What is it like to file Chapter 7 bankruptcy?
October 28, 2016 4:14 PM Subscribe
I am looking at filing Chapter 7 bankruptcy in the next month. I would like to know what this process is like and how nerve-wracking it is and how anxious I, an anxious person, can expect to be throughout. You are not my bankruptcy lawyer, nor are you in my situation with my specifics, but I would like to hear about your experiences. More about my personal situation under the cut so you can give advice if you feel so inclined.
I make about $51k/year, often cannot afford food, and sometimes buy cat food on amazon and charge it to my mom's credit card so the cats can get fed. I currently spend approx. 1/2 my monthly paycheck on paying debts. Rent is about 1/3. I do not foresee my living arrangement changing, as my credit is in the shit, and it's very difficult to find a place/roommates that's okay with cats, and moving is expensive.
Most of my debt is credit card debt ($700/month). If you feel moral about credit card debt, it's mostly from when Hurricane Sandy destroyed my house and I had to replace things not covered by insurance, and also when I lost my job and had to pay for medical coverage/doctors/drugs. I also somehow thought it was a good idea to put $7k in taxes on a credit card. I was young and stupid.
Also stupid: I was scared and went through credit card consolidation instead of talking to credit card companies myself, which is why the payment is so high, even though the total owed is only somewhere around $20,000.
About $200 per month is a car payment. I refuse to give up the car for psychological reasons.
About $200 per month is student loan payments, and they are already as low as Navient will go, despite both fighting and crying.
A friend of mine is a bankruptcy lawyer and recommended bankruptcy upon hearing about this stuff. If you have a better idea, I would be delighted to hear it.
If not, I really do what to her about what it's like to go through Chapter 7, especially if it is not actually super anxiety-provoking and full of people making moral judgments about your life and finances the way I imagine it is. Thanks, green.
I make about $51k/year, often cannot afford food, and sometimes buy cat food on amazon and charge it to my mom's credit card so the cats can get fed. I currently spend approx. 1/2 my monthly paycheck on paying debts. Rent is about 1/3. I do not foresee my living arrangement changing, as my credit is in the shit, and it's very difficult to find a place/roommates that's okay with cats, and moving is expensive.
Most of my debt is credit card debt ($700/month). If you feel moral about credit card debt, it's mostly from when Hurricane Sandy destroyed my house and I had to replace things not covered by insurance, and also when I lost my job and had to pay for medical coverage/doctors/drugs. I also somehow thought it was a good idea to put $7k in taxes on a credit card. I was young and stupid.
Also stupid: I was scared and went through credit card consolidation instead of talking to credit card companies myself, which is why the payment is so high, even though the total owed is only somewhere around $20,000.
About $200 per month is a car payment. I refuse to give up the car for psychological reasons.
About $200 per month is student loan payments, and they are already as low as Navient will go, despite both fighting and crying.
A friend of mine is a bankruptcy lawyer and recommended bankruptcy upon hearing about this stuff. If you have a better idea, I would be delighted to hear it.
If not, I really do what to her about what it's like to go through Chapter 7, especially if it is not actually super anxiety-provoking and full of people making moral judgments about your life and finances the way I imagine it is. Thanks, green.
Response by poster: More questions:
- What is the paperwork like?
- What do you have to do at the hearing?
- What does the attorney need from you?
posted by shamash at 4:50 PM on October 28, 2016
- What is the paperwork like?
- What do you have to do at the hearing?
- What does the attorney need from you?
posted by shamash at 4:50 PM on October 28, 2016
I filed a couple of years ago and it was easy enough that I don't really remember a lot of specifics to tell you. I got the Nolo Press bankruptcy book and worked through the paperwork following their instructions. Filing in court was maybe half a day of sitting there while other people filed, and then five-ten minutes of talking to the... judge? Or whoever the paperwork gets filed with. Maybe a clerk? I did it myself with no attorney
posted by MsMolly at 5:15 PM on October 28, 2016 [2 favorites]
posted by MsMolly at 5:15 PM on October 28, 2016 [2 favorites]
Oh yeah, and the courtroom was super judgement-free. Everybody figured everybody else had a good reason to be there.
posted by MsMolly at 5:17 PM on October 28, 2016 [2 favorites]
posted by MsMolly at 5:17 PM on October 28, 2016 [2 favorites]
My parents went through a bankruptcy. They didn't get any judgment at the time nor did they afterwards. People declare bankruptcy all the time for a thousand different reasons, and it's becoming so much more common in our hellscape of an economy that it's pretty much on the level of admitting you need a bunion removed.
My parents said the most stressful part was getting all of their paperwork in order to begin with. Like they didn't even know how much debt they were in until they scraped together all of the records. If you already have that part taken care of then maybe the most stressful part is behind you.
posted by FakeFreyja at 7:04 PM on October 28, 2016 [3 favorites]
My parents said the most stressful part was getting all of their paperwork in order to begin with. Like they didn't even know how much debt they were in until they scraped together all of the records. If you already have that part taken care of then maybe the most stressful part is behind you.
posted by FakeFreyja at 7:04 PM on October 28, 2016 [3 favorites]
I filed in 2001. The paperwork isn't bad as the attorney filled most of it for me. He basically needed a list of all my debts and assets - any bank accounts, cash, property, etc. The hearing was pretty straightforward. The magistrate asked me a few questions and it was over before I realized it.
I was able to keep the car under the existing loan. My student loans were a mix of federally guaranteed (non-dischargable) and private (which went to my cosigner). Keep on top of the student loan people. They told me as soon as they found I was filing, they couldn't talk to me about the loans... including that the private loan was defaulting to my cosigner. However, they happily took my payments. If it's remotely complicsted, Sallie Mae will find a way to turn it into a giant trainwreck.
posted by neilbert at 7:40 PM on October 28, 2016 [2 favorites]
I was able to keep the car under the existing loan. My student loans were a mix of federally guaranteed (non-dischargable) and private (which went to my cosigner). Keep on top of the student loan people. They told me as soon as they found I was filing, they couldn't talk to me about the loans... including that the private loan was defaulting to my cosigner. However, they happily took my payments. If it's remotely complicsted, Sallie Mae will find a way to turn it into a giant trainwreck.
posted by neilbert at 7:40 PM on October 28, 2016 [2 favorites]
Without bankruptcy, we could not have a credit-based economy. Don't torture yourself over it.
The most important information your attorney will need to have is every single claim against you. If they are not declared to the court, they often cannot be discharged in the bankruptcy. This will include older-but-not-beyond-the-statute-of-limitations debts outside credit cards, ones that collectors may or may not be chasing you for. Pull your credit report, but if you happen to know of debts that haven't been reported (e.g., some hospitals won't report to credit agencies), you need to include those, too.
posted by praemunire at 10:13 PM on October 28, 2016 [4 favorites]
The most important information your attorney will need to have is every single claim against you. If they are not declared to the court, they often cannot be discharged in the bankruptcy. This will include older-but-not-beyond-the-statute-of-limitations debts outside credit cards, ones that collectors may or may not be chasing you for. Pull your credit report, but if you happen to know of debts that haven't been reported (e.g., some hospitals won't report to credit agencies), you need to include those, too.
posted by praemunire at 10:13 PM on October 28, 2016 [4 favorites]
Best answer: In my part of the country it's not even a courtroom per se. More than anything, it's like the DMV; a bunch of sitting around in marginally comfortable chairs in a large room with 30-50 other people, waiting for your name to get called. You go up to the front, sit at a conference table next to your lawyer and across from the bankruptcy trustee (who is not a judge, but an experienced bankruptcy attorney hired by the government), and have the hearing. If things aren't complicated it takes about 5-10 minutes. Everyone I've ever known go through it was extremely anxious beforehand, but not because of anything in particular about the hearing. In my district, at least, it's mostly a series of rote questions confirming your identity, the information you put down in the papers, whether anything has changed since you filed, whether you expect to receive any inheritance or other windfall in the next six months, etc. They may ask how your debts were incurred; you've got a good and easy to understand answer. You didn't waste your money on hookers and blow, you tried to rebuild your life after a natural disaster. You'll be answering most of the questions but your attorney will be right there with you to help you out if you need it.
By "complicated" I mean the trustee thinks you're hiding something (DON'T HIDE ANYTHING), you've made weird transfers/disposed of assets recently and s/he thinks there's money that should have been received from that, etc. Creditors can technically show up but rarely do; when they do, especially in no-asset cases, it's basically a matter of the trustee saying, "Yup, you're a creditor. You want your money. I'll note that for the record." Unless you're perpetrating a fraud on the court the creditor won't usually have any way to interfere.
These hearings are open to the public, not that there's a lot of demand for that, but that means you can go ahead of time to experience the atmosphere, see a few hearings, and get a feel for the whole situation. You might feel less anxious if you know what to expect that way. Once you file your case you'll be assigned a judge (who you'll probably never see) and a trustee; if you can find out what day your trustee does hearings and go observe them you'll have an even better sense of how it goes.
Bankruptcy attorneys are not going to be judging you. They get into that line of work because they see it as a way to help people who need it. If you get any sense from your attorney that they're judging you or otherwise making you feel bad, feel free to talk to them about it or to switch to another attorney. You don't deserve to be humiliated by someone you're paying good money to.
Similarly, the trustees usually are former debtor-side BK attorneys, so they know what's up. And they've seen people doing waaaaay hinkier stuff than you could dream of trying, so as long as you're honest and straightforward with them they won't be judging either. In my experience the trustees are almost always fairly kind and sympathetic about debtors' personal problems, and wish them well after the BK discharge. Of course that won't stop them from vigorously pursuing answers to any questions they have about the case, so don't imagine that they're your friend, but also don't imagine that they're out to judge you. This is all null and void if your attorney says otherwise -- they will know your district and the trustees in it best.
Dress nicely but not too nicely; in my district nice jeans are acceptable for debtors, though trousers are better. You'll see all kinds at the courthouse but it makes a better impression on the trustee if you're not dripping in diamonds and furs, nor are you wearing a tube top and Daisy Dukes. Businessy is good. Something you'd wear to work in an office.
In some ways it's kind of like getting a pap smear. There's a lot of anxiety, you feel exposed, there's a short interaction that can be more or less uncomfortable depending on personal circumstances, and then it's over and you feel relieved. And I'll repeat the two most important things, because they are *really* important: be forthright with the court/trustee, and listen to your lawyer.
Best of luck to you. Remind yourself, if you start feeling self-conscious or judged, that the framers of the Constitution thought bankruptcy important enough to put it in the body of the Constitution, before even the Bill of Rights. (Also, the most frequent thing I've heard from debtors is that they wish they'd filed sooner; they're anxious and scared while they're going through the process, which is why they delay, but once it's over they are SO relieved).
posted by katemonster at 11:19 AM on October 29, 2016 [5 favorites]
By "complicated" I mean the trustee thinks you're hiding something (DON'T HIDE ANYTHING), you've made weird transfers/disposed of assets recently and s/he thinks there's money that should have been received from that, etc. Creditors can technically show up but rarely do; when they do, especially in no-asset cases, it's basically a matter of the trustee saying, "Yup, you're a creditor. You want your money. I'll note that for the record." Unless you're perpetrating a fraud on the court the creditor won't usually have any way to interfere.
These hearings are open to the public, not that there's a lot of demand for that, but that means you can go ahead of time to experience the atmosphere, see a few hearings, and get a feel for the whole situation. You might feel less anxious if you know what to expect that way. Once you file your case you'll be assigned a judge (who you'll probably never see) and a trustee; if you can find out what day your trustee does hearings and go observe them you'll have an even better sense of how it goes.
Bankruptcy attorneys are not going to be judging you. They get into that line of work because they see it as a way to help people who need it. If you get any sense from your attorney that they're judging you or otherwise making you feel bad, feel free to talk to them about it or to switch to another attorney. You don't deserve to be humiliated by someone you're paying good money to.
Similarly, the trustees usually are former debtor-side BK attorneys, so they know what's up. And they've seen people doing waaaaay hinkier stuff than you could dream of trying, so as long as you're honest and straightforward with them they won't be judging either. In my experience the trustees are almost always fairly kind and sympathetic about debtors' personal problems, and wish them well after the BK discharge. Of course that won't stop them from vigorously pursuing answers to any questions they have about the case, so don't imagine that they're your friend, but also don't imagine that they're out to judge you. This is all null and void if your attorney says otherwise -- they will know your district and the trustees in it best.
Dress nicely but not too nicely; in my district nice jeans are acceptable for debtors, though trousers are better. You'll see all kinds at the courthouse but it makes a better impression on the trustee if you're not dripping in diamonds and furs, nor are you wearing a tube top and Daisy Dukes. Businessy is good. Something you'd wear to work in an office.
In some ways it's kind of like getting a pap smear. There's a lot of anxiety, you feel exposed, there's a short interaction that can be more or less uncomfortable depending on personal circumstances, and then it's over and you feel relieved. And I'll repeat the two most important things, because they are *really* important: be forthright with the court/trustee, and listen to your lawyer.
Best of luck to you. Remind yourself, if you start feeling self-conscious or judged, that the framers of the Constitution thought bankruptcy important enough to put it in the body of the Constitution, before even the Bill of Rights. (Also, the most frequent thing I've heard from debtors is that they wish they'd filed sooner; they're anxious and scared while they're going through the process, which is why they delay, but once it's over they are SO relieved).
posted by katemonster at 11:19 AM on October 29, 2016 [5 favorites]
A trustee! Yes, that's the person I couldn't remember.
I was the only person at my courthouse that day filing my own paperwork without a lawyer, so he saved me for last, and questioned me about a couple of things I had written down, but he was very nonjudgmental and inclined to be lenient if I had typed something up slightly wrong, because it was clear that I wasn't hiding any assets. (I had a salary that was well within the range for filing, and didn't have any "fun" assets like jet skis or ATVs like some of the people filing did.)
posted by MsMolly at 12:16 PM on October 29, 2016 [1 favorite]
I was the only person at my courthouse that day filing my own paperwork without a lawyer, so he saved me for last, and questioned me about a couple of things I had written down, but he was very nonjudgmental and inclined to be lenient if I had typed something up slightly wrong, because it was clear that I wasn't hiding any assets. (I had a salary that was well within the range for filing, and didn't have any "fun" assets like jet skis or ATVs like some of the people filing did.)
posted by MsMolly at 12:16 PM on October 29, 2016 [1 favorite]
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posted by hazel79 at 4:26 PM on October 28, 2016 [5 favorites]