Bankruptcy allows individuals or businesses (debtors) in Kansas who owe others (creditors) more money than they're able to pay to utilize the Bankruptcy code to relieve themselves of much of the debt they owe (often times all of it).
Q: What's the difference between secured and unsecured debt?
A: Secured debt is a claim that's secured by some type of property, either by an agreement or involuntarily with a court judgment or taxes. Common examples would be the mortgage on your house or the lien on your car. Unsecured debt debt that is not secured by any collateral. Common examples would be credit card debt, payday loan obligations, or medical bills.
Q: As a Kansas resident considering Bankruptcy, which Bankruptcy type or chapter should I file?
A:Kansas consumers typically file Chapter 13 bankruptcy, where repayment is made to some creditors, or Chapter 7 where the debts are dismissed. Each chapter of bankruptcy spells out:
What bills can be eliminated
How long payments can be stretched out
What possessions you can keep
The type depends on your circumstances and if you have assets available to repay all or part of the your debts. Bankruptcy laws can be tricky and involved, so determining if, when and which type of bankruptcy you need should be made with careful thought or the input of a bankruptcy lawyer.
Q: Can I change from one chapter of bankruptcy to another?
A: Generally, you can convert a case one time to any other chapter you're eligible for, and in fact you have the right to convert from a 13 to a 7 if you are eligible. The request to convert can be a simple one-sentence document. Their can be some problems however. For example, if you move from Chapter 13 to a Chapter 7,some of your possessions at the time you filed the Chapter 13 case may be part of the Chapter 7 estate (and can be taken and sold to pay your debts), even though they were safe from creditors under Chapter 13. This is a complicated decision to be discussed with your bankruptcy attorney.
Q: Who can file bankruptcy?
With few exceptions, in Kansas, any person or business owing money to a creditor can file a bankruptcy petition.
Q: How often can you file for bankruptcy?
A:You actually can file one immediately after the completion of a prior bankruptcy (and with some limitations after one has been dismissed), however there are restrictions on the type of discharge you can receive.
Chapter 7 - can be filed every 8 years from a previous Chapter 7 filing, or 6 years from a prior Chapter 13 filing.
Chapter 13 - can be filed 4 years from a prior Chapter 7 filing, or 2 years from a prior Chapter 13 filing.
Q: What do I need to begin the bankruptcy process?
Compile a list of past and present debts as well as a schedule, or list, or assets and liabilities. You'll also need a statement of financial affairs to file with the bankruptcy court in addition to your filing fee. Your bankruptcy attorney will be able to walk you through what you will need.
Q: What happens if one spouse files for bankruptcy and not the other?
If one spouse files and the other doesn't, the one who doesn't file could be responsible for the debts. Ask your Kansas bankruptcy attorney to see if you are in this situation.
Q: Does my divorce decree protect me from creditors if my ex files for bankruptcy?
No. If you're a co-signor with your ex-spouse on a debt acquired while married, the creditor can require the entire payment of that debt from you even though the divorce decree assigns the full debt to your ex-spouse. Your divorce decree may address any recourse you may have against your ex-spouse should he default on the loan obligations.
Q: Can a loan co-signor be responsible for a debt if the other person declares bankruptcy?
Yes. The lender can require the co-signor to make payments on a loan once the principal has declared bankruptcy on the credit. This makes it extremely important when considering co-signing a loan: Be ready, and able, to pay the loan in the event that the principal signor defaults.
Q: Can all types of debt be discharged?
A: No. The debts that can't be discharged vary slightly between the different chapters of bankruptcy. This is a good question to ask your bankruptcy attorney to see which if any of your debts fall into a non-dischargible category.
Q: What can I keep, if anything, if I file bankruptcy?
Exemptions vary from state to state, your bankruptcy attorney will be able to guide you on this issue. Some states such as Kansas have very good exemptions protecting household goods, your homestead, and a vehicle per debtor (up to $20,000.00).
Q: Do I have to file bankruptcy on all the accounts I owe, or can I keep some?
You must include all the debts you owe in your petition and schedules. You may opt to keep some debts by "reaffirming" the specific debt.
Q: Will I lose my retirement accounts or payments from social security?
Generally, no. Retirement accounts that are ERISA-qualified aren't considered property of an estate and aren't taken into consideration as assets. Social Security benefits are protected from assignment, or garnishment for debts in bankruptcy. Once paid, the benefits continue to be protected only as long as they can be identified as Social Security benefits. For example, money in a bank account where the "only" deposits into the account are direct deposits of Social Security benefits are identifiable and generally protected.
Q: How long does a bankruptcy stay on my record?
Bankruptcies remain on credit reports anywhere from 7 up to 10 years.
Q: Can a creditor continue to contact me after I've filed for bankruptcy?
During the time the debtor is working out a plan or the trustee is gathering and preparing the assets to sell, creditors are required by law to stop all collection efforts against you. As soon as the bankruptcy petition is stamped "Relief Ordered" upon filing, you're immediately protected from your creditors. This is called an automatic stay. After that time, if a creditor attempts to collect a debt immediately contact your attorney as the creditor may be subject to sanctions for violation of the automatic stay.
Q: What happens at a 341 meeting of creditors?
A:Meeting of Creditors is somewhat of a misnomer as creditors do not show up most of the time. You will be put under oath and asked questions pertaining to your situation. There aren't trick questions and often times the Trustee is just asking for clarifications regarding your paperwork. Truthfulness is key as it is in every legal situation. In any event your attorney will be able to walk you through it and will be at the hearing with you.
Q: Can I add a debt on my schedule if it was initially forgotten?
After filing the petition, if you discover that an entry is inaccurate or missing, you may typically file an amendment to correct it. Remember, you're submitting the petition under the penalty of perjury, so take care with the initial filing. Also, any debt that isn't on the list can't be discharged and you'll be responsible for it.
Q: When should I stop using my credit cards if I'm planning on filing for bankruptcy?
As soon as you anticipate filing bankruptcy, stop using your credit cards. Bankruptcy law allows the review of questionable purchases for potential fraud.
Q: What's a reaffirmation agreement?
Reaffirming a debt is voluntary and isn't required by bankruptcy codes. You may voluntarily repay any debt instead of signing a reaffirmation agreement, but there may be other reasons for wanting to reaffirm a specific debt, such as a vehicle loan or student loan. Debts not owed to a Credit Union must have their reaffirmation agreement approved by the court. What is the reason for this carveout you might ask? Better Lobbyists...
Q: Can a bankruptcy be reopened?
Yes. Typically, a bankruptcy case is reopened by the trustee when questions arise concerning what was included or possibly omitted, or any other irregularities that surface.
Q: How's an inheritance treated in a bankruptcy case?
How an inheritance is treated in bankruptcy depends on when you become entitled to receive it and what type of bankruptcy relief you're seeking.
Chapter 7- if you become entitled to an inheritance within 180 days of your filing date, the inheritance will be a part of your bankruptcy estate, and can be used to pay your debts. The important date is when your right to the inheritance is fixed, which is typically on the date of a person's death. You might not receive property or money from someone's estate for many months.
Chapter 13-your inheritance can be used in determining how much you have available to pay creditors under your repayment plan, and the 180-day limit doesn't apply.
In either type of bankruptcy, you must inform the bankruptcy trustee about the inheritance. If you're thinking about filing for bankruptcy, ask a bankruptcy lawyer how an expected inheritance might factor into your plans.
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