Alkalay & Smillie, PLLC

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Attorney Edward Alkalay writes a regular column for the Conway Daily Sun newspaper entitled "The Legal Corner." His articles address a wide variety of timely legal issues. Click on the titles below to review his past articles.
 

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The Legal Corner: The Legal Corner: Personal Bankruptcy Issues

Last spring, I wrote an article on bankruptcy-related issues. Since that time, I have continued to receive many questions on the topic. As the economy sputters along, many individuals with large medical bills and/or credit card debt have asked me what debts are dischargeable in bankruptcy and what they stand to lose should they file for bankruptcy. In this article, I will attempt to answer the most frequently asked personal bankruptcy questions that I have received.
(1) What does filing for personal bankruptcy mean? Under federal law, bankruptcy permits individuals to receive permanent relief from many debts.  The main purpose of personal bankruptcy laws is to enable individuals with large debt to get a “fresh start.” Once a personal bankruptcy has been concluded, the individual’s debts are discharged and the individual is no longer legally obligated to pay those debts.
(2) What type of bankruptcy can individuals file? There are a number of different types of bankruptcy filings. However, the most common for individuals is a Chapter 7 bankruptcy. In a Chapter 7 bankruptcy proceeding, the individual(s) file a petition in the bankruptcy court. The individual must disclose all of his/her property and debts. Certain property is exempt from creditors, while other property is not. Almost any legal resident may file a chapter 7 bankruptcy petition if you complete the required credit counseling and have not filed for bankruptcy within the past seven years.
(3) If I file for bankruptcy, will creditors stop calling me? Yes. Once a bankruptcy petition is filed, an automatic stay is placed on debts, which prevents creditors from taking any action to collect debts. This means that all the harassing telephone calls from creditors must stop immediately once a creditor becomes aware of a bankruptcy filing. If a creditor continues to call or write in an attempt to collect the debts, the creditor may become liable for sanctions by the court.
(4) Can I go to prison if I file bankruptcy or don\'t pay my debts? No. You cannot be sent to prison for filing bankruptcy or not paying debts.
(5) Can a husband and wife jointly file for bankruptcy? Yes, married couples can file a joint petition for bankruptcy. However, where only one spouse has debts, it may be worthwhile to only have the debtor spouse file for bankruptcy.
(6) Do I need to hire an attorney to file a petition? No one is required to hire an attorney for any legal matter. However, in bankruptcy cases, there are many forms that need to be filled out correctly and you must follow the court’s process. It is often much easier to do so with an attorney’s help.
(7) How much will it cost to hire an attorney? Different attorneys charge different fees. Some attorneys charge an hourly rate, while others charge a flat fee for a bankruptcy filing. Before paying any retainer, all attorneys should provide you with a fee agreement. Read this document carefully and ask any questions that you have. You should be absolutely clear what you are receiving for your payment.
(8) What should I do to prepare for filing bankruptcy? You should stop using your credit cards and save all of your financial records. Moreover, do not transfer any assets to family or friends with the hope of keeping those assets out of bankruptcy. This can be a major problem should the bankruptcy court find out that you have tried to hide assets. On the positive side, you will be surprised how many assets you are able to keep in a bankruptcy proceeding, including (usually) your home and vehicle, among other things.
People generally feel bad about filing for bankruptcy. Most people who have spoken to me over the past year about bankruptcy issues invariably explain how they have always prided themselves in paying their bills and how it hurts to be in a position where they are no longer able to do so. These people never dreamed that that they would have to consider bankruptcy, but because of medical bills, the economic downturn, or high credit card interest rates, they have incurred unmanageable debt. Bankruptcy enables those with unmanageable debt to start again. If you have creditors harassing you, bills continually coming in, and are worried about how you will get through it all, you should consider bankruptcy.

Edward D. Alkalay is a partner at Alkalay & Smillie PLLC and can be reached at (603)447-8994 or ed@northconwaylawyers.com. (This article conveys general information and should not be relied on for legal advice without further research and/or consultation with an attorney.)

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