Frequently Asked Questions
Answers From Our Houston Bankruptcy Attorneys
2. How does bankruptcy affect my credit?
The filing of Chapter 13 or Chapter 7 will affect your credit and will appear on your credit report. If you file Chapter 7, it will appear on your credit report for 10 years. If you file Chapter 13, it will appear on your credit report for 7 years. The bankruptcy will be on your credit report even if your case is dismissed. Your credit may be checked for future loans, applications for insurance and in other instances where credit checks are run. A bankruptcy may prevent you from obtaining credit in the future. It may also affect any interest rates offered to you.
3. Where is a bankruptcy petition filed?
A bankruptcy petition is filed in the Southern District of Texas United States Bankruptcy Court. We file in the Houston and Galveston Divisions. The United States Bankruptcy Court is a Federal Court.
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4. Do I have to file with my spouse if I am married?
If you are married, you can file separately or jointly. You do not have to join your spouse if you desire not to do so. If you do file a joint case with your spouse, one of the parties cannot be deleted from the case unless the entire case is dismissed or unless the court gives special permission. If you get divorced during your bankruptcy you may have to hire new bankruptcy counsel as there may be a conflict of interest.
5. What is a Section 341 Meeting of Creditors?
A Section 341 Meeting of Creditors is a meeting with the trustee appointed to your case and your creditors. It gives them the opportunity to ask you questions about your case. Your Houston bankruptcy attorney will be present with you in the meeting. You must attend the first meeting of creditors or your case may be dismissed. If you are married and filing jointly, you and your spouse must attend the meeting. If you do not attend the meeting and the case is dismissed, you may not be allowed to refile any type of bankruptcy for 180 days (6 months).
6. What is an objection hearing?
An objection hearing occurs when a creditor objects to your case. You will have to attend the hearing on the objection. If you fail to attend the hearing it may cause your case to be dismissed or may result in other adverse consequences.
7. What is a court hearing?
All court hearings require your attendance. If you fail to attend any hearing that is ordered by the court then your case will be dismissed and the creditors will be allowed to proceed against you and your property. Also, you may not be allowed to refile any type of bankruptcy for 180 days. 180 days may allow creditors to start and finish any foreclosures, repossessions, garnishments, etc. You should always attend a hearing unless specifically excused by the Guzman Law Firm. You may have several hearings and being excused from one or more hearings does not excuse you from the other hearings.
8. How will I know about the bankruptcy proceedings?
You will be notified by mail of all hearings and other important matters concerning your case. You must keep the Guzman Law Firm and the trustee in your case informed of any address change. A change of address will be filed with the court and you will receive a copy of the change of address. You should keep the Guzman Law Firm informed of any change in telephone numbers and any change in employers.
9. What is a discharge?
A discharge is what is received upon completion of your bankruptcy case. A discharge wipes out, voids, cancels or erases your debts.
10. If I file a Chapter 7 or a 13, can I be denied a discharge?
You will not be granted a discharge in Chapter 7 or 13 if you do or have done any of the following:
- Intended to hinder, delay or defraud a creditor or Trustee, or transferred, removed, destroyed, mutilated, or concealed, or permitted these things to happen, any of your property within one year before the filing of your Chapter 7, or any of your property after filing
- Concealed, destroyed, mutilated, falsified or failed to keep or preserve any recorded information dealing with your financial condition or transaction.
- Knowingly and fraudulently made a false oath, or presented or used a false claim, or withheld from an officer of the estate any recorded information, or gave, offered, received, or attempted to obtain money, property, or damage, or advantage, or a promise of money or advantage, for acting or forbearing to act.
- Fail to explain satisfactorily any loss of assets or deficiency of assets to meet your liabilities.
Refusal to obey any lawful order of the court.
- Committed any of the foregoing acts within one year of the filing of this Chapter 7 or in connection with another bankruptcy case.
- Have been granted a discharge under Section 1141 (a Chapter 11 discharge) within 6 years of this chapter 7 petition.
- Have been granted a discharge in Chapter 13 unless payments were 70% of unsecured claims and were debtor's best effort. (I must have paid at least 70 cents on the dollar in your previous chapter13).
11. Can I refile to try and discharge my debts?
No, if you are denied a discharge, you cannot file a new case to discharge the same debts in another Chapter 7 or 13 cases.
12. If my debts are discharged, can a creditor still try and collect these debts from me after Bankruptcy?
If you are granted a discharge under Chapter 7 or Chapter 13 and a creditor files suit against you for a discharged debt, you must raise this as a defense within the proper legal time or you may lose this defense and the creditor can proceed against you to collect the debt. This defense is your responsibility and the Guzman Law Firm is under no duty or obligation to defend you in the court that the action is brought in. Because of this, it is important that you keep a copy of your discharge, as your file will be placed in storage and will not be readily available. If you do need the Guzman Law Firm to retrieve your file, there will be a service charge to retrieve copies of your file if your file is available at all.
At the end of your case, you should go to the Guzman Law Firm and obtain whatever copies of your file that you will need in the future.
13. What debts do I have to include in my bankruptcy?
You must list all your debts and the creditors holding those debts, including credit unions, taxes, child support, charge card even if current, disputed debts, co-signed debts, business or personal debts, real estate taxes, homeowners insurance, Veterans Administration or HUD and any other guaranteeing agency on your home loan, and student loans even if not due yet.
14. Do I have to include all my property in my bankruptcy case?
YES, you must list all property, real or personal, that you own outright or are paying on, including: houses, rental property, rent-to-own property, furniture, stocks, bonds, lawsuits, potential lawsuits against someone else, settlements on lawsuits, debts owed to you, jewelry, cars, office equipment, accounts receivable, inherited interest in property, money in credit union accounts, livestock, life insurance face value, anything of value. It is a crime to willfully refuse to list all your property.
15. What happens if I inherit money in the next year, or separate or divorce and come into additional money or property that is not already shown on my schedules?
You must inform the Guzman Law Firm, in writing, so that your schedules can be amended.
16. How are the attorney's fees determined?
The bankruptcy judge controls the attorney's fees. And each case that is filed with the court contains disclosure of the attorney's fees.
17. Who works on my bankruptcy case?
Attorneys, paralegals, legal assistants, and trustees will all be working on your case.
18. Will my creditors still call me after I file bankruptcy to try and collect money?
After your Bankruptcy is filed with the Court, Creditors should not communicate with you at all. If they do call, you should give them your case number, which you can get from the Guzman Law Firm, tell them the name of your attorney, and whether you have filed a Chapter 13 or Chapter 7.
19. Can I still use my credit cards while I am in bankruptcy?
No, you may not use any credit cards. All credit cards must be destroyed or cut in half.
20. Do I have to maintain insurance on my vehicles, if they are included in the bankruptcy?
At all times you are to keep collision and liability insurance on any vehicle you own that is collateral for any creditor. Failure to maintain such insurance may cause the court to allow the creditor to repossess the vehicle without notice. In the event your vehicle is not covered by insurance during your case and the vehicle is damaged and/or destroyed you will still be responsible to the creditor for all payments on the vehicle. It is the law that you maintain liability insurance on your vehicles whether or not they are collateral for a loan.
21. Will I be able to keep my tax refunds?
If you owe the Internal Revenue Service and are due a refund, the Internal Revenue Service may be entitled to offset your refund against what you owe them. In Chapter 7, the Trustee may be allowed to keep your tax refund unless you have claimed an exemption under federal law. In Chapter 13, the Trustee may be allowed to keep your refund if you are behind on the plan payments. If you are behind on child support then the IRS may be able to intercept your refund to pay a portion of the delinquent child support.
22. Can I sell or give away property that has a loan on it or that has debt on it?
If you are planning on filing bankruptcy, it is better to discuss this issue with a Houston bankruptcy attorney before you take any action, because it does need to be disclosed in your case and may be a problem.
23. Once I am in bankruptcy, what if what the creditor says I owe is incorrect?
A creditor may file a claim that is incorrect. In Chapter 13, the Guzman Law Firm will be receiving a list of claims that your creditors submit to the Trustee. If you don't agree with the claim, you must make an appointment with the Guzman Law Firm Law to discuss the claim in person. You only have a time limit of 120 days after the first meeting with creditors. If you fail to object then that will mean that the claim will be paid according to the amount claimed by the creditor and provided for in your Chapter 13 plan. It is your duty to obtain all the records necessary to support the reason for the objection. It is your duty to notify the Guzman Law Firm of claims you get from the trustee, which are not on the list.
24. Does bankruptcy protect me with any criminal matters I may have pending?
No, a Chapter 13 or Chapter 7 will not protect me as to criminal prosecution, fines, traffic and parking tickets, other types of restitution, or probation revocation (including hot checks, DWI, fines, theft, welfare fraud, fraud in receiving government benefits, VA, school, or disability benefits, unemployment benefits, social security benefits), or charges resulting from failure to have automobile liability insurance, etc. The Guzman Law Firm does not represent you as to any aspect of the criminal charges including traffic tickets that have been or may be brought against you.
25. What will happen to my child support or alimony payments?
You must continue to pay child support, spousal support and alimony payments, which become due after the filing of the bankruptcy petition. You could face state court action if you fail to maintain such payments current. Also, the state and/or federal government will be allowed to take your tax refund each year that you fail to pay your child support.
26. What if I get divorced during my bankruptcy case?
If you are married and file jointly, the Guzman Law Firm may not represent one party against the other in the event a divorce is filed.
27. What if someone else co-signed for my property, or I co-signed for someone else to obtain credit?
A Chapter 13 will not protect a co-signer on business loans or non-consumer debts, or on any debts where you did not receive the benefit of the loans (i.e., where you co-sign for a relative when the relative bought a car) or non-consumer debts, or on any debts not paid in full. In these situations, the creditors will be free to proceed under state law as to the co-debtors. If your spouse is not filing bankruptcy with you, and your spouse and you owe the Internal Revenue Service income taxes for prior year(s), then the Internal Revenue Service is allowed to assess and collect from your spouse during your bankruptcy any interest or penalties accruing on the past-due tax liability after you file for bankruptcy. The Guzman Law Firm does not represent the co-signer and cannot do so because of a conflict of interest and therefore cannot discuss any aspect of your bankruptcy case with the other co-signer.
28. What if I have debts that are not in my name?
Bankruptcy does not cover debts that are not in your name and on which you are not liable to the creditor (for instance, if you have charged on someone else's account or if you have assumed someone else's debts without the creditor's permission in writing). Chapter 7 will not protect any co-debtors, and any creditor may attempt to collect the debt from them.
29. What about my utility bills?
You are to pay your utility bills because the utility companies may turn off your utilities if you do not pay them. You must pay a new deposit on all utility debts that are listed and in default if you want to continue your service. Problems with utility bills incurred after the filing of your bankruptcy is a problem that you must handle yourself.
30. What about any debts I incur after I file bankruptcy?
A Chapter 13 or a Chapter 7 will not protect you as to debts (including taxes and child support) which arise after the filing of your bankruptcy case and that the creditor may be allowed to exercise all collection efforts, including bringing a lawsuit, garnishment, phone calls, and repossessions. This includes repairs done on motor vehicles. You must pay for such repairs before you can get the vehicles. New debts cannot be added to your Chapter 13 plan unless the trustee approves the debt before it is incurred. This applies to all debts, especially car repairs.
31. What will happen if I surrender my property?
If you surrender the property to a creditor, you will be responsible for loss or damage to the property, while it is in your possession. The decision to keep or surrender a secured property is your personal choice.
32. How do I make my bankruptcy payments?
If you are a wage earner, your bankruptcy payments will be withheld from your paycheck by your employer and sent directly to the Trustee. If you are not a wage earner then you are responsible for making those payments directly to the Trustee through an automatic debit from a bank account or via online bill pay.
33. What if I don't see the bankruptcy payments being deducted from my check?
In Chapter 13, you are responsible for making the payments directly to the trustee if your employer for any reason fails to withhold the proper amount. Your first payment to the trustee is due no later than 30 days after the filing of the plan. If your employer has not begun to withhold the payment from your check, then you must send the payment directly to the Trustee.
34. Will my payments change?
The plan payments to the Trustee in Chapter 13 may increase if additional debts are discovered, if you owe more than shown on your schedules, or if the judge requires an increase in your payment. If you pay less than 70% of your unsecured claims then you will not be able to file a Chapter 7 within 8 years of the date of your Chapter 13 petition, but if you pay 70% or more, then you could possibly file a Chapter 7 within the 8 year time period.
35. What happens if my financial conditions change?
Your monthly plan payments in a Chapter 13 could increase if your financial condition improves, or if additional debts are added to your plan, or if a creditor objects and the court orders higher payments. If you fall behind on your payments, your plan will have to be modified to raise your payments to catch up on any arrearage. However, the court may not allow your attorney to modify your plan to raise payments, but may instead dismiss your case and/or allow creditors to take any property securing your debts. In order to modify your plan, you must have sufficient income to justify a higher payment.
36. What if I miss a payment?
The Trustee in Chapter 13 may not allow you to skip or miss a payment. If you miss a payment, your creditors may object and you may have to attend a court hearing. Also, if you miss payments in Chapter 13, your plan length will be extended an additional interest will accrue, and this may interfere with all your payments to your other creditors. Under some circumstances, if you miss and/or are late on any payment, your case can be dismissed and/or you can lose property without further notice or hearing. Missing payments can result in a hearing being set to determine if Chapter 13 is to be dismissed. The judge may decide to dismiss your case even if you have caught up your missed payments.
37. What if my case gets dismissed?
If your case is dismissed for failure to pay in Chapter 13 then you may not be able to file again unless there have been changes in your circumstance. Upon dismissal, all creditors will be free to continue collection efforts for the full unpaid amount of the debt. Such efforts could include foreclosure, repossession, garnishments, lawsuits, phone calls to you, your spouse, or your employer, etc. Your credit report will continue to show that a bankruptcy was filed.
38. What if I haven't filed all my federal tax returns yet?
Your Chapter 13 plan will not be approved unless all your Federal Tax Returns have been filed. Taxes that have not been paid must be paid through your plan and you cannot be relieved of these taxes by any form of bankruptcy.
39. Who is the trustee and what does he or she do?
The trustee in Chapter 13 will be collecting the monthly payments and making the monthly payments to your creditors. The trustee in Chapter 13 is court appointed. In Chapter 7, the court will appoint a private attorney as the trustee. Your case can be dismissed if you fail to cooperate with the trustee. You can also be denied a discharged if you fail to cooperate with the trustee.
40. How is the trustee compensated?
In Chapter 13, the trustee will receive compensation of approximately 6% of amounts paid into the plan. In Chapter 7, the trustee receives compensation from the sale of non-exempt property.
41. What about my student loans?
Student loans generally are not discharged in bankruptcy. However, if Chapter 13 is filed, you will not be required to make those payments until your case is dismissed or discharged. Keep in mind that any interest will continue to accrue on your student loans.
42. In Chapter 13, can I apply for credit while I am in bankruptcy?
If you file Chapter 13, you cannot incur any new debts without the permission of the court until your case is completed. This includes rent to buy, purchases of appliances, furniture, automobiles, trucks, remodeling house, credit union loans, car repairs, elective surgery, etc.
43. In Chapter 13, can I sell my property?
If you file Chapter 13, in order to sell your exempt property, such as your home or your car, the confirmed order in your case gives you permission to sell it. If you desire to sell a non-exempt property then you must have permission from the bankruptcy court. To make such a sale, you will incur an additional legal fee. It will take 30 to 60 days to process the motion through the court. You must plan accordingly when creating the sale documents, and notify the buyer that completion of the sale cannot occur until the sale has been approved by the bankruptcy court.
44. In Chapter 13, what debts will not be discharged?
A Chapter 13 will not discharge (wipe out, void, get rid of or cancel) child support, alimony, long-term debts (houses, extended months vehicle payments, etc.) or any debt not listed in your bankruptcy schedules and plan.
45. In Chapter 13, do I have to make my regular payments to my creditors?
Yes, if Chapter 13 is filed, you must begin making your regular house payments starting the month after filing. Regular monthly payments must also be made on any other debts not included in your bankruptcy plan that are identified by Guzman Law Firm.
46. What happens if I cannot afford to make my payments or I get behind?
If you file a Chapter 13, you must make your monthly plan payments or your case will be dismissed with or without notice. The filing of Chapter 13 is your last resort and the court does not recognize any excuses for failure to pay. Chapter 13 is the last chance to pay your debts and to save your property. Your case will be dismissed if your payment is not made on time. If you foresee this being a problem, you should talk to the Guzman Law Firm about filing certain motions with the court so that your case doesn't get dismissed.
47. In Chapter 7, do I have to make my regular payments to my creditors?
Yes, In a Chapter 7, if you fail to make regular payments as they become due to your secured creditors (those that have a collateral interest in your property, such as your house, car, property taxes, etc.) the creditor will be free to foreclose, take possession, or take other collection actions. If Chapter 13 is filed, you must begin making your bankruptcy plan payment starting 30 days after filing. Any payments not included in your bankruptcy plan payment must be made directly to your secured creditors.
48. In Chapter 7, what debts will not be discharged?
A Chapter 7 will not discharge (wipe out, void, get rid of, or cancel) the following types of debts:
- For money, property, services, extension, renewed or refinancing or credit, obtained:
By false pretenses, false representation or actual fraud; With written statements that were materially false, as to your financial condition, on which the creditor reasonably relied and whom I intended to deceive.
- Debts of $1,000.00 for luxury goods or services within 60 days of a petition or cash advances aggregating more than $1,000.00 on or within 60 days of the filing of the petition.
- Non-listed or scheduled debts with insufficient addresses.
- Fraud, embezzlement or larceny.
- Child support, alimony, or maintenance.
- Student loans.
- Driving While Intoxicated (DWI) judgments.
- Debts that have been determined to be non-dischargeable in another legal proceeding.
- Criminal fines or restitution (including traffic tickets, parking tickets).
49. Can I file bankruptcy if I am not a citizen?
Yes, you do not have to be a United States citizen nor a permanent resident to qualify to file bankruptcy. The court does not ask about your status. So long as you are a "debtor" and have debts, you are able to file bankruptcy.
50. Can I file bankruptcy if I do not have a social security number?
Yes, as long as you have an ITIN or EIN number issued by the IRS, you do qualify to file bankruptcy.