Bankruptcy FAQs
Do I have to list all of my stuff in bankruptcy?
Answer: All the property you own, in the broadest sense of the word, has to be listed in your case. This means everything. The law does not allow you to pick and choose. If choose to withhold information about property you own when you file a bankruptcy, it could be a crime. Just because you list the property that you own, it does not mean that you will lose it. Listing everything correctly is part of the process which allows you to keep the property -- not the start of losing it. Most people filing bankruptcy keep everything they want to keep and can afford to keep paying for, if they owe a debt on it. Remember, it is absolutely essential that you list everything in your bankruptcy case.
Who is going to know I filed for bankruptcy?
Answer: The only people who will be notified about your bankruptcy are your creditors, your lawyer, the bankruptcy court, and the bankruptcy trustee. A bankruptcy filing is a public record. It will be on your credit report. But there's very little public interest in individual bankruptcy cases. We know it can be embarrassing to file. We don't think it should be but we appreciate your privacy. So does the court. They don't go out of their way to embarrass anyone. It is likely that you know several people who have already filed bankruptcy, but you were never aware of it. Your bankruptcy is not going to be publicized in any way unless you are a celebrity or a public figure.
Do I have to list all my debts?
Answer: Yes. All of the debts you owe have to be listed, including your mortgage(s) and your car loan(s). The law does not allow you to pick and choose. If you choose to list some and not list others, you could be committing a crime.
Do not jump to the conclusion that you will lose your house or your car when you list your mortgage or car note in your bankruptcy schedules. Just the opposite is true. Listing these debts correctly is the first step to assuring you can keep the property you need to keep -- and get rid of the debt you don't need any more. Even if you don't want to wipe out a debt, like one owed to a friend or relative, or a doctor you want to visit again, those debts have to be listed. You can always repay discharged debts after the bankruptcy voluntarily. Or you can even reaffirm your legal obligation to debts. If you have even the slightest inclination that some person or some business thinks you owe them money, you should list them as creditors in your case, even if you don’t think you owe them.
Can I keep my house?
Answer: The answer is almost always yes, but there are two parts to the analysis.
The first question is: what will my mortgage company do when it finds out that I filed bankruptcy? The key issue from the perspective of the mortgage company is whether you are current on your monthly mortgage payments, and whether you can stay current on those payments. In many cases, the lender will ask for a reaffirmation agreement.
If you are behind on payments, a Chapter 13 may be necessary to cure the missed payments in the repayment program. And you need to be able to keep making the regular payments. We typically have no tools available to change your monthly payment obligation -- so if you can't afford the mortgage and the mortgage lender won't or can't change your loan terms, then you may not be able to afford the house.
The second question is: will the bankruptcy court or trustee take my house if I file bankruptcy. This answer is always no if you have equity of $15,000.00 or less in your residential real estate (Missouri Homestead).
If you have more than $15,000 of equity in your Missouri homestead, you may need to file a Chapter 13 Plan instead of straight Chapter 7 bankruptcy in order to keep your home and protect your equity.
The home equity amount protected can be different if you have moved to Missouri from another state in the last three years.
Can I keep my car?
Answer: Usually you can keep your car. If you are current -- and keep current -- on payments and have less than $3,000 equity in your car, you should be able to keep it. (If you and your wife both own the car or cars, you can protect up to $6,000 of equity.) That is true in either Chapter 7 or Chapter 13. The lender may ask for a reaffirmation agreement in certain situations.
If you have more than $3-6,000 of equity in automobiles, you may need to file a Chapter 13 Plan instead of straight Chapter 7 bankruptcy.
The car equity amount protected can be different if you have moved to Missouri from another state in the last three years.
If you are behind on payments, a Chapter 13 may be necessary but we can typically change and even lower how much has to be paid to the car lender, making some high payments much more manageable.
There is also an option in Chapter 7 to "redeem" a car for its retail value in a lump sum from the lender. This can be useful if your car is worth much less than you owe on it and you can either borrow the money to redeem it or a friend or family member might give you the money to do it.
Can I keep my retirements funds?
Answer: Almost without any exception, the answer is YES!
Missouri protects most types of retirement plans, including traditional pensions, IRAs, Roth IRAs, 401(k)s, 403(b)s, profit-sharing plans and so on, inside or outside of bankruptcy. In addition, bankruptcy law provides additional protection for most of these assets when you file bankruptcy.
There are some limited exceptions. You may not be able to protect unusual contributions made in the recent past to such accounts. And many of these accounts can be pursued by or for some special creditors -- like child support or some taxes.
However, for most people those accounts are safe from creditors. This is one of the reasons we strongly encourage folks to not touch those accounts to deal with current debt problems -- and to keep up their regular contribution programs, if at all possible.
Will bankruptcy stop a wage garnishment?
Answer: Almost without any exception, the answer is YES!
If you have been sued on a consumer debt, like a credit card or signature loan, we can usually stop the garnishment with a bankruptcy filing. Creditors have to obey the automatic stay imposed by a bankruptcy filing.
There are some limited exceptions. You can't stop a child support deduction. Bankruptcy can't be used to stop your child support payment. It might be used to stop the extra payment for back or missed support payments but you won't get rid of them in the long-run. You will typically need to file Chapter 13 in order to address back support payments owed, through a payment plan. And if the debt can't be wiped out (e.g. support or most student loans) the garnishment could resume after your case is over.
But for most people, garnishments are for old consumer debts they can't afford to pay. And the deduction is making them fall behind on more important debt, like rent or mortgage and car payments. Bankruptcy will allow you to put the order of payment right again -- to allow you to decide who gets paid and who does not.
I filed a bankruptcy before, can I file again?
Answer: The rules have gotten a lot more complicated. You can still file a case under different Chapters of the Bankruptcy Code, but in order to get a discharge (wipe out) debt, there are different "waiting" periods between cases.
If you filed a Chapter 7 bankruptcy before and received a discharge:
You have to wait eight (8) years before a new Chapter 7 will qualify you for another discharge, or you have to wait four (4) years before a Chapter 13 will qualify for you for another discharge. These time limits are measured from date of filing of the original case to the date of filing of the new case.
If you filed a Chapter 13 bankruptcy before and received a discharge:
You have to wait two (2) years before a new Chapter 13 will qualify for discharge; You have to wait six (6) years before a new Chapter 7 will qualify for discharge - unless the prior Chapter 13 case repaid an amount equal to at least 70% of unsecured claims.
These time limits also are measured by most courts from the date of filing of the prior case to the date of filing of the new case.
Does my spouse have to file bankruptcy with me?
Answer: It is possible for your spouse to file with you but not required. A joint case is an administrative convenience but it is simply two cases filed together. (And you must both qualify to file the case in the first place.)
Your spouse may want to file a joint case with you, if there is joint debt, though. In Missouri, if you file bankruptcy on your own without your spouse and discharge a debt owed by you and your spouse, your spouse will still owe that debt. It would likely cost nothing more to include your spouse in the case in such situations but it is definitely not required.
There can be some complicated situations in which it is advisable that your spouse not file a case at this point, too.