A Q-and-A about Bankruptcy and Your Credit Score

Q: What is a Chapter 7 bankruptcy?

A: It’s the typical bankruptcy plan for the everyday consumer. Sometimes people call it “straight bankruptcy.” Anything you have that has any significant value is sold to your creditors (with certain basic things like your house, car, appliances, furniture, etc. exempt). If you could still handle your own debts after deducting cost-of-living expenses, you probably can’t file for Chapter 7 bankruptcy. Bankruptcy ruins your credit score, however, and you will have to build good credit history again afterward.

Q: What is a Chapter 13 bankruptcy?

A: This is for people who are steadily employed and can pay off some of their debts but not all. In this kind of bankruptcy, you create a plan where you make payments to a trustee each month over the course of around five years, and the trustee spreads the money among your various creditors. In the meantime, you get to keep all your stuff -- but of course you must have a steady occupation. Once the five-year period (or however long it is) is over, and you’ve paid every month like you planned, any outstanding debts on those accounts is forgiven.

Q: What is a Chapter 11 bankruptcy?

A: This is for businesses and individuals to rearrange their finances by paying creditors via a plan of reorganization.

Q: What is the difference between the U.S. Trustee and the Trustee assigned to a case?

A: The Department of Justice governs all bankruptcy cases, and the U.S. Trustee’s office is connected with that. A regular trustee assigned to a case is a private individual designated by the U.S. Trustee to handle that particular case.

Q: Do you have to have an attorney to file for bankruptcy?

A: If you’re filing as a business or partnership, yes. If you’re an individual, you’re not required to have a lawyer. However, it is strongly advised that you have one, merely because the forms and papers to fill out are extremely complex for someone with no previous experience in the matter.

Q: What is a discharge?

A: This is an order from the court indicating you are no longer required to pay specific debts, and the creditors are no longer permitted to try to force you to pay them. Credit card debts, loans from banks, etc., are generally included here. There are quite a few exceptions, though, debts that cannot be discharged even in bankruptcy. Tax debts, child support payments, alimony, student loans, and debts resulting from fraud or illegal activity fall into that category. Those won’t go away when you file for bankruptcy. Also, if you try to hide property or assets to keep it from being auctioned off, you’ll be charged with fraud if you’re caught.

Q: Where do I go to get the forms and information on filing for bankruptcy?

A: You can visit your local bankruptcy court, or see an attorney.

Q: When will my case be closed/final?

A: Usually, a Chapter 7 case with no assets takes about two or three months after the 341 Meeting of Creditors. If there are assets, it might be three or four months after all the assets have been dealt with. Chapter 13 cases are usually about two or three months.

Q: What's the status of a particular case?

A: Contact your local bankruptcy court.

Q: What is the balance on my Chapter 13 account?

A: Contact your Chapter 13 trustee.

Q: One of my creditors is not accepting my discharge. He wants his money. What can I do?

A: If that debt was discharged by the bankruptcy judge, then the creditor has no more right to claim it. Send the creditor a copy of your discharge. If that doesn’t work, you’ll need to contact an attorney.

Q: How can I find out if someone has filed bankruptcy?

A: Contact your local bankruptcy court. This is a matter of public record.

341 Meeting of Creditors.

Q: What exactly is a "341 Meeting of Creditors"?

A: It is part of U.S. Code 341(a) (hence the name), and it’s a chance for the people you owe money to ask you questions -- under oath -- before conceding to the bankruptcy.

Q: Do I have to appear at the 341 meeting (asked by both debtors and creditors)?

A: Debtors are required to appear, no matter what, or their case may be dismissed. Creditors are not obligated to appear, and most credit card companies don’t bother sending anyone for individual Chapter 7 cases.

Q: Where do I go for my Chapter 7 or 11 341 meeting?

A: Please call your local district office.

Q: How do I get to your office or to the 341 Hearing Room from where I live?

A: You can call your local bankruptcy court to find out the location, or check an online mapping service such as Mapquest.

Q: Is the building/meeting room accessible for people with disabilities?

A: Yes, all Region 12 locations conform to accessibility codes.

Q: How do I confirm a 341 meeting date and time?

A: Check your Notice of Meeting of Creditors to confirm the date and time. If you do not have your notice, please call your attorney. If you don't have an attorney, please call the court.

Q: Can I bring my children to the 341 meeting?

A: Ideally, no. But if the children are quiet and well-behaved, they are allowed.

Q: Our attorney is tied up at another hearing.

A: If you have a lawyer, and your lawyer is not present when your 341 meeting is supposed to start, tell the trustee. Usually, the trustee can push your hearing back a little to buy time. If your attorney still isn’t there later, tell the trustee and follow his or her instructions. In most situations, if you have a lawyer, he or she must be present when you are interviewed by the trustee. The judge will decide what to do if your attorney never shows up.

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