Brackett and Strunk - FAQ

The following is general information and should not be construed as legal advice, nor does it form an attorney-client relationship. The following is an only an attempt to explore commonly asked questions regarding consumer bankruptcy.

Bankruptcy: Frequently Asked Questions

What is the difference between Chapter 7 and Chapter 13 Bankruptcy?

Chapter 7 is debt liquidation or what many people call “straight bankruptcy.”  There are no repayment terms in Chapter 7 and most debts are discharged without the debtor(s) having to make any additional payments whatsoever.
Chapter 13 is a debt reorganization plan. A debtor must pay all of their disposable income into the case until the completion of their three-year or five-year plan term. A few major benefits of Chapter 13 are that interest and late fees stop accruing on all unsecured debts, foreclosures and repossessions can be stopped, and the interest rates on many auto loans can be reduced.

What is the automatic stay?

The automatic stay is the provision of the bankruptcy code that stops most types of collection efforts by creditors. It goes into effect immediately when a bankruptcy petition is filed. The automatic stay provides the debtor(s) a “breathing spell” from their creditors as it stops most, but not all collection efforts. The automatic stay is not applicable to the following: criminal proceedings, child support/alimony collection, audits by a government authority, tax deficiency notices, demands for tax returns, the making of an assessment for any tax and issuance of notice and demand for payment, detainer warrant for eviction of rental residence, negotiable instruments (i.e. cashing of checks), retirement recoupment (i.e. wage withholding of 401(k) loan repayment) and a few other actions.

Can filing a Chapter 13 Bankruptcy stop a foreclosure?

YES! The automatic stay provision of Chapter 13 stops most collection activity, including a foreclosure, and it gives the debtor a “breathing spell.” However, don’t wait until the day of the foreclosure sale to come to our office! You should call us as soon as you know you are behind on your mortgage or IMMEDIATELY if you have received a notice of foreclosure. Give yourself time to weigh all of your options by meeting with our attorneys early. Call us quickly so we can explain your rights and then you will have time to act before your home is sold. Meet with an attorney at the Law Offices of Brackett and Strunk, PLLC to discuss whether you qualify for Chapter 13 and how the automatic stay can protect you from your creditors and their collection efforts.

Can bankruptcy stop a pending repossession or even require the return of repossessed property?

YES! The automatic stay provision of Chapter 13 stops most collection actions such as vehicle/personal property repossessions. Even if your vehicle or personal property has been repossessed, your collateral can be returned to you if the Chapter 13 is filed within ten (10) days of the repossession and you have proof of insurance for the collateral. Meet with an attorney at the Law Offices of Brackett and Strunk, PLLC to discuss whether you qualify for Chapter 13 and whether it is right for you.

Can bankruptcy stop a pending civil suit or wage garnishment?

Yes! Although the bankruptcy automatic stay provision does not stop child support/alimony proceedings or enforcement, it can stop breach of contract lawsuits such as those brought by credit cards companies, medical providers, loan companies, etc…. Make an appointment for a free consultation to meet with an attorney to discuss how bankruptcy may stop these types of collection actions.

Will I lose all my personal property if I file bankruptcy?

You will likely be able to keep most, if not all, of your personal property such as your automobile, TV, washer, dryer, etc… even though you have filed for Chapter 7 or Chapter 13 bankruptcy. Tennessee law provides exemptions on various assets as well as your home. Specifically Tennessee Code Annotated section 26-2-103 allows you to exempt your personal property up to $10,000 per debtor. It is only the equity of an asset that must be protected as perfected liens on vehicles or other personal property are taken into consideration in the valuation of your assets. There are residency requirements and other complex criteria that must be met to qualify for Tennessee’s exemptions. Therefore, how bankruptcy will affect your personal property needs to be discussed with an attorney.

Will I lose my home if I file bankruptcy?

Both Tennessee law and federal law provide a homestead exemption for a home that is used as a primary residence. The homestead exemption can protects a portion of the equity in the home. The homestead exemption varies depending on your age, type of ownership interest and whether there are minor dependents in the home. To fully understand how bankruptcy will affect your assets, call Brackett and Strunk, PLLC today to schedule a free consultation.

Will my name be place in the newspaper?

“Although a bankruptcy filing is a matter of public record, the only persons who can see that you have filed for bankruptcy relief are those who have a PACER username and password. PACER users have to pay for each page of information they access, so very few people review the filings and NO LOCAL NEWSPAPER currently publishes bankruptcy filings for East Tennessee.”

Is filing for Bankruptcy a moral decision or an ethical decision?

“No, a family’s economic decision is no different than a business’s economic decision. People deserve to have bankruptcy protection just as much as General Motors, Delta Airlines, or any other big company. For some reason personal bankruptcy has been framed as some sort of moral decision, when it’s not. It’s an economic decision.”

How much will my Chapter 13 payment be?

There is no “cookie-cutter” Chapter 13 payment. Each case is different but the factors that determine a Chapter 13 plan payment include disposable income, amount of secured debt, and the value of your assets.

Do I have to list all my creditors?

YES. The bankruptcy code requires all creditors to be listed. Some clients are initially hesitant about listing all creditors. This could be because the debtor is current with the payments to a certain creditor, they have had a long-standing relationship with a certain creditor, or they are concerned about losing an asset that has a lien against it.
Not paying all of your debts through your Chapter 13 plan can be the basis for the dismissal of a Chapter 13 plan. Chapter 13 is a reorganization of your debt; this reorganization cannot be successful if all creditors are not listed. In Chapter 7, the purpose of bankruptcy is to get a fresh start and not listing all of your creditors would undermine that objective. Nothing in the bankruptcy code prevents you from voluntarily making payments to your creditors after the bankruptcy is over, but no creditor can require payments unless you have reaffirmed the debt. You should call your bankruptcy attorney immediately if you receive any collection letters or calls from your creditors after the bankruptcy has been filed.

Do I have to disclose all of my assets and all transfer(s) of asset(s) within the past two years?

ABSOLUTELY! It is important not only to disclose any and all ownership interest(s) in all assets, but also to disclose the transfer(s) of any assets within the two years preceding the filing of a bankruptcy petition. Hiding assets or the failure to disclose certain transfers can be considered bankruptcy fraud – should this occur, the court may deny you a discharge of your debts, and you may be subject to criminal prosecution. The FBI investigates all bankruptcy fraud! While prior transfers may not have been intended to be fraudulent at the time of conveyance, it is important to disclose all assets and prior transfers with the Attorney at the initial consultation so the Attorney can properly advise you of your rights and how bankruptcy will affect you.

I filed my bankruptcy petition, what’s next?

The next step is to meet with the Chapter 13 Trustee or Chapter 7 Trustee assigned to your case at the §341 Meeting of Creditors. This meeting also gives your creditors an opportunity to ask you any questions (Note: creditors rarely attend the creditor meetings, but your attorney will be there with you). After the meeting of creditors you need to do a second credit counseling course, which can be done online, in person, or over the phone. Typically, Chapter 7 debtors receive their discharge within five or six months. Chapter 13 debtors receive their discharge when their case is paid off – the Chapter 13 repayment term can either be three years or five years.

I’m married, does my spouse have file with me?

NO. However, if there is any joint debt, the creditor can continue to collect against the non-filing spouse in Chapter 7. In Chapter 13, there is a co-debtor stay, but a creditor can, for good cause, file the necessary pleading to collect against the non-filing co-debtor, or collect the unpaid balance after the Chapter 13 discharge.

Will I be able to get credit again?

Most likely. It surprises many bankruptcy debtors to find that they receive credit card applications within weeks of filing a Chapter 7 petition. Credit card companies know that once an individual has filed Chapter 7 bankruptcy, that person will not be eligible for Chapter 7 relief again for at least eight years. Other means of credit can be available and there are lenders that specifically cater to rebuilding credit, but be cautious as well as aware of the interest rates and terms.

I have filed bankruptcy before, can I file again?

Maybe. Depending on the type of bankruptcy filed, you may be eligible to re-file but several facts are needed for the attorney to evaluate your options. There is no rule that says that once you have filed bankruptcy you can never file again.

Where is bankruptcy court?

All bankruptcy proceedings for our district are held in the Howard H. Baker, Jr. United States Courthouse, 800 Market Street, Knoxville, Tennessee 37902. Section 341 Meetings of Creditors are routinely held in room 114 and bankruptcy court is in Courtroom 1C. This Knoxville Eastern District of Tennessee, Northern Division, which encompasses individuals residing in Scott, Campbell, Claiborne, Morgan, Anderson, Union, Granger, Roane, Knox, Jefferson, Loudon, Monroe, Blount and Sevier Counties.

Can I be fired due to a bankruptcy filing?

NO! The bankruptcy code prohibits all private and government employers from discriminating against an employee solely because of a bankruptcy filing.

Does bankruptcy discharge all debuts?

While most debts can be discharged, there are certain exceptions. A few examples include certain types of tax liability, debt incurred by fraud or false pretenses, domestic support obligations (child/alimony support), debt derived from willful and malicious injury to another or their property, criminal fines/court costs and certain types of retirement loans.

Can I discharge my student loans in bankruptcy?

Probably not. Student loans are typically an exception from the bankruptcy discharge, but you may be able to pay them through a Chapter 13 plan.

How much does Chapter 13 cost?

Attorney fees in Chapter 13 are set by the bankruptcy court. So you don’t have to shop around for the lowest attorney fees because you will pay the same fees, regardless of who you hire to represent you. The most attractive part of a Chapter 13 for many debtors is that the majority of your attorney fees are paid over the duration of your plan as you pay your Chapter 13 plan payments.

How much does Chapter 7 cost?

Chapter 7 attorney fees vary, depending on the complexities of each case. Our office does not have a standard fee and we do not quote fees over the phone. Rather than over-charge you because we cannot gather all the required information in a phone call, we prefer to sit down with you and discuss your financial situation in depth at a free consultation and advise you of all available options, which may include options other than bankruptcy.

Do I need an attorney to file bankruptcy?

While individual(s) can file a bankruptcy petition without an attorney, or pro se, “it is extremely difficult to do it successfully” as stated by the bankruptcy court website. http://www.uscourts.gov/FederalCourts/Bankruptcy/BankruptcyResources/FilingBankruptcyWithoutAttorney.aspx. The bankruptcy code is complex and any misstep may not only result in your case being dismissed without receiving a discharge, but it could also result in the loss of assets that could have otherwise been protected with proper assistance of counsel. Pro se litigants that need representation after their bankruptcy has been filed usually pay more than if the case had been properly filed from the beginning. An experienced attorney is necessary to navigate through bankruptcy proceeding to protect your assets and your rights.