Bankruptcy Made Simple - Massachusetts

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Bankruptcy can be a confusing and scary process. But it doesn't have to be!

At Kelsey & Trask, P.C. we work hard to makes sure our clients understand the process so they can stop the collection calls and move on with their life. If you want to move on with your life too, then take charge and get your questions answered.

Below you will find answers to the 30 most common questions that we are asked by clients and potential clients.

In addition, click here to find our Bankruptcy Glossary with definitions for the most common bankruptcy terms.

If you would like more information or don't see your question please do not hesitate to call us at 508.655.5980, e-mail us.

The Most Frequently Asked Bankruptcy Questions:

How will filing bankruptcy affect my credit?
If I have a co-signor, will their credit be affected?
Will bankruptcy hurt my chances of co-signing for my children's student loans?
What does it cost to file for bankruptcy?
Can I file without an attorney?
Can I buy a house, car or get credit cards after I file bankruptcy?
Will bankruptcy show up on a background check for a job or security clearance?
How much debt do I have to have to file?
Will my name appear in the Newspaper if I file Bankruptcy?
Do I have to include all my bills when I file Bankruptcy?
Do I have to tell the Bankruptcy Court about cash?
What is the difference between a Chapter 7 and a Chapter 13 Bankruptcy?
What debts will bankruptcy not erase?
Do I have to go to court?
What is the difference between secured and unsecured debt?
Who will know about my bankruptcy?
Would I be able to refinance my home after filing?
Will I be able to rent an apartment after filing?
Will I still be able to keep my checking account? If I choose to switch banks will they give me a checking account?
What assets can I keep (house, car, property)?
Is there any way to have a bankruptcy removed from my credit report?
If I get married after filing for bankruptcy will it affect my spouse?
Why would I choose bankruptcy over debt consolidation or settlement?
If my partner is listed as an authorized user on my credit cards, will his credit be hurt?
After bankruptcy, what steps need to be taken to rebuild my credit?
If I am not married, but living with my partner and he/she pays most of the bills, will that affect filing?
What happens to my tax refund when I file bankruptcy?
Can I file Chapter 7 Bankruptcy Even if I Have Filed Before? How many times can I file bankruptcy?
What happens if I forget to add a creditor to my bankruptcy?
I Received My Discharge, but Creditors are Still Calling Me. What Should I Do?

How will filing bankruptcy affect my credit?

Put simply: filing bankruptcy will hurt your credit. According to the credit reporting service freecreditreport.com, your credit score (FICO Score) will decrease between 85 and 105 points if your credit is poor, and between 140 and 160 points if your credit is good or excellent. While this seems significant, for most consumers, this is not significantly worse than a missed credit card payment, which, even if it happens once, can lower your score between 60 and 80 points for poor credit, and 90 to 110 points if your credit is good.

The fact that you filed for bankruptcy will appear as a "public records" entry on your credit report for up to 10 years, and individual debts that were discharged in bankruptcy will remain on your credit report for 7 years after discharge. The discharge date is different depending on the type of bankruptcy you file. In a Chapter 7 case, your discharge is granted approximately 5-6 months after filing; in a Chapter 13 case, your discharge is granted between 3 and 5 years after filing, depending on your plan terms.

However, if you take the proper steps to rebuild your credit following bankruptcy, you may be able to qualify for an unsecured credit card, car loan or mortgage in as little as 2 years after your discharge.

If I have a co-signor, will their credit be affected?

A co-signer is an individual who is promising to repay a loan in the event the primary borrower defaults. If the primary borrower defaults (or files bankruptcy), the co-signer will be required to pay the loan back. As long as the co-signer repays the loan pursuant to the terms of the agreement, their credit will not be affected. However, many loans include an acceleration clause, meaning that if one of the borrowers files bankruptcy, the entire balance of the loan is due. If the lender exercises their right to accelerate the loan, the co-signer may not be able to make regular monthly payments.

Will bankruptcy hurt my chances of co-signing for my children's student loans?

Generally, any time a loan is applied for, the lender will evaluate the creditworthiness of both guarantors. An adverse credit history of one co-signer may result in the denial of the loan. However, the ability of a parent to co-sign their children's loans (including student loans) largely depends on the lender and the type of loan.

For example, a parent may be able to co-sign for Stafford Loans (federally guaranteed student loans) shortly after bankruptcy, but will have difficulty co-signing a PLUS loan if less than 5 years have passed since discharge. These requirements are built into the lending structure for student loans, and reflect the individual requirements for each financing option. In other words, it depends on the loan and you should consult with a college financial aid expert or an attorney.

What does it cost to file for bankruptcy?

Court filing fees (the fees for filing your petition) for bankruptcy vary depending on the chapter you are filing under, but initially plan on $281.00 for Chapter 13 and $306.00 for Chapter 7. If you need to change your petition after it is a filed, there is an additional $30.00 filing fee.

In addition to court fees, there will be legal fees, i.e. what you pay to your Bankruptcy Attorney to analyze your case, review your purchase history to avoid non-dischargability issues (meaning you still owe money to a creditor after bankruptcy), make recommendations regarding when you should file and under which chapter, preparing your petition, schedules and disclosures, and representing you at the §341(a) Creditor's Meeting. Each attorney offers slightly different services, and charges different amounts. You should speak with your attorney to understand his or her fee structure, and always get the fee agreement in writing.

At Kelsey & Trask, P.C. our fees are calculated based on how complicated the case is and we have provided a simple online calculator for you to easily determine the flat fee for your case.

Can I file without an attorney?

Yes. If you decide to seek bankruptcy relief, you can represent yourself in all matters connected with the bankruptcy, or you may hire an attorney to represent you. Additionally, you may hire a bankruptcy petition preparer who is not an attorney. However, a paid bankruptcy preparer may only assist you in preparing the appropriate bankruptcy forms, petitions, schedules and disclosures, and may not represent you in bankruptcy court.

Can I buy a house, car or get credit cards after I file bankruptcy?

Once your bankruptcy case is concluded, there are no restrictions on property that you may own or purchase. Any property that is acquired during the bankruptcy proceeding (the period between filing and the closing of the case) must be disclosed to the bankruptcy court by amending the bankruptcy schedules, but after the discharge these limitations cease.

Similarly, you may incur new debt, however, any debt that is obtained after the date of filing is not included in the discharge. As a general rule, it is advisable to not incur any new debt or acquire any new assets until you receive your discharge from the bankruptcy court.

Once you have your discharge, just because you may borrow money or purchase assets, does not mean it will be easy. Bankruptcy filing makes it difficult to obtain the credit required to purchase these items, for some time. Because bankruptcy (and often, the financial difficulties which gave rise to a bankruptcy filing) will make it difficult to obtain credit, many people will be unable to purchase a new home or car, or obtain a credit card for a period of time after bankruptcy.

Taking steps to repair credit (such as establishing a good repayment history on reaffirmed debts or a secured credit card, maintaining a cash reserve, paying debts on time, and borrowing and repaying a small personal loan) can accelerate credit repair. If you take the proper steps to rebuild your credit following bankruptcy, you may be able to qualify for an unsecured credit card, car loan or mortgage in as little as 2 years after your discharge. Eventually, if you budget correctly and manage your credit after your bankruptcy better than before, you will be able to purchase a new home and/or car.

Will bankruptcy show up on a background check for a job or security clearance?

A bankruptcy filing creates a court case in the Bankruptcy Division of the Federal District Court. The existence of a court filing in any court is a matter of public record, so there will be a public record of a bankruptcy filing. However, this does not necessarily mean that the information will be easily obtainable by the general public. For example, in order to view bankruptcy case documents, one must either go to the Federal Bankruptcy Courthouse in the district where the case was filed, or have the requisite credentials to obtain a PACER account (on-line access to Federal Court records).

Third-party agencies can determine that a case was filed through various public records search engines. Credit reporting agencies (Equifax, TransUnion and Experian) are able to obtain similar information. However, the technologies to obtain wide-reaching searches for court filings (including bankruptcy) are not readily available to the general public because of their cost. Therefore, whether or not a bankruptcy will "appear" on a background check largely depends on the type and thoroughness of the background check.

Many employers simply run a criminal offender records check (commonly called a CORI check in Massachusetts), and the CORI report will not make mention of a bankruptcy. However, more involved background checks may require the evaluation of a credit report, which, if so, would mean that the bankruptcy would be visible during a background check. Background checks for compartmentalized security clearance requests (for DOD or Law Enforcement employment) will also contain financial information, including bankruptcy.

Just because a bankruptcy is visible on a background check doesn't necessarily mean it will have an affect on the employer's decision, especially if you have disclosed this to them already. For example, many employers, including the U.S. Military do not view bankruptcy as a basis for the automatic withholding of a security clearance.

The status of a security clearance (or the ability to obtain a clearance) can be affected, but it is not automatic. The outcome depends on the circumstances that led up to the bankruptcy and a number of other factors, such as your job performance and the recommendations provided by supervisors, co-workers, and professional references.

The employer should evaluate whether the bankruptcy was caused primarily by an unexpected event, such as medical bills following a serious accident, or by financial irresponsibility. As a practical matter, a security clearance probably should not be a significant factor in making your decision about whether to file bankruptcy. The amount of your unpaid debts, by itself, may jeopardize your clearance, even if you don't file bankruptcy. In that sense, not filing for bankruptcy may make you more of a security risk due to the size of your outstanding debts. By the same token, using a government-approved means of dealing with your debts may actually be viewed as an indication of financial responsibility. Eliminating your debts through bankruptcy may make you less of a security risk. (Source: U.S. Air Force Judge Advocate)

How much debt do I have to have to file?

The bankruptcy code places no minimum amount of debt required to file for Chapter 7 or Chapter 13 bankruptcy. When considering whether or not to file it is important not to pay attention only to the total debt figures, but also consider the debtor's ability to repay the debt versus the potential benefits of bankruptcy, such as the automatic stay (which can prevent further collection action, stops lawsuits, halts foreclosure and can prevent repossession). In addition, in some cases, bankruptcy may successfully protect someone who owes unliquidated or contested debts - even if those debts have not been ultimately reduced to a dollar figure.

Chapter 13 places certain restrictions on the amount of debt that can be discharged. Under the current limits, a Chapter 13 bankruptcy will be dismissed if the debtor has unsecured debt greater than $360,474 and/or secured debt greater than $1,081,400 (as of April 1, 2010).

Will my name appear in the Newspaper if I file Bankruptcy?

No. While bankruptcy is a matter of public record, your name will not be published in the paper. Certain redacted records are available at the bankruptcy court, but can only be obtained in person. However, certain issues which commonly arise in the context of bankruptcy, such as foreclosure, do require the publication of a legal notice, often in the local newspaper serving the debtor's residence.

Do I have to include all my bills when I file Bankruptcy?

Yes. Every debt you owe must be completely and accurately disclosed in the documents filed to commence your bankruptcy case. Bankruptcy is not a "pick and choose" proceeding. You cannot not put some debts in and leave other debts out. Intentionally omitting debts from your bankruptcy case may result in the nondischargability of those debts, the dismissal of your bankruptcy case, fines, or imprisonment for bankruptcy fraud.

Do I have to tell the Bankruptcy Court about cash?

Yes. In order to file for bankruptcy, all assets must be discharged. This includes cash, accounts receivable, promises to pay, the contents of a safe deposit box, etc. Bankruptcy is not a "pick and choose" proceeding. You cannot not disclose some assets and fail to disclose others. Intentionally omitting assets from your bankruptcy case may result in the denial of your bankruptcy discharge, the dismissal of your bankruptcy case, fines, or imprisonment for bankruptcy fraud.

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

Chapter 7 Bankruptcy, sometimes referred to as "liquidation" or "straight bankruptcy", is designed for people who do not have the ability to pay their existing debts. To prove that you cannot pay your debts, you are subject to a "means test" designed to determine whether the case should be permitted to proceed under Chapter 7. The means test generally looks at the debtor's gross income from all sources over the past six months, and if it is over the median income for your state, then you cannot file Chapter 7 bankruptcy because the formula has determined you have enough excess income to pay your debts over time. There are some exceptions to the "means test" so you should consult with an attorney to be sure.

At the end of a Chapter 7 Bankruptcy (usually about 6 months) you receive a discharge of your debts and you no longer owe those debts (except for some debts like student loans which cannot be discharged).

Chapter 13 Bankruptcy involves the repayment of all or part of your debts with your excess monthly income. Chapter 13 is designed for individuals with regular income who can pay at least some of their debts in installments over a period of time.

Under Chapter 13, you must file with the Bankruptcy Court a plan to repay your creditors all or part of the money that you owe them, using your future earnings. The period allowed by the court to repay your debts may be three (3) to five (5) years, depending on your income and other factors. The court must approve your plan before it can take effect.

Provided that you have complied with the plan and made all payments required under the plan, at the end of a Chapter 13 repayment plan (3-5 years) you will receive a discharge of the unpaid portion of your debts (except for some debts like student loans which cannot be discharged).

Because a Chapter 13 requires some payments of your debt, it is not usually a person's first choice. However there are some good reasons to file Chapter 13:

A Chapter 13 is often filed:

1. To stop foreclosure and cure mortgage arrears, allowing someone to keep a house they might lose in a Chapter 7 case;

2. If the debtor is over the means test limit for a Chapter 7 case, but still wants a fresh start debt after 3-5 years;

3. To pay tax debt over time;

4. To protect property from creditors and avoid a Chapter 7 liquidation of assets;

5. To sell property to maximize price, rather than let it go to Chapter 7 auction; and

6. To avoid dischargability problems with creditors that might occur in a Chapter 7 (although the 2005 changes to the Bankruptcy Code have reduced Chapter 13 filing's ability to avoid dischargability problems).

What debts will bankruptcy not erase?

Even if you receive a general discharge, some particular debts are not discharged under the law. You may still be responsible for most taxes and student loans; domestic support and divorce settlement obligations; most fines, penalties, forfeitures and criminal restitution obligations; debts which are not properly listed in your bankruptcy filing; and debts for death or personal injury caused by operating a motor vehicle, vessel or aircraft while intoxicated on alcohol or drugs. Debts incurred to pay non-dischargeable debts will themselves be non-dischargeable as well. In simpler terms this means that you cannot, for instance, use a credit card to pay your student loans and then discharge the credit card.

Also, if a creditor can prove that a debt arose from fraud, breach of fiduciary duty, or theft, or from a willful and malicious injury, the bankruptcy court may determine that the debt is not discharged.

Do I have to go to court?

Whether you will need to go in front of a Judge largely depends on how complex your case is. In every bankruptcy case, though, you must attend the Meeting of Your Creditors (often referred to as a §341(a) Creditor's Meeting, in reference to the section of the Bankruptcy Code requiring such a meeting) about 30 to 45 days after your bankruptcy petition is filed.

The court-appointed Chapter 7 trustee will preside over this meeting. At the meeting, you will be asked to testify under oath as to the accuracy of the statements in your petition. However, most of your creditors will not appear at the meeting, and you will not be before a judge. The meeting is very informal, and in most cases will last no more than 10 minutes. If you do not attend the meeting, your case will be dismissed.

If the trustee or your creditors file objections to your claimed exemptions, or other issues are raised by a creditor or interested party, a hearing will be held in front of the Bankruptcy Court Judge, and you may be required to attend.

What is the difference between secured and unsecured debt?

Secured debts are those debts in which the borrower pledges some asset (e.g. a car or property) as collateral for the loan. In the event that the borrower defaults, the creditor takes possession of the asset used as collateral and may sell it to regain some or all of the amount originally lent to the borrower. An example of this is repossession of a car or foreclosure of a home. If the sale of the collateral does not raise enough money to pay off the debt, the creditor can often obtain a deficiency judgment against the borrower for the remaining amount.

Unsecured debt refers to any type of debt or general obligation that is not collateralized by a lien on specific assets of the borrower. In other words, in the event that the borrower fails to pay the debt, there is no collateral that the lender may recover to mitigate its financial losses resulting from the debtor's failure to pay without suing in court.

Who will know about my bankruptcy?

The bankruptcy code requires that you disclose all debts owed, and those creditors will be sent Notice of the bankruptcy filing. Therefore, anyone that you owe money to will learn about your bankruptcy.

Additionally, many bankruptcies are filed to discharge un-liquidated or contingent claims - claims arising from a lawsuit, for example - so the adverse party in the lawsuit will be aware of your filing.

Co-debtors must also be disclosed and will receive notice of filing; as will anyone that holds a leasehold interest with the debtor, such as a landlord or tenant, regardless of whether the rent is up to date.

In addition, bankruptcy is a court case. The existence of a court filing in any court is a matter of public record, so there will be a public record of a bankruptcy filing. However, this does not necessarily mean that the information will be easily obtainable by the general public. For example, in order to view bankruptcy case documents, one must either go to the Federal Courthouse in the district where the case was filed, or have the requisite credentials to obtain a PACER account (on-line access to Federal Court records). Third-party agencies can also determine that a case was filed through various public records search engines. Credit reporting agencies (Equifax, TransUnion and Experian) are able to obtain similar information. This means that anyone authorized to review your credit report will see your bankruptcy, such as prospective employers conducting an authorized background check or loan officers acting on a credit application.

Would I be able to refinance my home after filing?

Yes, and in many cases, you should. If you keep your home during the bankruptcy and do not reaffirm the debt, any later on-time payments will not be reflected on your credit report. This is due to a technical issue regarding the severability of mortgages and the note, and how debts are reported to the credit reporting agencies. However, paying off the existing mortgage and refinancing will have a much greater effect in rebuilding your credit.

Because bankruptcy (and often, the financial difficulties which gave rise to a bankruptcy filing) will make it difficult to obtain credit, many people will find it difficult to refinance immediately after bankruptcy. However, taking steps to repair credit (such as establishing a good repayment history on other reaffirmed debts or a secured credit card, maintaining a cash reserve, paying debts on time, and borrowing and repaying a small personal loan) can accelerate credit repair. If you take the proper steps to rebuild your credit following bankruptcy, you may be able to qualify for a refinance loan in as little as 2 years after your discharge.

Will I be able to rent an apartment after filing?

Yes, but you may have to shop around a bit. Each landlord has the discretion to rent to a particular tenant based on a number of legal factors, including the landlord's determination of a tenant's ability to pay the mortgage each month.

The landlord's ultimate decision may depend on the circumstances that led up to the bankruptcy and a number of other factors, such as recommendations from previous landlords or other personal references. Most landlords will evaluate whether the bankruptcy was caused primarily by an unexpected event, such as medical bills following a serious accident, or by financial irresponsibility.

As a practical matter, the ability to rent an apartment in the future should not be a significant factor in making your decision about whether to file bankruptcy. The amount of your unpaid debts, by itself, may jeopardize your chances, even if you don't file bankruptcy. In that sense, not filing for bankruptcy may make you more of a financial risk due to the size of your outstanding debts. By the same token, using a government-approved means of dealing with your debts may actually be viewed as an indication of financial responsibility.

Honesty is often the best policy. If you know your prospective landlord will be running a credit check, be up-front and honest about what your credit contains, and the reason for your past financial difficulty. While you may need to provide more information to convince a prospective landlord, there are still many landlords who are willing to rent to tenants with a bankruptcy in their past.

Will I still be able to keep my checking account? If I choose to switch banks will they give me a checking account?

You will be able to keep your checking account, provided the balance in the account is below the maximum exemption limits. If you have a checking account that is associated with an overdraft account, or a credit card issued by the same bank and file bankruptcy, the bank cannot seize money from your checking account to cover the other debts. Banks are private institutions, so they can decide that they no longer want to do business with you. However, this does not mean that they can keep your money.

If your account is ever closed by your institution, you must be given the funds in the account by bank check. Some financial institutions will make inquiries into your credit history when opening a new account, although these inquiries are usually for the purposes of extending lines of credit or an overdraft account. In addition some institutions may review your check-writing through a service like TeleCheck to determine if you are a risk of passing insufficient checks.

What assets can I keep (house, car, property)?

When filing bankruptcy as a resident of Massachusetts a debtor can choose to use the exemptions allowed under either State or Federal law, but you must choose one or the other. There are many exemptions that are similar under both schemes, such as the exemption of most qualified retirement plans. Click here to view a table of the maximum exemptions as of April 14, 2011 in categories where the state and federal exemptions differ significantly. On April 7, 2011 a new Massachusetts law went into effect significantly increasing the personal property of Massachusetts residents that is protected from seizure by creditors. Please note that these figures are subject to change and you should consult with an attorney to obtain the most current figures and to decide which option you should choose.

In addition certain types of income may also be exempt from the bankruptcy estate. You should consult with an attorney to obtain further information.

Is there any way to have a bankruptcy removed from my credit report?

The fact that you filed for bankruptcy will appear as a "public records" entry on your credit report for up to 10 years, and individual debts that were discharged in bankruptcy will remain on your credit report for 7 years after discharge. Remember that in a Chapter 7 case, your discharge is granted approximately 5 months after filing; in a Chapter 13 case, your discharge is granted between 3 and 5 years after filing, depending on your plan terms. Despite the negative effect bankruptcy can have on your credit, it is not necessarily a good idea to attempt to make no mention of your prior bankruptcy. In some cases, the fact that a debt is reflected on your credit report as being discharged in bankruptcy is evidence to a prospective lender that you no longer owe that debt, and are more able to repay a future loan. Additionally, some prospective employers would consider a bankruptcy filing evidence of a proactive attitude toward resolving a poor financial situation, as opposed to having a credit report populated with debts that have been "written off" (but still legally owed), as opposed to debts "discharged in bankruptcy."

If I get married after filing for bankruptcy will it affect my spouse?

If you get married after filing bankruptcy, the "taint" of bankruptcy on your credit report will not affect your spouse's credit. However, a bankruptcy on one spouse's credit may make it difficult to obtain joint credit accounts, which are often necessary for large purchases, such as cars or home mortgages. This is because the lender will consider the total credit risk of all parties to the note, not just the one with the good credit. While you still may qualify for a loan, a poor credit rating may exclude you from certain FHA loans, and you may be required to pay a higher interest rate over the course of the loan.

Why would I choose bankruptcy over debt consolidation or settlement?

Debt consolidation involves getting one loan to pay off multiple smaller loans. The advantages are that the debts are paid off in full, often at little to no damage to credit, and the new loan may have more favorable terms over the old loan, such as a reduced monthly payment, a larger monthly payment (that will insure the loan is paid off quickly) or a lower interest rate.

Consolidating loans takes the logistical hassle in making sure that multiple loans are paid on time and ensures that the debtor only has to make one payment, and gives the debtor the ability to "shop around" for the best deal. However, since debt consolidation requires a new loan, someone with excessive or past-due debt may not be able to obtain a consolidation loan. Additionally, depending on the debtor's situation, debt consolidation may not provide enough relief, especially if the borrow cannot afford the payments on the new loan.

Debt settlement is the process of attempting to pay your existing debts for less than you owe. No creditor is required to settle a debt, but for financial and practical purposes many companies will compromise the amount owed. If your creditors agree to accept less than you owe, you must usually make a lump-sum payment, which may be difficult. Also, paying a debt for less than you owe has tax consequences - the "forgiven" portion of the debt is considered to be income by the IRS, and, with certain exceptions, you will be required to pay taxes on that income.

Bankruptcy, on the other hand, ultimately involves the discharge of the obligations, meaning that you are not required to pay them back. Bankruptcy also provides other legal protections that may be beneficial to someone needing financial assistance. For example, the automatic stay in bankruptcy is a useful tool in temporarily stopping foreclosure proceedings brought by your mortgage holder(s), as well as halting collection efforts, collection calls and lawsuits filed by your creditors. Click here for more information on chapter 7 and chapter 13 bankruptcy.

If my partner is listed as an authorized user on my credit cards, will his credit be hurt?

This is an interesting question, and the answer often depends on how the information is reflected on a credit report. An "authorized user" is someone who is merely authorized to make purchases on an account, but bears no legal responsibility to repay the debt. Some credit bureaus (TransUnion in particular) often do not report credit accounts to the individual who is an authorized user only; but others sometimes do (such as Experian).

Additionally, not all credit card companies report authorized users to the credit bureaus. If you are an authorized user on a credit account, and that account is discharged, there may be a notation in your credit profile that indicates your prior access to an account, and the fact of that accounts discharge in bankruptcy. While an intelligent loan officer should understand the distinction when making a credit decision, it is important to obtain a copy of your credit report if the primary cardholder files bankruptcy in order to understand how that debt is reporting, and contact the credit bureau in writing to correct any errors.

After bankruptcy, what steps need to be taken to rebuild my credit?

First and most importantly, time heals all wounds. Only time can fully repair the damage from a bankruptcy (and being significantly behind on a lot of credit card debt beforehand).

The best thing you can affirmatively do right now is to start developing a history of on-time payments to creditors that report to your credit bureaus. Pay your bills early, or at worst, pay them on time.

Because of the way the bankruptcy system works and the way creditors report reaffirmed debts, you will not get credit for on-time mortgage payments or car payments. Therefore, it is necessary to establish a new account that you can make solid, on-time payments on. We recommend applying for a secured credit card or gas card. Before you apply, take the time to confirm that the card management company reports to all three credit bureaus every month. If they don't report every month, or if they do not report to all three, go elsewhere. Use the card, but pay it off early or on time, every month. Carrying a small balance (less than $100 is OK), but never utilize more than 50% of the available credit.

If you have a mortgage, then as soon as feasibly possible, refinance your mortgage. Paying off the current loan and keeping a new loan current will, once again, give you credit for on-time mortgage payments.

In addition, as soon as you feasibly can, refinance your car loan, or sell your car and purchase a new car. Again, the key is to obtain a new loan that will report to the credit bureaus. Post-bankruptcy, many current secured lenders will not report payments to the credit bureaus. Of course, be sure to keep that loan current.

Obtain copies of your credit reports approximately 90 days after receiving your discharge. Ensure every debt is reported as "Discharged in Bankruptcy" or something similar. If they are not, send a letter to the creditor and the credit bureau requesting that information be reflected accurately. Remember, your credit report is a list of your "debts", and right now, you have no debts aside from your house and car (and any non-dischargeable debts). Make sure your credit reports accurately show that, although you had debts discharged in bankruptcy you should not currently owe any money to dischargeable creditors.

Besides paying the above-described loans on time there are also a number of things you should avoid doing:

1. Avoid opening credit accounts with co-signers, if possible. Having a co-signer on an account indicates you are a greater credit risk.

2. Avoid financing with finance companies or sub-prime lenders, if possible. Doing business with these companies can actually lower your credit score.

3. Avoid future financial risk. Bulk up your savings account. Develop a budget, and stick to it. That way, when emergencies or unexpected expenses come up, you can pay in cash, rather than increasing your debt.

4. Some industry experts recommend that you obtain a small personal loan, and use the funds to open a CD account. Pay the loan on time, and when the loan is paid off, you will have some funds in savings, which you can take out once the CD matures. Of course, this only works if you can fit these payments into your budget. Setting up a workable budget should be your first priority.

If I am not married, but living with my partner and he pays most of the bills, will that affect filing?

Having other people in your household will not implicate your cohabitant(s), inasmuch as the bankruptcy will not affect their credit or discharge any of their debts. However, the means test (for Chapter 7 eligibility or Chapter 13 plan commitment purposes) looks at the debtor's "total household income" when considering the income available to the debtor. Therefore, it may be necessary to disclose to the court your cohabitant's income. Some trustees will accept the argument that, in cases where the cohabitants maintain sufficiently separate finances, the debtor's total income is not available to the debtor. However, the debtor would need to disclose, as income, the portion of income made available for the debtor's benefit, including any amount the cohabitant pays toward the debtor's monthly expenses.

>What happens to my tax refund when I file bankruptcy?

Your tax refund is what the bankruptcy court would consider an "unliquidated asset", and is treated by the bankruptcy court like other personal property. Any unissued tax refunds would need to be listed on your bankruptcy schedules as assets, and properly exempted if you want to prevent that property from being seized by the Trustee and applied to pay your creditors. If the tax refund is fully exempt or is abandoned by the trustee, you will not be required to turn it over to the bankruptcy Trustee.

Can I file Chapter 7 Bankruptcy Even if I Have Filed Before? How many times can I file bankruptcy?

Whether or not you may re-file (and the amount of time that must pass before you may re-file bankruptcy) depends on whether or not you received a discharge under your most recent bankruptcy filing.

If you received a discharge under a Chapter 13 bankruptcy case, then you cannot file for relief under Chapter 7 unless:

1. Six (6) years have passed since the discharge in the Chapter 13 case; or

2. You paid at least 70 percent of your allowed unsecured claims in the Chapter 13 case, and your plan was proposed in good faith and represented your best effort to pay.

If you received a discharge under a Chapter 7 bankruptcy case, then you cannot file for relief under Chapter 7 unless eight (8) years have passed since the discharge in the previous Chapter 7 filing.

If you filed a Chapter 7 or Chapter 13 case that was dismissed because you failed to obey court orders or you voluntarily requested a dismissal and did not obtain a discharge, then you cannot file for relief under Chapter 7 unless 180 days have passed since the dismissal of the previous filing.

Assuming that you meet the above time restrictions for re-filing, there is no limit to the amount of times you can file bankruptcy.

What happens if I forget to add a creditor to my bankruptcy?

As we discussed in response to a previous question (Do I have to include all my bills when I file bankruptcy?), every debt you owe must be completely and accurately disclosed in the documents filed to commence your bankruptcy case. Bankruptcy is not a "pick and choose" proceeding. You cannot not put some debts in and leave other debts out. Intentionally omitting debts from your bankruptcy case may result in the non-dischargability of those debts, the dismissal of your bankruptcy case, fines, or imprisonment for bankruptcy fraud.

The bankruptcy court requires that you undertake an appropriate level of "due diligence" to determine your debts and your potential creditors. This means that you need to make a concerted effort to review supporting documentation, such as a credit report, account statements, collection notices, and other information pertaining to the existence of a debt or potential claim. When you sign your bankruptcy petition, and testify at the §341(a) Meeting of Creditors, you are indicating to the Court that your petition is "true, accurate and complete." Bankruptcy will only discharge "scheduled" debts - meaning the creditor must receive notice of the bankruptcy - and any debt not listed in your creditor matrix may not be discharged.

So, then, what happens if you unintentionally omit a creditor?

In most cases, if the mistake was unintentional (i.e., you forgot about the debt, or did not know about the claim), and you have not yet received your discharge, it is possible to file an amended schedule of your debts to include the missing items. This involves preparing a new list of debts, and preparing a Motion for Leave to Amend Schedules, which is a formal request to the Court for permission to add the new creditors. The Court will almost always allow the motion, but there is a $30.00 filing fee for the Motion to Amend. Additionally, the Court will usually give your added creditors sufficient time to object to claimed exemptions or the dischargability of the new debt. The added time will delay your discharge. Still, it's better to wait a little extra than to owe the debt following the bankruptcy.

If you have received your discharge and your case has been closed, the process is more complex. You must first request that the Court re-open your bankruptcy case. Cases can be re-opened for any number of reasons, including "to administer assets, to accord relief to the debtor, or for other cause" (See 11 U.S.C. §530(b)). Courts have nearly universally held that re-opening a case to include an unintentionally-omitted creditor will "accord relief to the debtor", and will allow the request. The Court will charge a filing fee of $260.00 to re-open a closed bankruptcy case, so be sure to conduct your "due diligence" and get things right the first time.

I Received My Discharge, but Creditors are Still Calling Me. What Should I Do?

Although you no longer owe any scheduled (and dischargeable) debts following your bankruptcy, it is important that you do not simply ignore a creditor's efforts to collect a debt after discharge.

Call your attorney right away, and be sure to provide copies of any letters, bills or notices you received, or the name, business name and telephone number of the creditor or collection agency that has contacted you. Any creditor that received notice of your bankruptcy and was included on the creditor matrix cannot continue to collect any debt that was discharged. Any entity that does so is in contempt of an Order of the U.S. Bankruptcy Court.

Any efforts to attempt to collect a discharged debt are unlawful, and if the creditor's actions are deemed to be a willful violation of the Court's Order, the creditor can be forced to pay the debtor's actual damages, and, in certain cases, punitive damages. As a practical matter, most cases of a creditor attempting to collect on a discharged debt can be resolved with a simple letter to the creditor, as well as a copy of the Discharge and Creditor Matrix. Additional bankruptcy litigation (and the costs associated with having to go to Court is usually not necessary.



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