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If I File Bankruptcy, Will I Lose My Car or House?

It depends. Under state law, you are entitled to certain exemptions that apply to one's home and car. If you have any equity in your house after deducting the mortgage and exemption, that leftover equity may be claimed by the trustee for the benefit of your unsecured creditors. Similarly, if your motor vehicle is worth more than the loan against it and the applicable exemption, the trustee may claim such equity. If there is no equity for the trustee to proceed against in a house or car, and you wish to keep the residence and motor vehicle, you must continue to pay the monthly loan amount to the mortgage company or car loan company.

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Can I Just File Against My Medical Bills or Credit Card Debt Only?

No. If you file a bankruptcy petition, you must list all unsecured debts, such as credit cards, medical and hospital bills, loans and past-due utility bills. You must also list all secured debts, such as your mortgage and car loan. Even debts that are not dischargeable, such as student loans and child support obligations, must be listed in the petition.

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Do I Have to List All My Assets?

Yes. You not only have to list all of your property, both real estate and personal, such as household goods, car, bank accounts, boat and cash surrender value of life insurance policies, but you must also indicate whether you have any retirement plans or personal injury cases that are pending. Failure to list all assets can subject you to criminal charges.

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Can I Stop Paying Child Support or Student Loans?

Generally, no. In fact, during the bankruptcy proceeding, you must keep paying your child support obligations and your monthly student loans. If the reason you had to file a bankruptcy was a critical loss of income, you may be able to work out a hardship agreement with the student loan agency on a permanent or temporary basis.

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If I Have a Divorce Decree That Requires Me to Pay Certain Debts, Will Filing a Bankruptcy Petition Discharge Them?

No. If you were ordered to pay certain debts of the marriage in the decree, you will still be obligated to pay them after the bankruptcy is over.

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If a Creditor Has a Wage Deduction Against My Earnings, Will That Stop When I File a Bankruptcy?

Yes. However, any wages deducted prior to the bankruptcy filing belong to the creditor, even though they are not paid until weeks after the filing. Additionally, if there is a wage deduction in effect, your employer will have to be notified of the filing so that it can stop the deduction.

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If I Have Been Sued and Am Supposed to Appear in Court, What Effect Will Filing a Bankruptcy Have?

While a filing will automatically stop most legal proceedings, you or your attorney should contact the other party and the court to notify them of the filing. This will stop the legal proceedings from continuing, but the case will not be dismissed until the court approves your bankruptcy petition and discharges your debts. Filing a bankruptcy will not stop child support enforcement matters or eviction actions.

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Does Filing Bankruptcy Stop a Creditor From Pursuing My Co-Debtors?

In a Chapter 7 bankruptcy, no. Generally, if you keep paying on that particular debt, such as a car, the creditor will not pursue a co-debtor. If you do not continue to pay, the co-debtor will be responsible for it. In a Chapter 13 bankruptcy, the creditor will normally be bound by the scheduled payments to it under the Plan and not be able to proceed against a co-debtor until the Plan of repayment is completed.

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Do I Have to Attend Any Counseling Sessions?

You have to attend two counseling sessions before you are granted a discharge of debt. The first session goes over your financial picture, your current income, expenses, assets and debts. This one must be completed before you can file your bankruptcy petition. The second session, which you attend after you file, concentrates on how you can reduce your expenses. Each session lasts about one hour and 15 minutes and can be taken by telephone or on the internet. The counseling facility will charge you for each session, but such charge is usually under $65 per session. Upon completion of the sessions, you will receive a certificate of completion, which must be filed with the court.

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If I File Bankruptcy on Past Utility Bills, Will I Be Able to Get Service Afterward?

Yes; however, you may be charged a hookup fee or security deposit as a condition for reconnection. This can occur even if your last month's bill was paid in full.

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If My Income Is Different Every Month, How Does the Trustee Determine My Monthly Income?

The trustee goes by the average of the last six months. Since this may give an unrealistic monthly wage amount — for example, due to overtime wages that may not be available now — you should consult with a lawyer to figure out when you should file. Additionally, even if only one spouse files, the income of the nonfiling spouse will be calculated into the average income if the spouses still live together. In that case, the entire family's expenses are also considered.

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Must My Spouse File With Me?

Generally your spouse should join you in filing. All medical bills, by law, are joint debts. Most secured debts are joint, such as a house or motor vehicle, and most loans are signed by both spouses. If, as in the case of a second marriage, one spouse is signed on most debt individually, that spouse can file without including the other spouse. However, in determining the household income and household expenses, both spouses are included. This is an issue which should be discussed with your attorney.

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What Is a Reaffirmation Agreement?

If you wish to keep a specific debt such as a motor vehicle, the loan company will ask you to execute a reaffirmation agreement. This is essentially a new loan that preserves the loan company's right to repossession in case you default in the payments. Several factors should go into your decision, such as the amount of the remaining balance, the value of the vehicle, and your ability to make the proposed monthly payment. Reaffirmation agreements are a very important step in the bankruptcy process, and you should discuss these agreements with your attorney before signing. If you insist on reaffirming a specific debt but it appears that your budget will not allow it, you will be forced to have a hearing and a judge will determine whether you should sign it or not.

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Will the Fact That I Filed Bankruptcy Be Published Anywhere?

While bankruptcy petitions are public records, such filings are normally not published in the local newspaper. An exception would be if the filing debtor was a public figure in the Central Illinois area. Such filings will be picked up by the credit reporting agencies as well as many banks in their normal records search.

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If I List Doctors or Hospitals on My Petition, Will I Be Able to Get Medical Treatment From Them After I File?

While doctors can refuse treatment to anyone, normally they do not and since they advertise for new clients, it makes sense for them to keep treating current patients. Hospitals cannot refuse treatment because a patient has filed bankruptcy.

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Will I Have to Pay Anything to the Trustee After I File Bankruptcy?

If you have nonexempt assets that the trustee can liquidate, you will have the opportunity to pay such liquidated equity to the trustee. Secondly, if you inherit money within six months after you file the petition, that money will have to be turned over to the trustee to pay unsecured debt. Thirdly, if you get divorced within six months after you file your petition and receive money or other assets in the divorce, that money or asset will have to be turned over to the trustee to pay unsecured debt.

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Will Any Debt I Incur After I File Be Discharged?

No. Only that debt incurred before you file the bankruptcy petition will be discharged or reaffirmed. Therefore it is important to time your filing to include as much debt as possible. For instance, if you are in the middle of a medical procedure, you should wait until it is completed before filing.

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Are There Time Limits on Filing Bankruptcy?

You may not file a Chapter 7 bankruptcy until eight years pass after your last Chapter 7 filing. There are other rules about timing relating to subsequent Chapter 13 filings that you should discuss with your attorney.

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What Is a Trustee and What are His or Her Duties?

The trustee is a court-appointed attorney who reviews your bankruptcy petition to determine if it conforms with the requirements of the Bankruptcy Code. The trustee also presides over the hearing, called the first meeting of creditors, where he or she asks you questions concerning your financial status and other background. The trustee's job is to discover nonexempt assets to liquidate and pay to unsecured creditors. The questions the trustee asks are intended for that purpose. The trustee has the power to sell or otherwise dispose of nonexempt assets after determining that there is in fact equity in excess of your exemptions.

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What Happens at the First Meeting of Creditors?

The first meeting of creditors is the name of the hearing you're required to attend after you file your bankruptcy petition. While it is a legal proceeding it is not usually held in a courtroom. After your name is called you will proceed to sit in front of the trustee, show him or her your driver's license or state identification card and Social Security card and be put under oath. The trustee will then ask you questions for approximately 12 minutes, and you will answer truthfully to the best of your knowledge. Any creditor has the right to appear and ask you questions, but normally no creditor appears, especially if the attorney has conferred with interested creditors prior to such meeting.

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