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Ms. DeWald

Jean answers
your questions about
bankruptcy.

Q: How much does Bankruptcy Cost?

A: If it is a straight liquidation, it will be called a Chapter 7 case. The filing fee is $299.00, and my fee is $650.00. Chapter 7 costs a total of $949.00

If it is a reorganization case, it may be a Chapter 13 or a Chapter 11 case, depending on whether it is an individual or husband/wife (Chapter 13) or a business (Chapter 11). My fee is $1,500.00 for Chapter 13. Chapter 11 is negotiable, depending on the size of the business. Some businesses, if they are small, may be filed under Chapter 13. There are also chapters for farmers and for municipalities, but I have not filed one of those.

Q: Do I have to pay it all at once?

A: For Chapter 7, I regret that I must require the filing fee and my fee be paid in advance so that I can keep your overall costs as low as possible.

For Chapter 13, you will have to pay the filing fee and $100 of my fee, for a total of $294 in advance. The remaining balance of my fee, $1,400.00, will be paid through the Plan by the Trustee from your Plan payments each month.

These fees cover my services in preparing your documents, advising you regarding which Chapter fits your needs best, attending the Creditor's Meeting with you, preparing reaffirmation agreements, and appearing in certain adversary matters that may arise. Under Chapter 13, it will pay my fees through confirmation of your Plan (which may take six months to one year). Sometimes, however, it is necessary to perform additional services that become very time-consuming and were not foreseeable when we began the process. In those case, I will submit a fee application to the Court for approval. If approved, the fee will be paid by the Trustee out of the funds you pay into the Plan. The Bankruptcy Court exercises control over the amount a lawyer can charge.

Q: How do I know which Plan I should file under?

A: This will be discussed at the initial interview, and perhaps subsequent interviews after I have gathered sufficient information about your financial situation. There are options available to you, and we can discuss the options, at which time you will make a decision about whether or not you want a straight liquidation, or a reorganization. For instance, If you have a home in foreclosure proceedings, or a car that is about to be repossessed, and you want to keep them, a reorganization Chapter may be your best choice. If you have a house and car, but the payments are current, or can be brought current quickly, then you may have the option of Chapter 7. Your final decision will be governed by other things. What property you own, what kinds of debts you have, and whether or not you are employed. For instance, if you are unemployed without an income, Chapter 13 will not be an option.

Q: How long does it take?

A: About 120 days in Chapter 7. Three to five years in Chapter 13. Chapter 11 may take a longer time.

Q: What if I file under one Chapter and then want to change to another Chapter?

A: It is possible to convert from one chapter to another under certain circumstances.

Q: I want to keep some of my credit cards. Can I do that?

A: No, all creditors must be included in the bankruptcy--you cannot pick and choose. Sometimes, under Chapter 7, a creditor will make an offer to let you keep their card, if you reaffirm the debt. You can do this if you want to so long as I approve and the Court approves. Our approval rests on whether or not the reaffirmation will be detrimental to your financial condition. Under Chapter 13, you must destroy all of your credit cards and you cannot acquire new debt while in Chapter 13 without permission from the Chapter 13 Trustee.

Q: If I file bankruptcy does my spouse have to, also?

A: No, you may file as an individual. However, the bankruptcy may appear on your spouse's credit report.

Q: Will everyone find out I have filed bankruptcy?

A: Court records are open records and can be viewed by anyone who wants to do that. All of your creditors will be notified. Certain entities monitor bankruptcy filings, such as credit reporting agencies. Also, the IRS will be notified, along with certain State agencies such as the Comptroller's Office, the Attorney General, etc. Also, lawyers hired by taxing units will receive this information. Your next-door neighbor, your boss, or your best friend will probably not know, unless they work for one of these organizations and discover it by accident, or happen to be one of your creditors.