Bankruptcy FAQ

While most of these FAQs are general to bankruptcy across the country, some of the answers will be specific to Connecticut bankruptcy laws and to particular situations.

  1.   What are the different types of bankruptcy available?
  2.   Is consumer bankruptcy still available under the new bankruptcy law?
  3.   I am having trouble paying my bills. Should I file bankruptcy?
  4.   What actions must a collection agency avoid?
  5.   How can I find out whether filing bankruptcy would be the right decision for me?
  6.   What is the Automatic  Stay?
  7.   Does the Automatic Stay always apply and if so, for how long?
  8.   Is it too late to file bankruptcy if I’m being sued or have a judgment against me?
  9.   What does it mean to bankrupt or discharge a debt?
  10. What Property Can I Keep (Exemptions)?
  11. Can I pick and choose who to list in my bankruptcy case?
  12. Can you be fired or denied employment because of a bankruptcy?
  13. Can I remove liens against my property?
  14. Are all of my debts dischargeable in a bankruptcy case?

Is bankruptcy still available under the new bankruptcy law in Connecticut ?
In 2005, Congress made sweeping changes to the U.S. Bankruptcy Code, primarily in connection with consumer bankruptcy. In general, the new law makes consumer bankruptcy more difficult, time-consuming, and expensive. Still, Chapter 7 relief is still available for 90 to 95% of the consumers who need it. Those who are not eligible for Chapter 7 may be able to find relief by way of a Chapter 13 payment plan bankruptcy, paying back in most cases a small fraction of what is actually owed.

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I’m having trouble paying my bills. Should I file bankruptcy?
Many people run into financial problems from time to time. Sometimes, the situation is temporary and can be resolved before it gets out of control. But if you are hit with an expense that was never anticipated, such as a large, uninsured medical bill, you may find it impossible to work it into your monthly budget. An experienced bankruptcy attorney will be able to provide you with the guidance you need.

In some cases, what appears to be a small problem may be a symptom of a larger problem. For instance, you may be making your monthly payments on time, but find it necessary to borrow money (for instance, by taking cash advances on credit cards) to meet your living expenses. If this pattern continues over a period of time, at some point, the debt will build up to the point where you cannot borrow enough money fast enough to stay current on your payments.

Like a snowball rolling downhill, when debts are not paid on time, extra interest and penalties can build up to a crushing weight. This can lead to collection letters, harassing telephone calls, and even lawsuits, judgments and wage garnishments. If you feel that your debt problem is heading in this direction, you should review the situation with an attorney experienced in bankruptcy law, to help you decide whether bankruptcy would be appropriate for you.

In some instances, bankruptcy may not solve the problem, or it may involve potential risks and expenses which would make it inappropriate. A good bankruptcy attorney will take the time to understand the facts of your particular situation, and will give you advice tailored to meet your specific needs.

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What actions must a collection agency avoid?
Debtor collectors are notorious for their harassing tactics they sometimes use to collect a debt here in Connecticut . In many instances, these collectors overstep their legal right to collect a debt that and you may possible have a law suit against such creditorl Under the Federal Fair Debt Collection Practices Act, a collection agency may not act in the following ways in Connecticut :

Third-party communications. The collection agency cannot contact third parties other than the debtor’s attorney or a credit bureau for any reason other than to locate the debtor. Collection agents who contact third parties must state their names, and may only add that they are confirming or correcting information about the debtor. They cannot give the collection agency’s name unless asked directly. They cannot state that they are calling about a debt. Collection agents may not contact a third party repeatedly unless they believe an earlier response was wrong or incomplete and that the third party has revised information. Further, collection agents cannot communicate with third parties by postcard or by correspondence that uses words or symbols that betray their collection motive.

Attorney-represented debtor. A collection agency cannot contact the debtor directly if counsel represents him or her unless the debtor gives the collection agency specific permission to do so. Once you retain my office to represent you may refer those harassing calls to my office. From that point forward, they are not permitted to contact you anymore and all verbal communication must go though my office.  They can still send you letters.

Debtor communications. Collection agents may not contact debtors before 8:00 a.m. or after 9:00 p.m., or at another inconvenient time or place. Collection agents also may not contact a debtor at work if he or she knows that the employer bans receipt of collection calls while on the job.

Harassment or abuse. Agents cannot threaten or use violence against the debtor or another person. They cannot use obscene or profane language. They cannot publish a debtor’s name on a blacklist or other public posting. Agents cannot call repeatedly or contact the debtor without identifying themselves as bill collectors.

False or misleading statements. Agents may not lie about the debt, their identity, the amount owed, or the consequences for the debtor. They cannot send documents that resemble legal filings or court papers. Agents cannot offer incentives to disclose information.

Unfair practices. Agents may not engage in unfair or shocking methods to collect, including adding interest or fees to the debt, soliciting post-dated checks by threatening criminal prosecution, calling the debtor collect, or threatening to seize property to which the agency has no right.

If any of these actions occurred, then you may be able to sue your creditors and receive damages for their violation of federal lawIf any of these violations occurred, then please give my office a call so I can discuss all of your options.

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How can I find out whether filing bankruptcy would be the right decision for me?
Just call my office to set up an free initial consultation meeting. Prior to meeting you will be asked to fill out a questionnaire and bring it with you to the appointment. This questionnaire will allow provide me with basic information so when we meet I will be fully informed about your particular situation and prepared to discuss your options at our appointment. The meeting takes approximately 1/2 hour.

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What is the automatic stay?
This is an injunction that goes into effect automatically upon the filing of a bankruptcy case in Connecticut. It strictly prohibits the commencement or continuation of any acts to collect on a debt that arose prior to filing the bankruptcy. Think of the automatic stay as a court ordered time out against your creditors. This includes enforcement of judgments, creating or perfecting liens, and many other actions under Connecticut Law. (It does not apply to collecting alimony maintenance and support). If any creditor violates this Bankruptcy Court Ordered, they could be held in contempt and then your creditors could be liable to pay you sanctions.

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Does the automatic stay always apply when a bankruptcy case is filed, and if so, for how long?
Generally, the automatic stay goes into effect immediately upon filing your case with the bankruptcy Court located in Denver and against acts taken towards you personally until you receive your bankruptcy discharge. Stays against actions towards property you own may last longer or shorter depending on what happens to that property during your case. For cases filed on or after October 17, 2005, there are several limits to the length of the automatic stay: 1. If you had a prior bankruptcy case dismissed under any chapter within one year prior to the filing of your present case, the automatic stay will terminate 30 days after your new case is filed, unless you obtain a bankruptcy court order extending it, for cause and a showing of good faith as to why the prior case was dismissed. 2. If you had more than one prior bankruptcy case dismissed under any chapter within one year prior to the filing of your present case, the automatic stay does not go into effect at all unless and until the court orders it into effect, after a noticed hearing. There are other new limitations on the automatic stay that can be discussed during an appointment.

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Is it too late to file bankruptcy if I’m being sued or already have a Connecticut judgment against me?
No. It is almost never too late to file bankruptcy. Assuming that it is a dischargeable debt (meaning one that is not incurred through fraud, or a domestic support obligation, or one of the others Congress has excluded from discharge), you can still get rid of the debt even if a creditor has filed a lawsuit against you and received a judgment. You can even get rid of the debt if they have a lien against your property (although the lien will remain against the property unless you are able to remove it during the bankruptcy proceeding–see below). These liens can be removed during the bankruptcy proceedings.

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What does it mean to bankrupt or discharge a debt?
Many people refer to getting rid of their debts in bankruptcy as “bankrupting” the debt. They often ask “can I bankrupt this debt?” They also ask can I “go bankruptcy?” That is incorrect terminology. The legal term for this is “discharge”. What happens in bankruptcy (assuming you are successful) is that your legal obligation to pay on your debt will be discharged. Debts are never technically eliminated. They still exist after a bankruptcy, but you no longer have the legal obligation to pay on the ones that are discharged (or, bankrupted if you prefer).

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What Property Can I Keep (Exemptions)?
Exemptions are protected allowances for the value in certain assets. For example, a homestead exemption protects the equity you have in your home, up to a certain value. All States have different exemption laws which protect the value in certain assets. In many circumstances, you will be able to keep all of your property. I can’t tell you how many times I see a person in court loose a house, car or motorcycle because they either did not have an attorney or used a bankruptcy filing service and did not have any attorney representation. Hiring an attorney is a small price to pay in order to insure that you will not have any unexpected surprises.

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Can I pick and choose who to list in my bankruptcy case?
Absolutely not. I don’t know where people get this idea. You must list ALL of your assets and ALL of your debts in ANY chapter of bankruptcy. You may voluntarily repay anybody you want after your case is concluded (and you are required to repay any debts that are not discharged), but you are still required to list all of your creditors.

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Can you be fired or denied employment because of a bankruptcy?
No. While an employer can usually find some reason to fire anyone, they cannot use bankruptcy as a basis for doing so. This is set forth in Section 525 of the Bankruptcy Code.

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Can I remove liens against my property?
Yes. Under certain circumstances, judicial liens and “nonpossessory, nonpurchase-money security interests”…may be removed if, based on the value of the asset and the amount of senior liens and encumbrances against it on the date your bankruptcy case is filed, the fixing of the lien causes it to “impair” an exemption to which you are entitled under Connecticut (or other applicable) law. This is another reason to hire an experienced bankruptcy attorney to interpret all the legalese just recited.

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Are all of my debts dischargeable in a bankruptcy case?
No. There are many debts which Congress has excluded from discharge. A few of these are:

  1.   Debts incurred by fraud or false pretenses;
  2.   Debts incurred by a false statement in writing (such as false credit application);
  3.   Debts incurred by embezzlement or larceny;
  4.   Spousal support or child support obligations;
  5.   Debts incurred by willful AND malicious injury;
  6.   Debts resulting from death or personal injury while operating a vehicle while intoxicated;
  7.   Criminal fines and restitution;
  8.   Marital Equalization obligations (Ch. 7 only, these may be discharged in a Ch. 13);
  9.   Income taxes for tax years less than 3 years ago;
  10. Fines and penalties owed to a governmental unit;
  11. Student Loans (unless you can prove “undue hardship” which is almost impossible to do).

These are the main types excepted from discharge, although there are others that are not listed here.

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