The main misconception about bankruptcy is that people think they will lose everything and they will get nothing, which is really not true for a Chapter 7 or a Chapter 13. The whole point of a Chapter 7 is to give the person a fresh start and to allow them a certain amount of assets with which to make their fresh start. Naturally, the attorney’s job in a Chapter 7 would be to make sure the person could keep as much as they could in their Chapter 7.
The main misconception regarding the Chapter 13 is when people ask why they have to make payments in their chapter 13, whereas their friend filed a Chapter 7 and got to keep his house. These are two different things, so someone who as current on their mortgage, could probably file a Chapter 7 and keep their house, but if they filed a Chapter 13 to catch up with their mortgage payments, then a Chapter 7 would not help because they would just lose their house if the person was behind on their payments.
Is There Anything Else People Should Know?
People are amazed that they can file a chapter 13 after a chapter 7. A lot of people do not realize that and they think that they cannot file any kind of bankruptcy ever again because the filed a chapter 7, although they can file a Chapter 13 while they are still in a Chapter 7, but certainly the day after the Chapter 7 is discharged and closed, they can file a Chapter 13 and catch up on houses and cars that they owe, although it would be up to the person if they did not do that.
It is a real common misconception that the person would never be able to file any kind of bankruptcy for eight years, because they can absolutely file a Chapter 13 at any time, even right after a Chapter 7.
What Particular Questions Are People Typically Confused About?
A lot of people do not know what a domestic support obligation means. Basically, it means that the person would owe child support, or alimony to anybody. It is formal language and the trustees will ask the person about it in a formal way.
If someone had ever filed bankruptcy before, then a lot of times it would have been converted to a Chapter 13 or Chapter 7, and it would be a converted case, so technically they are going to file bankruptcy once because it was the same case even though they feel that they filed two cases. That probably presents another issue, because a lot of times someone who had filed a Chapter 13 would not be able to keep up with the payments so they would convert it to a Chapter 7.
This can be done, but the person would then have to go to another meeting of creditors, which would all be part of the same case. The person would have to attend two meetings of creditors and the case would be converted, which is something that sometimes confuses people.
Is It Common For People To Be Nervous Or Hesitant?
Absolutely, because firstly the person will have been sworn in and most people have never testified before so they would be nervous about that and they would be scared to say the wrong things. People should be reassured that there will be no issues if they had told the attorney about everything, and they should just answer, “yes” or “no,” give short answers and tell the truth, which is really all they can do.
No one will want to harass the person if they were being honest. They would not try to make the person look foolish or anything like that. Everybody gets annoyed when the person tries to hide things and that is when they start asking more difficult questions.
Do People Get Confused Because They Don’t Know The Difference Between A Chapter 13 And A Chapter 7?
Yes, this is a very common misconception in a Chapter 13, because people often ask why their friend who filed bankruptcy got to keep his house and did not have to make any payments. This may be true if someone was up-to-date on their payments in a Chapter 7 because they would not need to be concerned about catching up on any payments or anything, so it would be fine if they were current, whereas the whole point of the Chapter 13 would be to catch up on the payments.
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