Can I Still Use the Business Funds While in Bankruptcy?
Generally a debtor may continue to use assets in the ordinary course of business without court approval. There are, however, certain restrictions on the debtor’s use of cash collateral. The debtor in possession cannot use, sell, or lease "cash collateral" unless each creditor with an interest in the collateral consents or unless the court authorizes such use. To obtain court permission to use cash collateral, such as proceeds of stored grain, milk proceeds, the proceeds of livestock sales, or other business income, the debtor in possession must provide any creditor who holds a lien on such property with adequate protection. In other words, the creditor's secured position must be protected and not harmed by the use of the creditor's collateral.
Is the Business Authorized to Borrow Funds while in Bankruptcy?
The debtor in possession is authorized to borrow funds. He may obtain unsecured credit in the ordinary course of business without court approval. And he may obtain secured credit by granting a lien on unencumbered property of the estate or a subordinate lien on encumbered property with court approval. Finally, if the debtor cannot obtain credit on either an unsecured basis or by using previously unencumbered assets, a super priority lien may be obtained if he can establish that any lender who also has a lien on the property will be adequately protected.
Will my bankruptcy be published in the paper?
A bankruptcy is on the public record. However, most newspapers no longer publish bankruptcy information. While they still publish foreclosures and court actions, bankruptcy is a federal action and is generally only available on the United States Bankruptcy Court’s website.
Will I lose my vehicle?
If you have a loan secured by your vehicle and are up-to-date on your payments, your bank and the court may allow you to reaffirm the original contract on the vehicle. If you are behind on payments you will need to get them up-to-date or possibly enter into a Chapter 13 bankruptcy to cure any defaults.
If I surrender my home or vehicle will I be responsible for the difference between the loan amount and the amount my home or vehicle sells for?
Generally speaking, outside of bankruptcy you could be held liable for the deficiency or remaining debt. However, these deficiencies are discharged in bankruptcy, and you will not be responsible for repaying them.
Is there a court hearing?
You will have to go to what is called a “Section 341 hearing.” This hearing is also called a trustee meeting or a meeting of creditors. Generally, you will meet with the trustee for a 5-10 minute hearing. Your attorney will be there with you and as the name implies, creditors are allowed to attend and ask questions. The trustee will verify that you are who you say you are and put you under oath to answer the questions concerning your bankruptcy filing. This meeting is generally where the trustee determines whether your case is an “asset case” or a “no asset case.” Most cases are determined to be a no asset case, which means the trustee determines that there is no property of yours that can be sold for the benefit of the creditors.
Could I lose my job because I filed bankruptcy?
It is illegal to discriminate against a person because they filed bankruptcy.
What will happen to my credit score after I file bankruptcy?
There are many factors that go into the determination of your credit score including but not limited to filing for bankruptcy. A person's credit score and credit report can fluctuate within the course of a week. Here are some of the factors that influence your credit score:
- Payment History: This has the largest impact on your credit score. Missing higher payments will impact more than missing lower payments. Delinquencies in the past two years have a greater impact.
- Outstanding Credit Balances: The ratio between outstanding balance and available credit is one-third of your credit score. Keep the ratio under 10%.
- Credit History: This is the length of time a credit line was established. A long record of consistent payments on older accounts is positive, while there are small penalties for closing old accounts.
- Type of Credit: Auto loans and mortgages will have the highest impact on your score. A mixture is best and store cards have minimal impact compared to bank credit cards.
- Inquires: The number of inquires on a consumer’s credit report within a six month period will affect your score. The most a score can be reduced is by 50 points, if it shows 10 inquiries or more.
Will the trustee take my furniture, retirement, or other personal assets?
You are required to disclose all of your personal and real property and make a reasonable inquiry into the values of those items. There are federal and state exemptions that your attorney will go over with you to protect most if not all of the equity in your personal and real property.
Should I try to consolidate my debt first with a Debt Resolution Firm or Debt Consolidation Agency?
Be extremely cautious if you decide to work with a Debt Resolution Firm or Debt Consolidation Agency. There are some reputable ones out there but most are just frauds. Check with the Better Business Bureau and the Consumer Protection Agency in your state before sending them your money.
Things to consider when you want to consolidate your debt:
- You may owe 1099-C income taxes on the entire amount of “forgiven debt”.
- You will continue to accrue late fees, over limit charges, and any other penalties while you are in the consolidation program.
- You will continue to get harassing phone calls at home, work and at your neighbors and friends house while you are in these programs.
- You will get sued and possibly garnished by your creditors while you are in the programs.
- The Firms and Agencies get their money from you upfront through your first few months of payments to them while they do nothing on your behalf with your creditors.
- Generally, these agencies do not do anything that you cannot do yourself. If you wait long enough you will be offered the same settlement that the Firms and Agencies will eventually get you.
- The overwhelming majority of people who enter consolidation programs do not stick with the payments long enough to get a settlement.
What if I am served with divorce papers?
If you agree with all the terms of the divorce as listed in the petition, you do not need to respond. If you want to challenge the terms listed in the petition, you must file a written answer, (also called a “response”) with the court within the time stated on the petition and appear in divorce court for the temporary order hearing date.
How much does a divorce cost?
Court costs and filing fees range from $100-$400. If you hire a lawyer, you will need more money. The more complex the divorce is, the more it will cost. The more issues you and your spouse disagree about, the more work your lawyer will have and the more expenses you will have. Your attorney will explain the fee and billing procedures at your first conference.
Can I take back my former name?
Yes. The judge must give you back a former name if you ask for it in a divorce.
What is mediation?
Mediation is one or more private counseling sessions in which a trained person tries to help you and your spouse reach an agreement. The judge might order both of you to go to mediation in an attempt to agree on divorce issues such as child custody, support, parenting time and property division.
All mediation proceedings are private and confidential. Neither party is required to agree to any solutions proposed by the mediator. If you are able to reach agreement on some or all of the issues, a written summary of that agreement is usually sent to the lawyers by the mediator.
If you and your spouse cannot agree and one of you will challenge the divorce issues in court, a judge will have to make a decision about the issues.
What is a legal separation?
A legal separation is a court order that states who gets the children, who pays support for the children, whether spousal support is ordered, and who gets what property. You might want a legal separation if your religious beliefs prohibit divorce, if you or your spouse have not lived in Wisconsin long enough to file for divorce, or if one of you needs to be covered by the other’s medical insurance. A legal separation costs about the same as a divorce. Filing for legal separation does not prevent a divorce from being filed. The main difference between a legal separation and a divorce is that you are still married after a legal separation. Therefore, you still have the right to inherit property from your spouse if you are legally separated. If you are divorced, you lose that right.