Answers to Common Bankruptcy Questions
Courtesy of the National Consumer Law Center and the State Bar of New Mexico
A decision to file for bankruptcy should be made only after determining that bankruptcy is the best way to deal with your financial problems.
What is a bankruptcy discharge?
One of the reasons people file for bankruptcy is to get a “discharge.” A court order which states that you do not have to pay most of your debts.
What documents should I bring to my first appointment?
Please bring the following: A list of your creditors and the balance due on each account, a list of your monthly expenses, and a copy of any documents that pertain to your situation
- A list of creditors and the amounts of your debts
- Collection letters, etc.
Will my creditors stop harassing me?
Yes. When you file for bankruptcy relief there is an “automatic stay” that is immediately initiated. This automatic stay arises out of 11 USC §362 of the Bankruptcy Code and immediately “freezes” all collection efforts against you. Therefore, upon filing for bankruptcy, creditors cannot continue in their pending lawsuits against you without Bankruptcy Court approval, creditors can no longer contact you regarding your debt (by mail, over the phone, or in person), and all other collection efforts also cease.
Does my spouse have to file bankruptcy with me?
Usually. However, if the debts that are of concern are primarily in one spouse’s name only then the other spouse may not need to file for bankruptcy.
However, if the debts are in both spouses’ names then both spouses should file. The primary reason is that although one spouse will receive a discharge, the other spouse will then remain liable for all of the debts and the creditors will then go after that one spouse.
Who will know?
Although bankruptcy filings are public record and are available to anyone who inquires, only the creditors listed on the bankruptcy schedules will receive actual notice of the bankruptcy. The bankruptcy filing is also published in the Business Outlook (part of Albuquerque Journal), but it is listed along with various other filings and is not conspicuous unless someone is purposely going through the filings each time it is printed.
Will I ever get credit again?
Yes, immediately. Upon filing for bankruptcy, you will likely receive many offers for credit cards and vehicle loans. The primary reason for this is that the lenders know you cannot file for bankruptcy for another 8 years (unless you are filing under a different Chapter of bankruptcy) and therefore they know that you will likely not be able to discharge their debt– especially vehicle loans that usually have a maximum length of 5 years.
Are there any debts that cannot be discharged?
Yes. Certain types of debts are NOT discharged in bankruptcy. The following debts that generally may not be cancelled by bankruptcy:
- Most taxes, unless they are more than 3 years old. However, this can be a complicated issue. If you have tax debts, you will need to discuss them with your lawyer.
- Child support. The debtor must continue to pay child support during a bankruptcy case
- Most student loans. But you can ask the court to discharge the loans if you can prove that paying them is an “undue hardship.” There are options for reducing your monthly payments on student loans, even if you can’t discharge them.
- Money borrowed by fraud or false pretenses
A creditor may try to prove in court during your bankruptcy case that you lied or defrauded them, so that your debt to the creditor cannot be discharged. A few creditors (mainly credit card companies) accuse debtors of fraud even when they have done nothing wrong.
Their goal is to scare honest families so that they agree to reaffirm the debt. You should never agree to reaffirm the debt without the advice of an attorney. If the company files a fraud case and you win, the court may order the company to pay your lawyer’s fees.
- Court fines and criminal restitution. This exception includes even minor fines, including traffic tickets.
- Personal injury caused by drunk driving or under the influence of drugs.
You must list all your property and debts in your bankruptcy schedules. If the debt is not listed, it is possible the debt will not be discharged. The judge can also deny your discharge if you do something dishonest in your case, such as destroy or hide property, falsify records, or lie or disobey a court order.
In Albuquerque, the Giddens & Gatton Law,amp; P.C. has bankruptcy attorneys who offer expert handling of Chapter 7, Chapter 11, Chapter 12 and Chapter 13 bankruptcy cases and can specifically provide advice as to bankruptcy and its alternatives.
The New Mexico firm represents many debtors and creditors in Albuquerque, Santa Fe, Taos, Raton, Farmington, Gallup, Grants, Roswell, Los Lunas, Placitas, Belen and the rest of New Mexico. Contact Giddens & Gatton Law,amp; P.C. at (505) 271-1053 to set up an appointment or visit the firm’s website at giddenslaw.com. Giddens & Gatton Law,amp; P.C. is located at 10400 Academy Road N.E., Suite 350 in Albuquerque, New Mexico, 87111.