Steven L. Lefkovitz - Attorney At Law

Here are some frequently asked question about bankruptcy:

(1) What is a Chapter 7 Discharge?
It is a court order releasing a debtor from all of his or her dischargeable debts and ordering the creditors not to attempt to collet them from the debtor. A debt that is discharged is one the debtor is released from and does not have to pay. Some debts, however, are not released by a chapter 7 discharge, and some persons are not eligible for a chapter 7 discharge.

(2) How does filling under chapter 7 affect lawsuits and attachments that have already been filed against a debtor?
The filing of a chapter 7 case automatically stays or stops most lawsuits and attachments that have been filed against a debtor. A few days after the chapter 7 is filed, the court will mail a notice to all creditors ordering them to refrain from any further action against a debtor. If a debtor cannot wait this long, it is permissible for him or his attorney to notify one or more of the creditors of the filing of the case. Any creditor who intentionally violates this court order may be liable to the debtor in damages.

(3) May employers or government agencies discriminate against persons who file under chapter 7?
It is illegal for either private or government employers to discriminate against a person as to employment because that person has filed under chapter 7. It is also illegal for local, state, or federal government units to discriminate against a person as to the granting of licenses (including a driver's license), permits and similiar grants because that person has filed under chapter 7.

(4) Under what conditions should a husband and wife both file under chapter 7?
Both husband and wife should file if some debts to be discharged are owed by both spouses. If both spouses are liable for some of the debts and only one files under chapter 7, the creditors often try to coerce the no filing spouse into paying the debts, even if he she has no income or assests.

(5) When is Chapter 13 preferable to Chapter 7?
Chapter 13 is usually perferable to the debtor who (1) who wishes to repay all or most of their unsecured debts and has the income with which to do to so in a reasonable time, (2) has valuable nonexempt property pledged as security for debts, either of which they would lose if they filed under chapter 7, (3) is not eligible for discharge under chapter 7, (4) has one or more substantial debts that are not dischargeable under chapter 7, or (5) has sufficient assests with which to repay their debts, but needs temporary relief from their creditors in order to do so.

(6) How does Chapter 13 compare to a private debt consolidation service?
Under chapter 13, the court possesses the power to aid the debtor the private debt consolidation services do not have. For example, the court had the power to prohibit the creditors from attaching or foreclosing on the debtor's property, the power to force unsecrued creditors to accept chapter 13 plan that does not pay their claims in full, and the power to discharge a debtor from unpaid portions or debts. Private debts consolidation services have none of these powers.

(7) How may secured creditors be dealt with under Chapter 13?
There are 4 methods of dealing with secured creditor under chapter 13, (1) they may accept the proposed plan, (2) they may be allowed to retain their lien and be paid the full amount of their secured claim under the plan, (3) their collatoral may be surrendered to them, or (4) they may be dealt with outside the plan. It is important to realize that a secured creditor is considered to have a secured claim only to the extent of the value of the property securing the claim. For example, if a secured creditor has a mortgage on an automobile, and if the automobile is worth $500, then that creditor has a secured claim for only $500, regardless of how much is owed to them. If the debtor is at fault to a secured creditor, the default must be cured (made current) within a reasonable time. Also, interest must be paid on secured debts.

(8) May a self-employed person file under Chapter 13?
A person meeting the eligibility requirements may file under chapter 13 if their business in not incorporated. A debtor who owns their own business is normally permitted to continue to operate the business during the chapter 13 case.

Steven L. Lefkovitz
618 Church Street • Suite 410
Nashville, TN 37219