There are many myths and misconceptions
Geranios Law, PLLC
hiring an attorney is a serious matter and that you may have
important questions about your potential case. I also know that your
time is valuable. Therefore, I provide answers to a number of
commonly asked questions. Because these answers are general in
nature, I strongly recommend that you consult an attorney prior to
acting on any of the information listed below. Remember, every case
is different and it is imperative that a trained legal professional
evaluate your case and advise you on your best course of action.
Contact me at 406-541-3565
today to set up a free, personal
consultation to discuss your case.
Commons Worries about Filing Bankruptcy
“I'll never ever get credit again.”
In fact, you'll be offered new credit
(on not very good terms) just as soon as you get a bankruptcy
discharge, if not before. People in bankruptcy can get car loans. The
situation improves year by year.
“I incurred these debts and I should
Repayment is certainly the better
approach if it's truly an option, but ask yourself, 1) is it
possible to repay on the present terms; and 2) at what risk to your
future and that of your family?
Most people who struggle to repay debt
go without health care or health insurance; emergency savings; or
anything set aside for retirement. They gamble their future health
and security to repay debt that is frequently far in excess of what
they can realistically pay.
Most people who file bankruptcy have
suffered job loss; divorce; or ill health. A much smaller group got
there via poor choices or over optimism about their ability to bounce
back from adversity, or a combination. The bankruptcy system doesn't
condition relief on an assessment of whether you “merit” a
discharge. No one sits in judgment about how you got in debt.
Generally the only people at bankruptcy hearings are others who are
in the same boat (and their lawyers). The system treats honest
debtors with respect.
While it may be emotionally difficult
to admit you are financially stuck, the result of filing a bankruptcy
is both psychologically and financially liberating. Remaining in
hopeless debt saps energy and efficiency.
What is the difference between Chapter
7 and Chapter 13 bankruptcy?
Chapter 7 bankruptcy & Chapter 13
bankruptcy both provide the same result – relief from your debts.
Yet, while they serve the same goal, each Chapter's approach in
achieving this goal is vastly different.
The biggest difference between Chapters
7 & 13 bankruptcies is the repayment of your debt. Chapter 13
bankruptcy involves a court-ordered repayment plan where a portion of
your debt is repaid to your creditors. In a Chapter 7 bankruptcy,
there is no repayment plan and certain debts can simply be
The second major difference between the
two chapters is the time it takes to complete each chapter's filing
process. While a Chapter 7 bankruptcy filing usually only takes 4-6
months to complete, a Chapter 13 bankruptcy is a much longer
procedure and usually lasts 3-5 years.
Your assets are protected in a Chapter
13 bankruptcy and the bankruptcy can even help you save assets that
are facing foreclosure or repossession — such as a house or car.
Since a Chapter 13 bankruptcy in not a liquidation bankruptcy, you
are able to keep your assets even if Montana bankruptcy exemptions do
not completely protect them. In a Chapter 7 bankruptcy, although it
rarely happens, the Bankruptcy Court can liquidate your assets if
they are not protected by your state's bankruptcy exemptions.
In a Chapter 13 bankruptcy, do I have
to repay all of my debts?
A Chapter 13 bankruptcy requires you to
pay a monthly payment to the Chapter 13 Bankruptcy Trustee. A common
misunderstanding about Chapter 13 bankruptcy is that you must repay
all of your debt. You are not required to pay back all of your debt.
The bankruptcy laws control the amount you must repay, but you may
still discharge or eliminate portions of your outstanding debt. Your
monthly payment is calculated based upon your monthly income and
expenses. However, your future goals regarding secured property (i.e.
vehicles, homestead, and other real property) may also have an effect
on how your monthly payment is calculated. If you have fallen behind
in payments or are experiencing a financial hardship with your home
or any other secured properties, Chapter 13 bankruptcy may offer you
the opportunity save, or keep these properties.
If I have filed bankruptcy before, can
I file again?
You may file for a second Chapter 7
eight years after filing the first. You may file a Chapter 13
bankruptcy four years after filing a Chapter 7.
How can I get my creditors to stop
Creditors are not permitted to call
individuals who are represented by legal counsel. Once you have
retained Geranios Law, PLLC to represent you, creditors are required
to communicate with us, not you. Harassing phone calls must cease
when you tell your creditors you have retained an attorney. If they
do not stop, we will contact them to stop the calls. Once you file
your bankruptcy petition, the court will issue an automatic stay,
putting an immediate halt to all debt collection efforts, including
lawsuits and garnishments.
What happens if I get sued?
You should seek legal advice
immediately. A bankruptcy will stop a lawsuit and prevent the
creditor from getting a judgment against you. If the creditor gets a
judgment, collection efforts must stop when the bankruptcy is filed. Until the
bankruptcy is filed, however, the creditor may be able to garnish
your wages or bank accounts. A judgment also creates a lien on any
real estate you own. It may or may not be possible to eliminate the
lien in bankruptcy.
Do I have to include all my debts when
I file for bankruptcy?
The bankruptcy code does allow you to
retain certain secured property (i.e. vehicles, homestead, and other
real property). Your unsecured debts (i.e. credit cards, personal
loans, etc.) must be included in the bankruptcy and are subject to
discharge. There may be special exceptions to this requirement, but
by and large, you will not be permitted to pick and choose between
Will I have to appear in court?
It is rare for people who file Chapter
7 or 13 to go to court or see a judge. A “Meeting of Creditors”
at which a bankruptcy trustee presides is usually the only required
appearance. Creditors rarely appear, and for most bankruptcy filers
the meeting consists of 10 to 15 minutes of questioning by the
trustee regarding your assets. You do not have to explain why you
cannot pay your bills.
Can I keep my car? My home?
If you file Chapter 7, you may be able
to exempt a certain amount of equity in your home or car; depending
upon your equity and the value of these assets, they may be safe from
the bankruptcy trustee. Also, there are other actions you can take to
retain certain property. If you file Chapter 13, your assets will not
be taken or sold in bankruptcy, and you can even save your home from
foreclosure if you are in default. At Geranios Law, PLLC we
understand how important it is to protect your assets, which is why
we do more than just file your bankruptcy, but also advise you on how
to manage your property prior to filing.
Who will know about my bankruptcy?
When the case is filed in Bankruptcy
Court, notifications are sent by the court to all creditors,
co-debtors, your case trustee, the United States Trustee, the
Internal Revenue Service, and the Montana Department of Revenue. The
case is a matter of public record and anyone who wants to look at the
court record may do so. The Meeting of Creditors (your meeting with
your case trustee) is open to the public but creditors rarely attend
and there is press coverage only in the most unusual and high profile
cases. There is no requirement that notice of your bankruptcy be
published in a newspaper. If, however, a newspaper chooses to print
bankruptcy notices, you cannot stop it from doing so.
Are all debts dischargeable in
No. Domestic support obligations are
never dischargeable. Most tax debt is not dischargeable. Income tax
debt may be dischargeable depending on how old the debt is and when
you filed your return. Student loan debt is rarely dischargeable. You
must prevail in a lawsuit in the Bankruptcy Court (separate from your
bankruptcy), and the legal standards are very difficult to meet.
Certain other debts (such as debts arising from fraud or malicious
injury to another) are not dischargeable if successfully challenged by the creditor. Some
Marital property settlements are dischargeable in Chapter 13
bankruptcy but not in Chapter 7.
I own a business and it is suffering
financial hardship; should I file a business bankruptcy?
Business entities can file for
bankruptcy under either Chapter 7 or Chapter 11. In determining under
which bankruptcy Chapter your business should file, your goals
concerning the business's future must be taken into consideration.
As a practical matter, if you plan on closing your business or if
your business is already closed, a Chapter 7 liquidation bankruptcy
would be appropriate. Upon filing, assets which are owned by the
business, will be subject to liquidation by a Trustee assigned by the
Bankruptcy Court in order to distribute any proceeds to your
business' creditors. At the time of filing, all business operations
must cease, and doors must close. On the other hand, if your business
is having trouble paying all of it's present debt, but the business
does earn a monthly income, a Chapter 11 bankruptcy may be the better
fit. A Chapter 11 bankruptcy is similar to a personal Chapter 13
bankruptcy in that the Chapter 11 acts as a reorganization bankruptcy
for the business. At the time of filing, the business does not have
to cease operations, and may be able to successfully remain open and
operating in the future. If your business is suffering financial
hardship, it is important to obtain the legal advice of a
knowledgeable bankruptcy attorney as soon as possible in order to
explore your options and to determine your best course of action.
I personally guaranteed my business
debt; should I file a personal bankruptcy?
Often times, business owners are
required to personally guarantee business debt. If you have
personally guaranteed a loan or other debt for you business, and that
debt is about to or has become in default, you will be personally
liable for the loan. Personally guaranteed business debt is
dischargeable, but only in a personal bankruptcy filed by you. If you
file a business bankruptcy, although your business may no longer be
liable for its debts, the creditor holding your personal guarantee
will continue to retain a legal basis to sue you personally in your
capacity as the personal guarantor. On the other hand, if you file a
personal bankruptcy, your personal liability can be discharged, and
the creditor will no longer have a legal right to attempt to collect
Can I put my assets in someone else's
name before filing?
No. Such transfers are not effective to
put your assets beyond the reach of creditors and bankruptcy
trustees. Worse, such action may lead to the denial of your discharge
(11 U.S.C. 727).
A bankruptcy trustee can recover assets
transferred within one year of the bankruptcy filing where the debtor
did not get reasonably equivalent value for the asset, or where the
transfer was made with intent to hinder creditors.
The “look back” period may be even
longer under Montana law, giving the trustee that same state law look
back period in which to recover assets.
Does my spouse have to file bankruptcy
if I file?
No. You can file alone. Keep in mind
that your spouse will remain liable for the debt on any joint
What effect will my bankruptcy have on
a co-signer, such as the person who co-signed my truck loan?
In Chapter 7 the creditor can pursue
the co-signer if payments are not being made. In Chapter 13 it is
sometimes possible to protect the co-signer by paying the debt
through the Chapter 13 plan. Your bankruptcy cannot be reported on
your co-signer's credit reports, although delinquencies can be
reported. If payments are being made by either you or the co-signer,
there will be no adverse consequences.
Will I Lose My Tax Refund If I File
First, when you file a bankruptcy case
you should know that everything you own is property of the bankruptcy
estate that the trustee can use to pay your creditors. Even if you
file in the middle of the year and are not yet owed a tax refund, a
bankruptcy trustee can claim a percentage of the refund you receive
the next year for the tax year in which you file. As an example, if
you file bankruptcy in September and then file your tax return the
following April, claiming a refund of $5,000, the trustee could claim
75% of the refund (9 months out of 12). If it turns out that you
cannot afford to have any portion of your tax refund taken, and you
can wait to file bankruptcy, you may need to file your tax returns,
receive your tax refund first, and spend the refund on necessary
items before filing the bankruptcy. We can help you determine how
much if any of your tax refund might be claimed by the trustee if you
What will happen to my credit score?
This is a universal
question that does not have a universal answer. Certainly filing a
bankruptcy has an initial affect your credit score. However, the type
of bankruptcy, whether Chapter 7, 11 or 13, will affect an
individual's credit differently. If you are in need of a
bankruptcy, the initial affect to your credit score should not
necessarily guide you in your decision on whether or not to file.
Often, those in need of a fresh start who choose not to file for
bankruptcy will have a harder time rehabilitating their credit in the
future. Those who are unable to pay their debt today, and choose to
file bankruptcy, are ultimately afforded the opportunity in the
future to obtain credit cards, purchase vehicles, and qualify for
mortgage loans. While these things may not happen overnight, you may
be surprised as to the actual positive effects your bankruptcy will
have on your life. Bankruptcies remain on your credit report for ten
years after discharge. During that time, your credit score will be
negatively impacted by the bankruptcy. However, that does not mean
that you cannot obtain credit. In fact, there are steps you can take
immediately after – or even during – a bankruptcy to begin
rebuilding credit and obtaining loans.
is elder law? Elder law is a legal practice area devoted to several
areas of law, including guardianships, long-term care planning,
advance health care directives, powers of attorney, estate planning,
special needs trusts, and elder abuse.
is the difference between a guardianship and a conservatorship?
and conservators may have different roles. Guardians' duties involve
making decisions to protect the physical and mental health of a ward;
conservators make financial decisions for the ward. Regardless of the
term used, if the judge determines the ward is incapacitated, the
judge also must determine the duties of the guardian or conservator
including making physical, medical or financial decisions for the
ward, and other matters.
guardianship is a situation where one person, the guardian, has the
ability to make decisions for someone else who cannot make decisions
himself or herself. Guardianships are typically necessary with:
might I need to seek an Elder Law attorney?
family members who are incapacitated and have difficulty with tasks
such as managing their own finances or health care. The need may
arise because of memory loss.
members are often the victims of elder abuse. In this situation, an
emergency guardianship can be immediately granted, and a follow-up
hearing will occur after the family member is out of danger.
Call today to learn more at(406) 541-3565