Bankruptcy FAQ
Frequently Asked Questions
1. Why do I have to be counseled?
The Bankruptcy Abuse and Prevention and Consumer Protection Act of 2005 (BAPCPA) requires both a Pre-Filing Counseling session and a Pre-Discharge Debtor Education course.
2. Why are there two required counseling sessions for the bankruptcy process?
BAPCPA requires both a Pre-Filing Counseling session and a Pre-Discharge Debtor Education course, so there is one counseling session and one education session.
3. What is a Webinar?
A Webinar is a Web-based seminar conducted via computer and a conference call.
4. If filing together, do both parties have to be on the phone for a Webinar or phone counseling session?
Couples are not required to take the sessions together; however, all parties needing a certificate must attend a counseling session and an education course. If taking a Webinar or phone course together, yes, both must be on the phone.
5. How long does the bankruptcy process take?
It depends on the chapter being filed. Chapter 7s can take anywhere from 3 to 6 months from the time the petition is submitted to the court to the completed discharge. A Chapter 13 can take anywhere from 3 to 5 years.
6. How long is the process after one files?
It depends on the Chapter filed. Please see above or consult your attorney.
7. What is the difference between Chapter 7 and Chapter 13?
A Chapter 7 involves the liquidation of a debtor’s unsecured debt. A Chapter 13 is a structured repayment plan through the court and trustee.
8. What’s the difference in filing bankruptcy and joining a Debt Management Program (DMP)?
A DMP is a voluntary repayment plan established outside of the court system and is typically administered by a non-profit credit counseling agency. Bankruptcy is a legal proceeding asserting your legal right to negotiate with your creditors to have your debt liquidated or restructured for repayment.
9. How long does a bankruptcy stay on a credit report?
10 years.
10. What is the difference in how bankruptcy affects your credit report versus DMP?
On a DMP, each creditor will determine if they will report and how they will report your account. In a bankruptcy, a public record is created which will remain on your credit report for 10 years. You may call each of your creditors and ask exactly how each creditor will report a DMP to the credit bureaus so you may compare the potential credit damage of each option.
11. How will bankruptcy affect a credit score?
A bankruptcy typically lowers a consumer’s credit score. How much it is lowered is dependent on many factors leading up to the bankruptcy.
12. What are the costs involved?
Attorney fees can vary substantially depending on the case and service delivery. Attorney fees should generally be in the range of $1,000-$2,000. There are also court filing costs (as of 2010):
Chapter 7 court filing costs are approximately $299.
Chapter 13 court filing costs are approximately $274.
13. How does one go about filing?
The simplest way to get started is to obtain your Pre-Filing Counseling Certificate and then contact an attorney.
14. Can ClearPoint refer me to a bankruptcy attorney in my area?
We can provide you with a list from which you may select an attorney.
15. How will this affect my credit?
Each consumer’s credit may be affected differently, but generally, a bankruptcy will lower a consumer’s credit score.
16. What is the “Means Test”?
The Means Test is a qualifier administered by the attorney to determine if a consumer qualifies for a Chapter 7 filing, or has the “means” (or ability) to repay a portion of the debt owed through a Chapter 13 filing.
17. I can’t afford an attorney; what are my options?
ClearPoint strongly encourages client to utilize the professional services of a qualified attorney. Other options and resources may include free or low-cost legal service or assistance through Legal Aid clinics, the Legal Aid Foundation, or pro-bono work provided by your local bar association.
18. Will my employer or neighbors know that I have filed for bankruptcy?
ClearPoint holds all client information in strict confidence (see our Privacy Policy). However, a bankruptcy filing does become a public record and can be looked up by anyone with the desire to do so.
19. Once I get my Debtor Education Certificate, what do I do with it?
Provide it to your attorney for submission to the court to complete your bankruptcy proceeding. If you are not using an attorney, you’ll need to determine which form is appropriate for your case.
20. Does ClearPoint help in completing the bankruptcy forms?
ClearPoint is neither a legal advisor nor a petition preparer and cannot help in the preparation of bankruptcy forms.
