You Can’t Apply Online for a Credit Card If You’re Facing Bankruptcy

Articles List

July 09, 2007

Bankruptcy is more than just a black strip on the Wheel of Fortune wheel and it can do a lot more than take your money from you. In fact, in some cases of bankruptcy, it allows you to keep what little money you have and keep creditors away from the rest. In other cases, it may take as much as your property from you. You should stay as far away from filing for bankruptcy as possible, as it leaves a nasty black mark on your credit history that can stay there for up to 10 years. However, it can also be quite helpful to know what types of bankruptcy are out there and what they can do in case you find yourself considering filing for bankruptcy.

The first type of bankruptcy is Chapter 7 bankruptcy, also known as straight bankruptcy. It is under this chapter that a lot of what you have will be liquidated; a trustee will take over your property and it will then be sold or otherwise transformed into funding that can pay off your creditors. There are some states that have different stipulations about what can and cannot be taken from you, such as personal property. You will lose a lot with this type of bankruptcy, and depending upon the specifics of your problem, you may not be able to quality for relief through this chapter of bankruptcy.

Another type of bankruptcy is Chapter 13 bankruptcy. You may have also heard of this form of bankruptcy the wage earner chapter. There are a great deal of specific guidelines under this chapter, such as the amount of debt you owe and the type of debts you owe, secured, unsecured, both of which usually liquidated. The two main numbers you will see under this form of bankruptcy are unsecured debts of $269,500 and secured debts of $807,750. Usually you must owe less than these two amounts in those particular debt forms. Under this bankruptcy chapter, though you will be able to keep your property, you must still earn enough money in order to repay your creditors over time. A budget and repayment plan must be created and you must follow it once it is approved by the Court. Your payments will be collected by a court-appointed trustee, who will turn over your payments to your creditors and make sure you stay within the guidelines dictated by your repayment plan. Once you have paid off your debts or all payments mentioned in your plan have been paid, you will be discharged.

Chapter 11 bankruptcy is fairly simple. There are fewer details about the amount you might owe, and basically you will create a repayment plan in order to pay your creditors. Businesses can also file under this chapter of bankruptcy and perform the same actions in paying creditors.

Already, trustees have been mentioned, but who are they and what do they do? A trustee is a person who has been appointed by the United States Trustee to watch over a single case as well as monitor the person and his or her affairs during the case. The United States Trustee is a member of the United States Trustee Office, which monitors all bankruptcy cases and is a branch of the Department of Justice.

Because people see bankruptcy cases going to court, they often wonder if you need to hire an attorney. You do have that option, but you can also file for bankruptcy on your own if you wish. However, if you are a filing on behalf of a business or partnership, then you must have an attorney assist you.

If at any time during your case or afterward you hear that you have received a discharge, it means you no longer have to pay a certain amount of the debt you owe. Do not expect certain items to be discharged, however, such as tax debts, student loans, alimony, or child support. Any fraudulent behavior that caused debt, such as drunk driving, is also not going to be discharged. Lying under oath or hiding property from the court may mean you receive no discharge at all from your debts. Sometimes even with a discharge, creditors may try to obtain the rest of their money from you. In this case you should inform them of the discharge or get legal counsel if they continue to request payment from you.

A case will typically be closed an approximate amount of days after a certain event. In the case of Chapter 7 bankruptcy, you will have to wait 60-90 days after the 341 Meeting of Creditors. If there are assets involved with the case, then the wait will be 90-120 days after the filing of the Final Report. A Chapter 11 case will close after a Final Decree is filed, and a Chapter 13 case will close 60-90 days after the Final Report, though a Chapter 13 filing will usually last for many, many months before it closes.

You may be wondering what a 341 Meeting of Creditors is supposed to be. This is a meeting during which you, your attorney (if you have one), and your creditors meet to ask questions of you (the debtor) about your particular financial affairs. You absolutely must be present at the meeting, as must your attorney if you have one, but the meeting is not obligatory for creditors. If you fail to arrive, your case could be dismissed and you will not receive any help provided by the bankruptcy chapter. Try not to bring your children if possible. If your attorney cannot be present at the 341 Meeting of Creditors, inform your trustee, and your meeting will usually be moved to another date. However, if your attorney cannot attend that meeting either, you will have to speak to the trustee again to find out what you should do.

Should your attorney miss your court hearing, you should inform the Judge in order to find out how to handle the situation. Normally, your attorney is to be present at such times, and if he or she is not, you may have to wait until another time.

If you know someone has committed bankruptcy fraud and/or have evidence of such actions, you must write to the United States Trustee that is in your area, as well as a copy sent to the trustee overseeing that particular case. Usually you can just provide the copy and the U.S. Trustee will send it for you. Be detailed and thorough with your information and descriptions, and include any pertinent documents if you have them.

There are a lot of other questions you may have, such as where to get specific documents, find out a case’s status, Chapter 13 account balances, how to get to the 341 Meeting of Creditors, building and parking locations, and disability options. Many of these questions can be answered by your local Bankruptcy Court or through trustees in your area.

Knowing what credit card bankruptcy pertains can add as a deterrent to going down that path. Stay on your toes with your credit cards, loans, and other finances. Be careful when you decide to start a business and take all necessary precautions to try and prevent bankruptcy. Filing for bankruptcy can leave you with a bad credit history, or at the very least, a very ugly mark on your current credit report. Bankruptcy is not an easy way out of your problems, even if it sometimes is the only way.