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March 10th 2010
Frequently Asked Questions  
FREQUENTLY ASKED QUESTIONS (FAQs)


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These frequently asked questions will help you to understand the differences between Chapter 7 and Chapter 13 bankruptcy.










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Credit Counseling and Debtor Education approved agencies
Please see
www.usdoj.gov/ust

Go to Credit Counseling and Debtor Education then to approved agencies then look for Georgia.

Counseling can be in person, by internet or by telephone.


What do I need to do prior to filing a bankruptcy?
You must attend a credit counseling class approved by the United States Trustee and receive a certificate of compliance.
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What is a Chapter 7 bankruptcy?
A Chapter 7 bankruptcy is a complete liquidation of your past due debts. In this Chapter, you can eliminate credit card debts, debts for medical bills, a debt due to a repossessed car, personal loans that are not secured by real estate and some other secured property, apartment complex debts, charged off accounts and such the like. If you have personal loans that are secured by real estate and you want to keep your home, those personal loans must be paid. If you do not want to keep your home, those personal loans do not have to be paid and can be eliminated in a Chapter 7. If you have personal loans that are secured by some other type of collateral (T.V./VCR, etc), then, depending on the circumstances you may have to surrender the collateral.
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What cannot be discharged in a Chapter 7?
You cannot discharge student loans, child support arrearages, alimony, and state or federal taxes. You may be able to make payment arrangements with the student loan and taxing authorities.
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Can I file a Chapter 7 If I have equity in my home?
Depending upon a number of factors, you may or may not be able to file a Chapter 7 with equity in your home. Please speak with the attorney first, if you believe the equity in your home may be an issue.
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If my mortgage payments and/or vehicle payments are behind, how will that work in a Chapter 7?
In order to keep your home and/or vehicle in a Chapter 7, the payments must be current or be brought current before you file.
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What if I am unable to bring my home and/or vehicle current?
You have two (2) options. (1) You can either surrender the property and/or vehicle in a Chapter 7 and eliminate the outstanding debt on the home or vehicle. (2) You can keep your home and/or vehicle and pay the arrearages back in a Chapter 13 bankruptcy.
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I'm current on my home and/or vehicle payments, can I still surrender one or the other or both?
Probably, just let the attorney know of your intentions.
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What are the consequences of filing a Chapter 7?
A Chapter 7 is a bankruptcy and will show up as a bankruptcy on your credit bureaus. A Chapter 7 bankruptcy will remain on your credit report for 10 years from the date you file. You can only file a Chapter 7 once every 8 years. If you were to find yourself in a situation where you had to file again, within that 8 year period, you will probably only be eligible to file a Chapter 13 repayment.
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What exactly does a Chapter 7 do for me?
It provides you with the protection of the U.S. bankruptcy Court and it stays any actions from any creditors you list on your bankruptcy that try to collect from you. The automatic stay has some restrictions and you may need to speak to the attorney further about this.
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Will it stop any liens on my property?
No, however, speak with the attorney regarding this matter.
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What if I want to file this myself and I'm not working, but my spouse is? Does my spouse need to be involved?
The new law requires that some information be obtained regarding your spouse even though your spouse may not file.
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Will I ever be able to get anything on credit or finance anything after filing a Chapter 7?
Your Chapter 7 case will be open and active anywhere between 3-6 months after you file. Before you can receive a discharge you must attend a debtor education class. After that time, your case will close and you will receive what is called a "discharge" letter from the Bankruptcy Court. That discharge letter will help you to re-establish credit again. The discharge letter, however, is not a guarantee that every creditor is going to extend credit to you. After you file a Chapter 7 bankruptcy, creditors still reserve the right to deny you credit, even with your discharge. However, some creditors are willing to extend more credit to you after you file.
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What is a Chapter 13 bankruptcy?
A Chapter 13 bankruptcy is a federally supervised repayment plan under the United States Bankruptcy Code. This Chapter allows you to pay back your arrearages and/or debts. In this Chapter, child support arrearages, back property, state and federal taxes, mortgage arrearages, vehicle balances and student loans can be consolidated and paid back.
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Do I need to include everything in a Chapter 13 or just those items that I choose?
It is important to include all of your debts in a Chapter 13, including credit cards, medical bills, repossessed car debt, personal loans, as well as mortgage arrearages, back property, state and federal tax, mortgage arrearages, student loans, etc. Please note that the whole entire balance of your vehicle, (not just the arrearages), must be included in the Chapter 13.
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How exactly does a Chapter 13 work?
Your total debt, attorney fees and other Court fees are calculated. This debt is divided over a period of 3-5 years to establish your monthly amount. This plan is presented to the Court. Your payroll department will be notified and the monthly amount will be deducted from your paycheck and sent to the Trustee. The Trustee will pay your creditors and attorney fees from the monthly amount received from your payroll each month.
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I have a lot of debt! What do you think my monthly amount will be?
The attorney will need to calculate your "total debt" before the monthly amount can be established.
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My income is low. My debt is high. Will my Chapter 13 payments be based upon my income?
Speak with the attorney. There are some calculations that must be made to make a determination regarding your situation.
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My spouse and I would like to file this together, but I am not working. How will that work?
That is not a problem. The spouse that is working would be subject to the payroll deductions.
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What happens if neither spouse is working?
A Chapter 13 must be funded. Funding is the key to making the Chapter 13 work. Income is required to fund your Chapter 13 successfully.
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What if my spouse loses the job in the middle of our Chapter 13?
The attorney should be contacted immediately. Some temporary action may be able to be taken until new employment can be found. Time is of the essence here. Contact the attorney.
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What if my spouse changes jobs?
The attorney should be contacted immediately. The attorney will take the necessary steps to notify the new employer and the Court. It is crucial to the case, that there be no lapse in your payments to the Court. If there are gaps in payments to the Court, dismissal of your case is a strong possibility.
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My spouse and I are both retired and/or receiving disability. Therefore, we are not able to do payroll deductions, but we need to save our house. What option do we have?
Discuss this matter with the attorney there may be some options.
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Does the ongoing mortgage still have to be paid in addition to the Chapter 13 payments?
Yes. The ongoing mortgage still has to be paid each month throughout your entire Chapter 13 case, in addition to the Chapter 13 monthly payments.
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I heard about the "discharge letter" in a Chapter 7. How will that work in a Chapter 13?
Chapter 7 and Chapter 13 cases require you to attend a debtor education class before you will receive a discharge. You will receive your discharge letter after you have attended the class and all of your creditors/attorney fees are paid according to the chapter 13 plan. (within the 3-5 year period).
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Is there a difference between the credit counseling class and the debtor education class?
Yes. These are two different classes. You need the credit counseling class before you file and the debtor education class prior to you receiving your discharge
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I think I am ready to file a Chapter 7 or Chapter 13 . What do I need to do or bring in?

  • A certificate of compliance from an approved credit counseling provider
  • Tax returns for the last 4 years
  • Driver's License (or) Picture ID.
  • Social Security Card (or) a Medical Card with your Social Security number on it.
  • Copies of pay-stubs for the last 6 months
  • Installment purchase agreements
  • The addresses of all of your creditors. (Credit reports and statements)
  • The last two collection letters from any creditor
  • Real estate or personal property leases
  • Car finance company balances

    • For a Chapter 13, you will additionally need: The payroll address of your employer.
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    Can I pull a credit report to assist me with my addresses and balances?
    We highly recommend that you do so, to insure that all creditors are added. To assist you with obtaining your yearly free copy of your credit reports, please call:

    Equifax: 1-800-685-1111
    Trans Union: 1-800-916-8800
    Experian: (Formerly TRW): 1-888-397-3742

    These are 24 hour a day, 7 day a week, automated phone numbers. You are entitled to obtain (1) free copy from each one per year. They take approximately (4) days to get to you by mail.

    You can also get you free credit report online at
    www.annualcreditreport.com

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    Remember, We care about your problems and are here to serve you. Thank you for your interest in retaining this firm.

    		   
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