Questions
Questions people ask me
These are the questions people ask me most, including the ones they apologize for asking. None of them are silly. Many of them kept someone from calling for months. If yours is not here, please ask me directly. I am happy to answer it.
8 questions
Before you decide
How do I know if I actually need to file?
A simple test I use is whether you have a realistic path to paying off your unsecured debt within five years. If you are making minimum payments that barely move the balance, and nothing about your income is changing, you are not really paying the debt down. That is usually the point where filing deserves a serious look, and there is no shame in getting there.
Will my employer find out?
No one notifies your employer. Bankruptcy filings are public records, so a case is not secret in the strictest sense, but no notice is sent and there is usually no reason for it to come up. The exception is an active wage garnishment, where your employer already knows something is happening and will be told it has stopped.
What does this do to my credit, really, and for how long?
A Chapter 7 appears on your credit report for ten years from the filing date, and a Chapter 13 typically comes off at seven. Those numbers sound worse than the reality. Most of my clients see their scores begin to recover within a year of discharge, because the accounts that were pulling them down are resolved. If your credit is already damaged by missed payments and collections, filing often improves things faster than continuing to struggle.
Can I file without my spouse?
Yes, and sometimes it is the better choice. Your spouse's income still counts in the means test, but your spouse's separate debts and credit are not automatically part of your case. The right approach depends largely on whose name the debt is in, and we will work through it together.
Do I have to give up my house?
In most cases, no. Colorado protects a substantial amount of home equity, and if you are current on the mortgage and your equity fits within that protection, a Chapter 7 does not put your home at risk. If you are behind and want to catch up, Chapter 13 is designed for exactly that. More on Chapter 13
Do I have to give up my car?
Usually not. There is an exemption for vehicle equity, and most financed vehicles have little enough equity that it never becomes an issue. If you want to keep the car and keep paying the loan, you generally keep the car.
Will I lose my retirement?
No. Qualified retirement accounts are protected, and in twenty-five years, I have not had a client lose one in a Chapter 7. I say this firmly because I have seen people drain their retirement savings to pay debts that bankruptcy would have discharged, and it breaks my heart every time.
What will my family know?
Only what you choose to tell them. Your spouse will need to be involved, because household income and expenses are part of the filing. Beyond that, relatives are not notified, nothing is announced, and nothing arrives at your home that looks like what people imagine.
6 questions
The process itself
What is a 341 meeting and what happens there?
It is the meeting of creditors, named after the section of the Bankruptcy Code that requires it. It is not a court hearing, and there is no judge. A trustee asks you a short set of questions under oath, usually for just a few minutes, and I am with you the whole time. Creditors are allowed to attend but almost never do. Most people tell me afterward that it was much easier than they feared. The whole process, step by step
What is a trustee, and is the trustee on my side?
The honest answer is that the trustee is neither for you nor against you. The trustee administers your case: reviews the filing, conducts the 341 meeting, and in a Chapter 13 receives and distributes your payments. The trustee's job is to make sure the case follows the Bankruptcy Code. A carefully prepared filing draws very little attention, which is exactly what we want.
What documents do I need to gather?
Generally: recent pay stubs, your last two years of tax returns, several months of bank statements, a list of what you owe and to whom, and records of anything significant you own. It is more paperwork than people expect and less than they fear. My team helps to keep track of what is still needed and tell you exactly what is missing, so you never have to guess.
How long does the whole thing take, honestly?
A Chapter 7 takes roughly four to six months from filing to discharge. A Chapter 13 lasts three to five years, because the plan is the case. The part people do not expect is the time before filing, which depends on how quickly the documents come together. We will go at a pace that works for you.
How often will I have to come to your office?
Never. You can do all of it from home, so there is nowhere you need to go. We handle our initial Strategy Session, document collection, case signing, and even the 341 meeting by phone, video, and through a secure portal. How the firm operates
What if my situation changes during the case?
Please tell me as early as you can. A job loss, a raise, a move, a new medical situation, or an inheritance can all be handled, and nearly all of them are manageable when I hear about them promptly. We will figure out the next step together.
6 questions
Life after
When can I get a credit card again?
Sooner than you might expect. Offers often start arriving within months of discharge, because you now have no remaining unsecured debt and cannot file again for several years. A secured card, used carefully, is a sensible place to start.
How do I rebuild credit?
Steadily and patiently. A secured card paid in full each month, every other bill paid on time, and time. There is no shortcut worth paying for, and the companies advertising one are often the same kinds of businesses that caused trouble for my clients in the first place.
Can I buy a house, and when?
Yes. Waiting periods depend on the loan program and typically range from two to four years after discharge, with government backed programs generally shorter than conventional ones. I have had clients buy homes three years after discharge, with better rates than they could have gotten while carrying the debt. Those are some of my favorite emails to receive.
What if a creditor contacts me after the discharge?
Please tell me. The discharge is a court order, and contacting you about a discharged debt violates it. This is uncommon but does happen. It is usually a records error, and it is generally resolved with one letter from my office.
What if I am sued during the case?
Filing puts the automatic stay in place, which stops most collection lawsuits right away. If something is filed anyway, or a case was already pending, tell me and I will handle it. You should not have to respond to collection lawsuits on your own while your case is open.
Will this show up on a background check?
It can, since filings are public records, though many employment background checks do not show it. Federal law bars government employers, and your current employer, from discriminating against you because you filed. In twenty-five years I have not seen a client lose a job over a filing.
Want the long version? The library goes deeper on the means test, Colorado exemptions, student loans, and the decisions people make in the year before they call.
If yours is not here
Please ask me directly. I would much rather answer your question than have it weigh on you for another month.