1. If I am married, does my spouse have to file bankruptcy?

No, however the spouse that does not file will not receive the benefits of bankruptcy. In other words, if the non-filing spouse is jointly liable on certain debts, he or she will remain liable for those debts if the filing spouse filed for a Chapter 7 bankruptcy. He or she will also remain liable for any amount not paid for in the filing spouse’s Chapter 13 plan. On the other hand, the non-filing spouse will not have bankruptcy noted on his or her credit report.

Therefore, if the debts you owe are also owed by your spouse, or cosigned by your spouse, it would be to your benefit to file a bankruptcy together as a married couple. If most of the debts are in your name only, you may consider filing a bankruptcy as the only debtor.

2. What if I am unmarried but living with someone? Can we file a bankruptcy together?

At the present time, if you are living together with a significant other but are unmarried, you cannot file a bankruptcy together, even if the bills are in both your names. In this case, each one of you would have to file separate bankruptcy petition. A competent attorney or paralegal can separate the expenses and budget so that each of you pay 50% of the day-to-day living expenses (if both of you share the expenses) and submit the information properly to the court.

3. Will bankruptcy stop a wage garnishment?

Yes, some of the money garnished from your paycheck may even be returned to you. It all depends on how much was garnished and when it was garnished. If your wages are currently being garnisheed, a Notification of Stay pleading need to be filed in court as well as a letter mailed to the creditor and your employer to stop the garnishment after your bankruptcy petition is filed.

Stopping a wage garnishment is possible because whomever you owe that is garnishing your check is now being paid (or is being discharged) through the bankruptcy petition you filed. As soon as the clerk file stamps your bankruptcy petition, you have immediate protection under the United States Bankruptcy Court and every creditor you owe must proceed through this court to collect anything from you.

4. How can I immediately stop creditor harassment?

The filing of a bankruptcy under Chapter 7 or Chapter 13 will IMMEDIATELY bring the harassment caused by creditors to a HALT. Once your bankruptcy has been filed, creditors are forbidden from taking action against you or against your property to collect money you owe them. If they try to do so, they can be held in contempt of court. This is the advantage of the law, administered by the United States Bankruptcy Court, and provided as a way to help citizens get “another chance.” Even if there is a wage garnishment or other legal proceeding under way, the filing of a bankruptcy will bring it to a screeching halt, giving you the opportunity to take care of your financial affairs in an orderly and permanent way.

5. What if I owe the IRS back taxes? How will bankruptcy help me?

Most tax debts cannot be discharged in a bankruptcy. Trust funds and withholding taxes you owe, such as sales taxes or employee withholding obligations can never be discharged. However, income and self-employment taxes can be discharged if they are at least three (3) years old and the tax returns have been on file for at least two (2) years. In situations like this, a bankruptcy can be a great help in many ways. The biggest benefit is that you may be able to reduce the amount of the tax you owe. In a Debt Adjustment Plan, you can also stop interest and penalties on all taxes you owe — even the ones that are non-dischargable. This will place you in a situation where it will be easier to pay your taxes off.

6. How much does it cost to file bankruptcy?

At the present time, the court will charge you $200.00 to file a Chapter 7 bankruptcy petition and $185.00 to file a Chapter 13.

7. When does a bankruptcy take effect?

When the Clerk of Court receives your bankruptcy petition and date/time stamps it, your bankruptcy is immediately effective. The Court sends notice of your filing to all of your creditors and bill collectors generally within 24-48 hours after filing. That is why it is so vitally important to include complete addresses and zip codes of all the people you owe on your bankruptcy petition. The court will send a copy of your petition to all these creditors so they will stop harassing you. If those addresses are not correct, the creditor won’t know you filed bankruptcy and will continue to harass you. It is also important to list all the collection agency addresses so they can be notified as well. Upon receipt of the notice of your filing, creditors and bills collectors are prohibited from having contact with you.

If your should receive any harassing or annoying creditor calls after filing your bankruptcy petition, a letter can be mailed to the creditor which spells out Section 362 of the Bankruptcy Code (Automatic Stay.) This letter prohibits the creditor from contacting you again or risk being held in contempt of court.

8. Am I a “bad” person because I file bankruptcy?

You are NOT a “bad” person because you decide to file for bankruptcy. Back in the old days (pre 1900), if a person went bankrupt, creditors stepped in, sold everything the person owned, split the money between themselves, put the bankrupt person out in the street and make a public mockery of them. Therefore, this is why people who have not kept up with the times, still feel that bankruptcy is a “bad” thing to do. But that was over 150 years ago! The economy has changed, employers have changed, life is more complicated, interest rates are higher than they have ever been in history and the money you make doesn’t reach as far as it used to just five years ago.

Any one of these factors could cause a “good” person who was responsible and financially secure, to suddenly consider filing bankruptcy. Not one of us is immune from the world’s problems. So if there comes a point in your life where you find it necessary to take advantage of the bankruptcy law, don’t feel “guilty” about it. In fact, you should be glad the United States has set up a governing body to protect people like you and me.