Frequently Asked Questions

1. What is Bankruptcy?
2. Who can file a Chapter 7 Bankruptcy?
3. What happens if I file a Chapter 7 bankruptcy?
4. What is the general process in consumer bankruptcy cases?
5. Will bankruptcy stop creditor calls?
6. How long after filing will the creditors stop calling?
7. Who notifies the creditors?
8. Who deals with my creditors during the bankruptcy?
9. Will my employer or landlord find out about my bankruptcy?
10. Do I have to disclose all of my assets?
11. Are debts discharged in bankruptcy taxable?

 

1. What is Bankruptcy?

Bankruptcy is a federal court process designed to help consumers and businesses eliminate their debts or repay them under the protection of the bankruptcy court.

2. Who can file a Chapter 7 Bankruptcy?

In Connecticut, almost any individual, partnership, or corporation may file a chapter 7 bankruptcy petition if he or she resides, has a domicile, a place of business, or property in the United States. If you were granted or denied a Chapter 7 discharge in a prior case within the last 8 years, you might not be entitled to receive a discharge in a subsequently filed Chapter 7 bankruptcy .

3. What happens if I file a Chapter 7 bankruptcy?

In Connecticut filing a petition with the bankruptcy court commences a Chapter 7 bankruptcy proceeding. The person filing a Chapter 7 is referred to as the "debtor." The debtor is required to disclose to the court all of his or her property and debts and turn over all nonexempt property to the bankruptcy trustee, who then converts it to cash for distribution to the creditors. The debtor then receives a discharge of all dischargeable debts.

4. What is the general process in consumer bankruptcy cases?

In a Chapter 7 bankruptcy case, we will file several forms with the bankruptcy court disclosing your personal and real property, your income and expenses, debts and property transactions. The Bankruptcy Court will appoint a person called a "Trustee", who is assigned to oversee your case. About 30 days after your case is filed, we will accompany you to the "Meeting of Creditors" where the trustee reviews your case, verifies your identity, and may have a few basic questions. Despite the name, creditors rarely attend. The meeting lasts only a few minutes. A couple of months later, you should receive a notice from the court that "all debts that qualified for discharge were discharged.

5. Will bankruptcy stop creditor calls?

When we help you file for bankruptcy, we ensure that an "automatic stay" goes into effect and is enforced. The automatic stay prohibits virtually all creditors from taking any action to collect the debts you owe them unless the bankruptcy court lifts the stay and lets the creditor proceed with collections. Most importantly, once you have retained an attorney, the creditor will be referred to your bankruptcy attorney, and then, by law, the creditors will cease their harassing calls.

6. How long after filing will the creditors stop calling?

Once a creditor becomes aware of a filing for bankruptcy protection, it must immediately stop all collection efforts. After you file the bankruptcy petition, the court mails a notice to all the creditors listed in your bankruptcy schedules. This usually takes a few days. Creditors will also stop calling if you inform them that you filed the bankruptcy petition, and supply them with your case number. In urgent cases, we will contact the creditor immediately upon filing the bankruptcy petition, especially if a lawsuit is pending. If a creditor continues to use collection tactics once informed of the bankruptcy, it may be liable for court sanctions and attorney's fees for this conduct.

 

7. Who notifies the creditors?

After the bankruptcy petition is filed, the court mails a notice to all the creditors listed in the schedules. This usually takes a few days.

 

8. Who deals with my creditors during the bankruptcy?

We will deal with your creditors once you officially retain our office for representation. But if you have not paid your retainer in full and provided the required documents within 60 days, we will be forced to close your file and any creditors who call will be informed that you no longer are working towards filing bankruptcy. If your 60 days deadline is approaching, please contact us to discuss the reason of your delay.

 

9. Will my employer or landlord find out about my bankruptcy?

Bankruptcy petitions are public records. However, under normal circumstances, unless your employer or landlord is a creditor, it will not know you filed a bankruptcy petition. If your employer or landlord is a creditor, it must be listed as a creditor on the schedules and will receive notice of the bankruptcy proceeding.

 

10. Do I have to disclose all of my assets?

Yes.  If you knowingly and fraudulently conceal an asset from the court you have committed a felony and can be fined up to $500,000 imprisoned for up to five years, or both. In addition, the court can deny you your discharge, or dismiss or convert your bankruptcy proceeding

 

11. Are debts discharged in bankruptcy taxable?

Debt discharged in bankruptcy is not taxable.  Period.  If it was it would defeat the entire purpose of a “fresh start” which is a common name for Chapter 7 bankruptcy.   In a short sale, debt that is forgiven is subject to potential taxation if the homeowner is not insolvent at the time of debt forgiveness or the homeowner does not qualify for relief under the Mortgage Debt Forgiveness Relief Act.   See the link below for more information.
http://www.irs.gov/individuals/article/0,,id=179414,00.html    
 

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