Northern Colorado Bankruptcy FAQ’s
Please take time to review the Frequently Asked Questions about Bankruptcy, carefully selected and answered by our specialists:
Q: What is Bankruptcy?
Bankruptcy is a Federal Law (11USC) created for the sole purpose of giving debt relief to individuals and businesses. Congress recognized that many people will run into financial difficulty throughout their lifetime so they created bankruptcy laws to protect them from their creditors. Congress understood that there will be many people who want to repay their creditors, but due to unforeseen hardships (i.e. Divorce, high medical bills, loss of a job, etc.) They simply cannot.
Q: How do I know if I qualify?
The important question is not “Do I Qualify?” Instead, the important question is “Do I Need to File?” Nearly everyone qualifies for some form of bankruptcy (chapter 7 or 13), but not everyone needs to file bankruptcy. We find that we recommend filing bankruptcy to about fifty percent of the people with whom we meet.
The “New” bankruptcy law that was passed in October of 2005 was intended by Congress to make it more difficult for individuals to file bankruptcy. However, in our experience, about 95% of people who qualified for chapter 7 bankruptcy before the new law was passed; still qualify for Chapter 7 bankruptcy. Those that no longer qualify, still qualify for chapter 13 bankruptcy. The question of which bankruptcy chapter is right for you, of course, depends on many factors specific to your case and can only be answered after a full, free consultation with one of our experienced attorneys.
Q: Is bankruptcy right for me?
Bankruptcy is not right for everyone. Bankruptcy should be used only as a last resort. However, the question then becomes, “When is it a last resort?” We can help you answer this question. The basic rule to answer this question is, “Can you repay your debts within a reasonable period of time AND still live a comfortable, stress free life? If not, then bankruptcy should be a strong consideration.
Q: What advice can a bankruptcy attorney give me?
At the conclusion of your initial, confidential and FREE consultation with one of our highly trained bankruptcy attorneys, you will be given candid advice on the following:
- Should you file bankruptcy? Unlike some law firms, the attorneys at The Sumner Law Office will actually advise you NOT to file bankruptcy if we do not believe it would be in your best interest;
- How to plan, if necessary, for the bankruptcy filing;
- The pros and cons of filing bankruptcy.
- The cost to file bankruptcy.
- Outline the bankruptcy process.
- What can be done to rebuild your credit after you file bankruptcy?
Q: How should I choose a bankruptcy attorney?
You must feel comfortable with the attorney you hire. The following are some items to look for:
- Make sure the attorney offers a free consultation.
- Make sure the attorney spends as much time with you as necessary to fully answer all of your questions.
- Make sure the attorney gives you candid advice as to whether you should file bankruptcy.
- Make sure the attorney gives you candid advice about which chapter of bankruptcy you should file. The attorney fees for a chapter 13 are typically much higher than those in a chapter 7.
- Make sure the attorney is highly experienced.
Q: Is my first consultation free?
Yes. You will meet with a highly experienced bankruptcy attorney during your first consultation. The first consultation is FREE and confidential, and there is no obligation to file bankruptcy and no obligation to hire The Sumner Law Office.
Q: Do I have an obligation to file bankruptcy?
ABSOLUTELY NOT. Don’t let anyone tell you that you MUST file bankruptcy. There may be financial reasons why it would definitely be in your best interest to do so, but there will never be an obligation. If you meet with one of our experienced bankruptcy attorneys, you WILL get the best advice about whether you should file for bankruptcy. You WON’T get an attorney placing pressure on you to file bankruptcy. Many of our clients come to us from referrals from former clients AND from people who initially met with one of our experienced bankruptcy attorneys but were advised that filing bankruptcy was not the best solution for their financial situation.
Q: What is the cost of Bankruptcy?
The cost to file bankruptcy depends on many factors: which chapter is filed (chapter 7 or chapter 13), the type and number of creditors, the type and amount of non-exempt assets (if any non-exempt assets), the existence of any lawsuits pending against you, etc. Therefore, we cannot quote you a fee until after one of our experienced bankruptcy lawyers concludes the initial consultation. It would be quite simple for our firm, like many others, to have a “one price” policy whereby we quote and charge everyone the same price to file bankruptcy. However, we believe most people do not have complex financial issues. In these situations, we are able to lower our fee to make the filing of a bankruptcy more affordable to more people.
Q: What do I need to bring to my first consultation?
Very little. The objective of the first free consultation with your bankruptcy attorney is to educate and inform you of all your bankruptcy and non-bankruptcy options, answer all of your questions, and to gather enough information about your financial situation so he or she can give you candid advise about your options. Therefore, the only thing we really need at your first free initial consultation is YOU. We simply need the “big picture.” We need to ask you a lot of questions. While not necessary at your first free initial consultation, it will be helpful if you can bring some of your most recent pay stubs and a list of your creditors with the approximate amount owed and your most recent tax return.
Q: What is an exempt asset?
An exempt asset is an asset that cannot be taken away from you by the bankruptcy trustee if you file bankruptcy. It can be your home, your automobile, your household items, or even your retirement accounts. Asset exemptions can become complicated so it is highly recommended that you hire an experienced bankruptcy attorney.
Q: Can I keep my property?
Usually. Very few people that we meet during their free initial consultation have any non-exempt property. Most people have a home, a car, household items, and retirement accounts, all of which are usually exempt in bankruptcy. It is only on occasion that we meet someone who has non-exempt assets. Therefore, the vast majority of people we meet will be able to keep all of their property.
Q: Will creditors still be able to harass me?
No. One of the great benefits of filing bankruptcy is, as of the date your bankruptcy is filed, all of your creditors are prohibited from calling you, writing you letters, or taking any further collection activity against you. This means your creditors will no longer be able to call you at home, at work, or at all hours of the day and night. They won’t be able to send you nasty collection letters, and they won’t be able to file a lawsuit against you.
Q: Does my spouse have to file with me?
No. However, it may be in your spouse’s best interest to do so. Our experienced bankruptcy attorney will advise you during your free initial consultation if it is in your and your spouse’s best interest to exclude him/her from your bankruptcy filing. It will be entirely your spouse’s decision as to whether or not he or she files bankruptcy with you.
Q: Can I pay some creditors if I want to?
Sometimes, depending on the amount of the debt. However, the question then becomes, “Why do you want to?” Some clients want to re-pay some creditors for the following reasons: the creditor may be a family member, the debt may be a small amount, or you may want to continue using the services of the creditor after you file bankruptcy. If you want to continue paying a creditor (i.e. a credit card) even after you file bankruptcy, please be aware that the creditor will most likely terminate your privileges. While there may be some legitimate reason to repay some creditors, in most cases it is not in your best interest to do so. DO NOT pay certain creditors without talking to one of our bankruptcy attorneys.
Q: Will filing bankruptcy hurt my credit?
Not usually. This is one of the most frequently asked questions we get and it is a very good question. Our response to this question is always, “How is your credit now?” If you have good credit and you are current with your debt obligations, then, yes filing bankruptcy will hurt your credit. But if you are considering filing bankruptcy, then you are probably in a situation where your credit is bad anyway. However, if you already have bad credit and are behind in your payments to creditors then we do not believe filing bankruptcy will hurt your credit. In our opinion, there are two types of credit. Good credit and bad credit. If your credit is already bad, can you make it worse? Generally speaking, the answer is no. However, the true answer to this question can only be given after you meet with an experienced bankruptcy attorney.