop Using My Credit Cards?

It is best to wait 60 days, as any charges in excess of $500 during the 60 days prior to filing for bankruptcy are likely to be considered bad faith. If you are using the credit cards to buy food, clothing, and other basic necessities, and spend less than $500 for each charge, then there is really no problem. You just need to continue to make minimum payments. This will ensure that you can continue through the bankruptcy process without facing charges of bad faith.

Most of your credit card debt will get discharged in bankruptcy, but charges made within 60 days might survive if the lender objects. While they usually do not object, it is best to avoid using your cards within this time period. This will ensure that you do not have any unnecessary debt coming out of the bankruptcy process.

Who Can Access My Files?

Filing for bankruptcy is a public record, so the bankruptcy court has your file. It's not available to everyone. You can't just Google someone and see if they filed for bankruptcy. Sometimes, something will pop up because you are talking about 50-60 pages of disclosures about your belongings, your bills, and your transactions in the last couple years.

The typical bankruptcy file is large and complex. To access this, a person will have to go through the bankruptcy court. If they have a lawyer, the lawyer will be able to access the bankruptcy court's website and see a pdf format of the file. A person who does not have an attorney or the bankruptcy court log-ins will have to visit the court to see the information. Because bankruptcy disclosures are public record, they can also be obtained for the purpose of some kind of collection or divorce proceeding.

What Is a Creditor’s Meeting?

In every bankruptcy case, a first meeting of the creditors takes place about 5 weeks after you file. The bankruptcy code mandates that creditors be allowed to question a debtor and ask him about their loans. Since they cannot ask questions of a consumer over the phone or with letters due to the automatic stay, this hearing serves as an opportunity for them to come forward and ask.

95% of the time, creditors do not show up at this meeting. This does not necessarily mean that you are off the hook, because they can still file objections within 60 days of the hearing; however, most of them never file anything either. Still, you are required to attend this hearing. Our legal team from Leonard V. Sominsky, ESQ., PC will be there as well, to help you answer any questions thoroughly and accurately.

At the hearing, the trustee will ask you a number of basic questions:

• What is your name?
• What is your address and phone number?
• How long have you lived in Arizona?
• Have you filed for bankruptcy before?
• Have you listed all your assets and liabilities?
• Do you have any inheritances pending?
• Are you filing, or have you filed, any lawsuits?
• Have you filed for bankruptcy under another name or social?

It is an opportunity for the trustee to investigate and ask some questions on behalf of all the creditors who chose not to show up. If you do not have all the documents or answers, the trustee will continue the hearing in another couple weeks. They might ask you also to mail the documents, and they might have additional questions. It depends what they find and your case will be unique to your circumstances.

If you have questions, please call my office. I know all the trustees in Phoenix and each one operates a little differently. I can help you navigate your situation.

Helping Consumers Find Debt Relief

At Leonard V. Sominsky, ESQ., PC, we are devoted to serving the needs of individuals who are faced with financial concerns in and around Phoenix. Our experienced law firm can help you repair your financial situation through bankruptcy. If you need to take action, rely on the skill of a Phoenix bankruptcy lawyer from our firm. Do not hesitate to speak with us at once. We can provide you with the time and attention you need.

We also offer insight on following subjects:

• Bankruptcy FAQs
• The Means Test
• Property Exemptions
• Debt Settlement

When you need answers, you can trust our legal professionals. We are fully versed in your legal rights and know how you can assert these rights to achieve a stronger financial future. With our representation, you can put a stop to creditor collections, foreclosure, out-of-control debt, and more. In a free case review, Attorney Sominsky can help you assess your options and guide you down the best avenue.