A: Yes, bankruptcy is still an option. The changes in the law affect a small percentage of people. Even if you are one of those few, it may limit your options, but most people can file bankruptcy. That said, it may be that bankruptcy is not your best option — not everyone should file. Every case is different. The only way to find out for sure is to come in and let's figure it out.

Q: Okay, let's cut to the chase — can I keep my stuff? You know, my house, my car, my furniture, my retirement?

A: I know you want a clear, straight answer, but the only answer to that question is it depends. It depends on a number of things — what your property is worth, what you owe on it, how long ago you bought it, and what kind of bankruptcy you want to file. In order to tell you what will happen to your stuff when you file bankruptcy, I have to ask you a lot of questions. Once I know what your situation is, we can find a way to address the issues that are important to you. And we can usually give you an idea of what will happen if you do file bankruptcy, and what may happen if you don't.

Q: What does it cost?

A: Sorry, but again, it depends. Fees are based on the amount of time that I estimate it will take to complete your case, and that depends on what kind of bankruptcy we decide on, and how complex your finances are. But there is usually no charge for an initial visit, and I can usually tell you at that time what the fees will be and discuss payment arrangements with you.

Q:  What is the difference between Chapter 7, Chapter 13, and Chapter 11?

A:  Chapter 7 is a liquidation bankruptcy.  The Bankruptcy Court appoints a trustee whose job is to determine whether the debtors have anything that can be sold or used to pay your creditors.  In return, the debtor receives a discharge, which is a court order that prevents creditors from trying to make you pay.  Most debts are dischargeable in bankruptcy.  Only a few categories of debts, like taxes, student loans, and debts for alimony or child support, are not discharged, and survive bankruptcy.

A Chapter 13 bankruptcy is a repayment plan.  A trustee is also appointed in Chapter 13, but her function is different.  A Chapter 13 trustee collects monthly payments from the debtor and distributes that money to creditors according to a repayment plan approved by the court.  The amount a Chapter 13 debtor will be required to pay will depend on several factors, including income and expenses and the amount of equity in property.  A Chapter 13 is often used where mortgage payments are behind, because it gives a debtor a chance to catch up mortgage payments and avoid foreclosure. 

A Chapter 11 is a business reorganization; though individuals and small businesses may qualify for relief under Chapter 11, the expense of such a case, as well as the administrative burden, may make it impractical, except for larger businesses.

Q:  How do I decide which kind of bankruptcy to file? 

A:  For many people, that decision is determined by your financial situation.  For example, if you are behind on mortgage payments and want a chance to catch up, you probably want to try to set up a payment plan in Chapter 13.  On the other hand, if you are out of work, or have become disabled, it may not be feasible to do a payment plan, and you may prefer a Chapter 7 liquidation.  Factors to consider are income and expenses, the amount of equity in property, and the amount of debt you owe.  Changes to your situation in the immediate future should also be considered—are you expecting to retire, or expecting another child, for example.  An analysis of your entire financial picture is necessary to make that choice, and your attorney’s guidance will be important.  In many cases, however, you can change your mind.  A Chapter 13 case can be converted to one under Chapter 7, and vice versa, if your circumstances change.  

Q:  Will I ever be able to buy a house or a car on credit if I file bankruptcy?

A:  Most people will see a bankruptcy affect their credit for a period of time, but will be able to finance a house or car within a few years.  A Chapter 7 bankruptcy can appear on your credit report for 10 years, and a Chapter 7 can appear for a maximum of seven years.  Those are maximums; bankruptcy may not appear on your credit report for that long.  During that time, other factors may help you improve your credit score.  If you are retaining collateral such as a home or a car, and make those payments on time, that will help improve your score.  Bankruptcy improves your debt to income ratio, so that will help improve your score.  Finally, your income will also influence your credit-worthiness.  With a bankruptcy on your credit record, you will almost certainly pay higher interest rates than someone with good credit.  For most people the question is not whether they can get credit, but whether they can afford to pay those higher rates.