Question: How much does it cost to file bankruptcy?
Answer: The cost of bankruptcy depends on the type of bankruptcy you file.
Chapter 13 bankruptcy costs include court costs of $274, credit report fee ($30-$50), credit counseling fee ($49-$50), financial management course ($18-$50) and an attorney fee. The attorney fee is set by the Court in each district and currently it is set at $2500 in this district. Normally, the up-front cost to file will include the court costs, credit report fee, and credit counseling fee. The attorney fee is paid through the plan in monthly installments. The financial management course may be paid for after filing also.
Chapter 7 bankruptcy costs include court costs of $299, credit report fee ($30-$50), credit counseling fee ($49-$50), financial management course ($18 - $50) and an attorney fee. I currently charge $1100.00 for the average Chapter 7.
Question: If I file a Chapter 7, can I keep my house and my car?
Answer: If you are current on your payments on your house and your car, normally you can keep them in Mississippi.
Each state has what are called exemptions which are amounts that the legislature has determined are yours to keep and are untouchable by your creditors. In Mississippi, the homestead exemption is $75,000, meaning that you can have up to $75,000 equity in your homestead (place of residence) and your creditors are not allowed to touch it. Therefore, if you own a house worth up to $75,000 or if you have equity up to $75,000, you can keep your house and file a Chapter 7. You will, of course, also have to pay your mortgage company for your house in order to keep the house.
The personal property exemption in Mississippi is $10,000, which means that if your car is worth less than $10,000, or if you have less than $10,000 equity in the car, you can keep your car if you file a Chapter 7. You will, of course, also have to pay the creditor for the car in order to keep the car.
Question: Do I qualify for a Chapter 7 bankruptcy?
Answer: On October 17, 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 became effective. This law made it more difficult, but not impossible for someone with above median income to qualify for a Chapter 7 bankruptcy. As of November 1, 2009, the median income in Mississippi for a household of one is $32,068.00, a household of two is $42,758.00, a household of three is $46,685.00, and a household of four is $58,518.00. For each additional household member, add $6,900.00 to calculate the median income.
If you are above the median income for your household size, there is still a good chance that you can qualify for a Chapter 7 bankruptcy. Congress devised a long formula to determine eligibility that is called the "Means Test". In order to determine if you "pass" the means test, we must enter six months of household income, deductions from income, some expenses that are allowed under the means test, and secured and priority debts. Most people that are only slightly over median income and those with large amounts of secured debt will qualify for a Chapter 7 bankruptcy.
Question: What is a secured debt?
Answer: A debt is considered secured if the creditor has the right to repossess or foreclose on property if you do not pay the debt. This is called a security interest. Examples of secured debt are mortgages on real property, car loans when the creditor holds the title to the vehicle and notates their debt on the title, and personal loans where you pledge property in return for borrowing money. The last example is normally a small loan company where a person gives the creditor a list of personal property in return for a loan. It has been my experience that customers of these types of places often do not realize that they have placed their property as collateral for a loan and that the loan company can pick up their property if they do not pay their loan.
Unsecured debt is generally credit card debt, medical bills and check advances where there is no collateral pledged to receive the money or services.
Question: How long will a bankruptcy be on my credit report?
Answer: Normally a credit bureau will continue to list a Chapter 13 case for 7 years and a Chapter 7 case for 10 years on your credit report.
Question: I have filed bankruptcy before. Can I file bankruptcy now?
Answer: Yes, anyone can file a Chapter 13. However, there are limitations on how often you can file a Chapter 7 and whether or not you can receive a discharge in a Chapter 13.
In order to file a Chapter 7, it must be at least eight (8) years from the last date that you filed a Chapter 7 previously. If you have previously received a discharge under Chapter 13 and wish to file Chapter 7, it must be a least six (6) years from the date that the Chapter 13 was filed.
In order to receive a discharge under a Chapter 13, it must be at least four (4) years from the filing date of your Chapter 7.
Question: Can I file bankruptcy without my spouse?
Answer: Yes, a married individual can file bankruptcy by themselves without their spouse. However, under current bankruptcy law, total household income must be listed, so the non-filing spouse's income will have to be disclosed. However, neither their name or social security number will be disclosed.
Question: How much will my payments be on a Chapter 13?
Answer: There is no way to answer that question without a detailed analysis of your situation. Components of your plan payment may include your house note, arrearage payment on your house note, your car note, other secured debt payments, taxes, unsecured debt payments, attorney fees and trustee commission.
Question: Can I borrow money while I am in Chapter 13?
Answer: You cannot borrow money while you are in a Chapter 13 without approval from the Bankruptcy Court. Generally, if you are asking for permission to borrow for a necessity such as a vehicle if your current vehicle was wrecked, the court will approve the new debt if the Chapter 13 Trustee does not have an objection.
Question: Will I ever be able to borrow money after bankruptcy?
Answer: Yes, you will be able to borrow money after bankruptcy. Every creditor has their own particular standards to determine whether or not they will extend credit to an individual. Most creditors use your credit score as a large factor in determining whether or not to extend credit and most people's credit score increases after filing bankruptcy.
Still have questions? Please contact us anytime! We look forward to hearing from you.
