Bankruptcy FAQ

1. Must I appear before a Judge?

A debtor's involvement with the bankruptcy judge is usually very limited. A typical chapter 7 debtor rarely will appear in court or even see the bankruptcy judge.  A chapter 13 debtor only may have to appear before the bankruptcy judge at a plan confirmation hearing. Usually, the only formal proceeding at which a debtor must appear is the meeting of creditors, which is usually held in a large room at the courthouse. This meeting informally is called a "341 meeting" because section 341 of the Bankruptcy Code requires that the debtor attend this meeting so that the Bankruptcy Trustee or creditors can question the debtor about debts and property.  A Pagter and Miller attorney is by your side at this step of the case.


2. Will a bankruptcy filing stop the foreclosure of my home?

Almost always.  A chapter 13 bankruptcy often offers individuals an opportunity to save their homes from foreclosure. A chapter 7 bankruptcy usually stops the foreclosure, but only temporarily.  By filing a chapter 13, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time. Nevertheless, they must still make all mortgage payments that come due during the chapter 13 plan on time.


3. Will filing a bankruptcy stop collection calls?

The automatic stay provides a period of time in which all judgments, collection activities, foreclosures, and repossessions of property are suspended and may not be pursued by the creditors on any debt or claim that arose before the filing of the bankruptcy petition.  A stay of creditor actions against the debtor automatically goes into effect when the bankruptcy petition is filed pursuant to 11 U.S.C. §362(a) of the Bankruptcy Code. The filing of a petition, however, does not operate as a stay for certain types of actions listed under this Code section.  As long as the stay is in effect, creditors generally may not initiate or continue lawsuits, wage garnishments, or even make telephone calls demanding payments. The bankruptcy clerk gives notice of the bankruptcy case to all creditors whose names and addresses are provided by the debtor.


4. Can I protect my property from the claims of my creditors?

Among the schedules that an individual debtor will file is a schedule of "exempt" property. The Bankruptcy Code allows an individual debtor to protect some property from the claims of creditors or from sale by the chapter 7 Trustee because it is exempt under federal bankruptcy law or under the laws of the debtor's home state. 11 U.S.C. §522(b).


5. What is a discharge in bankruptcy?

A bankruptcy discharge releases the debtor from personal liability for certain specified types of debts. In other words, the debtor no longer legally is required to pay any debts that are discharged. The discharge is a permanent court order prohibiting the creditors of the debtor from taking any form of collection action on discharged debts, including legal action and communications with the debtor, such as telephone calls, letters, and personal contacts.

Although a debtor is not personally liable for discharged debts, a valid lien (i.e., a charge upon specific property to secure payment of a debt) that has not been avoided (i.e., made unenforceable) in the bankruptcy case survives a discharge.  Therefore, a secured creditor may enforce the lien to recover the property secured by the lien but not seek payment from the debtor.


6. Are all of the debtor's debts discharged or only some?

Not all debts are discharged. The debts discharged vary under each chapter of the Bankruptcy Code. Section §523(a) and §1328(a) of the Code specifically excepts various categories of debts from the discharge granted to individual debtors. Therefore, the debtor will be liable for those debts after bankruptcy. Congress has determined that these types of debts are not dischargeable for public policy reasons (based either on the nature of the debt or the fact that the debts were incurred due to improper behavior of the debtor).

The most common types of nondischargeable debts are certain types of tax claims, debts not set forth by the debtor on the lists and schedules the debtor must file with the court, debts for spousal or child support or alimony, debts for willful and malicious injuries to a person or property, debts to governmental units for fines and penalties, debts for most government funded or guaranteed educational loans or benefit overpayments, debts for personal injury caused by the debtor's operation of a motor vehicle while intoxicated, debts owed to certain tax-advantaged retirement plans, and debts for certain condominium or cooperative housing fees. Many of the types of debts described in sections §523(a)(2), (4) and (6) (obligations affected by fraud or maliciousness) are not automatically excepted from discharge. Creditors must file and win a lawsuit in the bankruptcy court to determine that these debts are excepted from discharge.


The foregoing was excerpted or quoted from Bankruptcy BASICS, Revised Third Addition, April 2006

Public Information Series
Bankruptcy Judges Division
Administrative Office of the United States Courts

While the information presented is accurate as of the date of publication, it should not be cited or relied upon as legal authority. It should not be used as a substitute for reference to the United States Bankruptcy Code (title 11, United States Code) and the Federal Rules of Bankruptcy Procedure, both of which may be reviewed at local law libraries, or to local rules of practice adopted by each bankruptcy court.