Cota & Zeiler APC

These are our most frequently asked bankruptcy questions:
  • What is bankruptcy?
    Bankruptcy is the court process which allows debtors, whether they are an individual or a business, who are unable to pay money owed to their creditors. This court process allows the debtor to either wipe out ("discharge") the debt or create a plan that will enable them to repay the money over time.
  • What is secured debt?
    Debt is either "secured" or "unsecured." Secured debts are debts secured by property. Secured debts usually arise by agreement. Auto loans and home mortgages are good examples of a typical secured debt arising by agreement--the bank is a co-owner of the property and retains the right to reclaim the vehicle and sell it to satisfy the debt in the event of non-payment. Secured debts may also arise involuntarily, usually in the form of a lien resulting from a court or government taxation process. Creditors with a security interest in property may seize the property and sell it to pay off the debt in the event of a bankruptcy.

    Unsecured debt is debt which is not secured by any interest in property. During bankruptcy, an unsecured creditor generally may not seize your property to satisfy the debt.
  • Who can file for bankruptcy?
    Generally, any individual (a real person) or business owing money to a creditor can file a bankruptcy petition.
  • Which bankrptcy chapter should I file under?
    Individual consumers will usually file under Chapter 7 if they want to seek a discharge of their debt, but sometimes will file under Chapter 13 if they wish to create a repayment plan. Each of these chapters have different effects on which bills can be wiped out, how long the consumer may take to repay if there is a repayment plan, which possessions the consumer may keep, etc. The decision often involves complicated questions of law and should be made only after consultation with an experienced bankruptcy attorney who will advise the consumer based on the individual's income, the property they own, and other factors affecting the consumer's ability to pay their debts.

  • Can I change my bankruptcy case from one chapter to another?
    Generally, yes. The debtor may change the chapter to any other chapter the debtor is eligible for. The change may only be made once, however. This decision should be made carefully and only after consulting with an experienced bankruptcy attorney. Since each Chapter governs which assets or property may be taken and sold to satisfy the debt, your bankruptcy lawyer will help you understand how a change will affect you.
  • How often can I file for bankruptcy?
    A Chapter 7 bankruptcy may be filed 8 years after a previous Chapter 7 filing, or 6 years from a previous Chapter 13 filing. A Chapter 13 filing may be filed 4 years from a prior Chapter 7 filing, or 2 years from a previous Chapter 13 filing.
  • What do I need to start my bankruptcy case?
    You must compile a list of all of your past and present debts. This list should contain the name, address, and telephone number of all of your creditors (people you owe money), as well as the amount of the debt you owe. You must also compile a list of your significant assets, including any real property (land, typically a house or condominium) you own, vehicles, etc. You should also calculate your total monthly expenses for things like rent, insurance, fuel, food, utilities and other necessities of life. You will be expected to file a financial statement containing this information with the court.

    You must also be ready to pay both your attorney's fee (if you choose to hire a lawyer to help you) as well as the court's filing fee. As of November 1, 2011, the filing fee for new bankruptcy petitions in Southern California's Central District is:

    • Chapter 7: $ 306.00
    • Chapter 11: $1,046.00
    • Chapter 12: $246.00
    • Chapter 13: $281.00

    Case conversions:

    • Chapter 7 to Chapter 13: $0.00
    • Chapter 7 to Chapter 11: $755.00
    • Chapter 11 to Chapter 7: $15.00
    • Chapter 12 to Chapter 7: $60.00
    • Chapter 13 to Chapter 11: $765.00
    • Chapter 13 to Chapter 7: $25.00

    Filers should make sure there are enough funds in their account for any check written to the court; the returned check charge is $53.00.


  • Will filing for bankruptcy affect my credit?
    Generally, yes. Bankruptcy can harm your ability to obtain credit in the future, and can make it difficult for you to rent housing. It may also negatively impact a job application. Before filing for bankruptcy, you should carefully consider whether your financial circumstances warrant the filing.
  • How much debt do I need to file for bankruptcy?
    There is no set debt amount. Some financial situations, however, do not warrant filing for bankruptcy. If you find yourself in temporary financial distress, you should consider other options, such as making arrangements with individual creditors to change your payment amount or to reduce the total amount owed. If you have no property, money or income, creditors may be unable to collect the debt anyway. Before filing for bankruptcy, you should carefully consider whether changes to your lifestyle or income situation might enable you to meet your financial obligation to creditors.
  • What will happen if my spouse files for bankruptcy?
    If your spouse files for bankruptcy, but you do not, you may become responsible for some or all of the debt. Before filing for bankruptcy, a party should consider what the effect will be on a spouse or former spouse before filing, and should consult with a bankruptcy lawyer before filing.
  • What is a "joint petition?"
    A joint petition is filed when an individual consumer and their spouse both file a bankruptcy petition. Unmarried partners who both wish to file must file separately.
  • Am I protected from creditors if my ex-spouse files for bankruptcy?
    Generally, no. If you were a co-signor, your credit was considered in applying for credit or the debt was incurred during your marriage, the creditor could demand that you pay the entire debt, even if your divorce decree or judgment of dissolution of marriage assigned the debt in full to your former spouse. In addition to consulting with an experienced bankruptcy attorney, you should also consult with a family lawyer to help identify any remedy you may have in case your former spouse defaults on his or her obligations under any divorce decree or judgment.
  • I co-signed on a loan. Am I responsible if the other party files for bankruptcy?
    Yes. The creditor will demand that you make payments on the loan once the primary borrower defaults or files for bankruptcy. You should carefully consider this before you agree to co-sign on a loan. You must be ready and able to pay the loan in the event the primary borrower defaults.
  • Will all of my debts be discharged?
    Maybe. Some debts cannot be discharged in bankruptcy. Debts that cannot be discharged vary between different Chapters of bankruptcy. Generally, you may not discharge:

    • Tax debts owed to local, state, or federal tax authorities;
    • Debts for credit, property or services you obtained by fraud;
    • Debts not in the initial list of debts or that you waived your right to discharge;
    • Debts owed to your former spouse or child as the result of a court order, decree or judgment for support of that person;
    • Debts resulting from a judgment against you for some kinds of personal injury or property damage;
    • Debts for government-backed education loans, unless you qualify for an "undue hardship" exception;
    • Debts resulting from a criminal conviction, including fines, court fees or money owed to a victim as restitution;
    • Debts resulting from personal injury or property damage caused by the debtor's driving under the influence of drugs or alcohol (or both); and
    • Debts which arise after the filing of your bankruptcy petition.

    This is not a complete list, but is typical of the kinds of debts that generally are not discharged in bankruptcy. Before making a decision to file, you should consult with an experienced bankruptcy attorney who can help you understand which of your debts (if any) cannot be discharged.
  • Can I keep some of my accounts?
    The debtor may "reaffirm" some specific debts. However, all debts must be included in your petition and schedules.
  • Will I lose my Social Security benefits or retirement?
    Generally, a debtor's retirement is protected. Qualified ERISA retirement plans or accounts are generally not considered property of the bankruptcy estate and are not considered as assets during the bankruptcy. Social Security benefits are also protected and cannot be assigned to creditors or garnished. Once paid to the debtor, the funds may not be seized as long as they are readily identifiable as Social Security benefits. Your bankruptcy attorney can help you protect these assets and may advise you to keep them segregated from other funds; typically, the debtor will benefit from depositing Social Security benefits directly into a bank account which receives money from no other source.
  • What about my home? Will I lose it?
    It depends. An experienced bankruptcy lawyer can help you weigh various factors which affect whether you can keep your home. Some of these factors include:

    • The state you're in and the exemptions allowed (note: we do not practice outside the State of California and can only give legal advice after an in-person bankruptcy consultation with California residents);
    • The status of your home loan (current vs. in foreclosure); and
    • The Chapter under which you are seeking bankruptcy protection.
  • How long will a bankruptcy stay on my credit report?
    Bankruptcies typically remain on your credit report for seven to ten years.
  • How can I remove a bankruptcy from my credit report?
    Credit reporting agencies are required to keep accurate records. If you didn't file for bankruptcy, you can dispute the report and ask the credit agency to update your record to make it accurate. If you filed for bankruptcy, however, there isn't much you can do besides filing an explanation with the credit reporting agency that briefly describes any extraordinary events which resulted in your bankruptcy.
  • Can creditors keep hounding me after I've filed for bankruptcy?
    Once you have filed, and the creditor has received notice of the filing, they must cease all collection efforts. Upon the filing of your bankruptcy petition, the court will issue an "automatic stay" granting you relief from collection efforts, including telephone calls and collection letters. If a creditor makes any attempt to collect a debt, including collection letters or calls or the filing of a lawsuit, you should immediately give the creditor written notice that you have filed for bankruptcy. Your letter should be brief and polite. Provide the creditor with at least the case name and, case number, and filing date. You may wish to provide them with a copy of the petition showing that it was filed. If the creditor continues collection efforts after receiving notice of the automatic stay, they may have liability and you may be entitled to take legal action against them.
  • Who is the trustee? What does the bankruptcy trustee do?
    The trustee is the person appointed by the court to administer the bankruptcy to ensure that creditors get as much money as possible under the circumstances of your case. The trustee will run the initial meeting of creditors (often referred to as a "341 meeting"). The trustee has the right to collect and sell non-exempt property in a Chapter 7 case, or to collect your payments and distribute them to creditors in a Chapter 13 case. The trustee is also responsible for obtaining information from you, including documents related to your financial affairs. Although the trustees are appointed by the court, they are not always lawyers. They are paid a fee out of your filing fee and, sometimes, as a set percentage of the money distributed to creditors.
  • I'm a creditor. Can I object to a debtor's bankruptcy filing?
    Yes. Creditors may object to specific debts in a bankruptcy plan and may object to its cancellation. In Chapter 7, creditors generally have 60 days after the first meeting of creditors to object to the discharge of a specific debt. If no creditor files an objection, the court will enter the discharge order and the trustee will begin the collection of assets and distribution of proceeds to creditors using a predetermined schedule. If a creditor files an objection the bankruptcy will proceed without the objectionable debts. The objection will then be resolved either by settlement between the parties or by trial. In a Chapter 13 proceeding, creditors may object to the repayment plan and the court may consider the creditor's reasons. Otherwise, the plan will most likely be confirmed by the court.

    Creditors generally should not object without some reasonable basis in fact and law, and should then do so only after consultation with an experienced bankruptcy lawyer.
  • What is a 341 meeting?
    After filing of your bankruptcy petition, the debtor must attend a creditors meeting conducted by the trustee appointed to administer their case. The creditors and trustee may ask, and the debtor must answer, questions including:

    • How the debtor came to be in their specific financial condition;
    • Which actions the debtor has taken concerning assets (property);
    • Debts identified in the petition; and
    • Any financial information requested by the trustee.

    Refusal to answer or failure to answer truthfully can result in dismissal of the debtor's petition. Since the questions are answered under oath, it is a serious crime for the debtor to offer information which the debtor knows to be false. In some cases, giving false answers may result in criminal prosecution for perjury.

    Although creditors may attend the meeting to ask questions about the debtor's financial situation or other relevant matters, the creditor does not waive any rights by not attending.
  • I forgot something. Can I add a debt to my schedule?
    After filing, your bankruptcy petition may be amended to include forgotten information or to correct information that was inaccurate.Willfully providing false information on your bankruptcy petition is a serious crime (perjury) that can result in criminal prosecution since the petition is signed under oath (that is, "under penalty of perjury"). The debtor should take great care before the initial filing to avoid these mistakes.
  • If I'm planning to file for bankruptcy can I keep using credit cards?
    Incurring debt, such as by obtaining or using credit, after you decide to file for bankruptcy is risky and can have serious consequences. Specifically, creditors and the court regard debts as "fraudulent" when they result from the debtor's borrowing of money without any intention of repaying it. Creditors and the court are generally able to review pre-filing purchases and cash advances for possible fraud. Fraudulent debts are not dischargeable in bankruptcy and must be repaid. In some cases, fraudulent borrowing will result in the dismissal of a debtor's bankruptcy petition. Once you decide to file for bankruptcy, you should stop using your credit cards and should not borrow money.
  • What is a "reaffirmation" agreement?
    After filing for bankruptcy, you may volunteer to repay any debt which would otherwise be discharged. Debts which are typically reaffirmed include auto loans (so the debtor can keep the car). Rather than signing a reaffirmation agreement, however, the debtor is usually better off either just repaying the money or settling the debt with the creditor, rather than signing an agreement that will commit the debtor to making payments in the future.