Frequently Asked Questions

What is bankruptcy?

Bankruptcy, sometimes referred to as “liquidation” or “reorganization,” is a federal court process that allows consumers and businesses to have their qualifying debts forgiven or repaid under the protection of the bankruptcy court. Bankruptcy recognizes there are certain circumstances beyond your control which can only be addressed through debt cancellation.

Filing for bankruptcy puts an “automatic stay” into effect – preventing creditors from trying to collect any debt. When the bankruptcy is successfully completed, you receive a discharge or legal release.

Should I declare bankruptcy?

Consider bankruptcy only when other alternatives have failed. When you can’t pay minimum monthly bills, the first step is to contact creditors and ask for a payment plan. If that fails to eliminate the problem, contact a qualified credit counseling agency. A credit counseling agency can negotiate interest rates down. Neither of these steps reduces the amount you owe. If you have accumulated more debt than you will be able to repay in the foreseeable future, you probably will benefit greatly from filing bankruptcy through a Connecticut bankruptcy attorney such as Kevin L. Mason. Bankruptcy can give you a debt-free fresh start.

What are the main types of bankruptcy?

For Connecticut consumers, there are two main types of bankruptcy: Chapter 7 and Chapter 13. Chapter 13 provides you with a way to consolidate debt and repay your creditors a portion of the debt you owe over time, usually three to five years. Your living expenses are paid first, then whatever is left over goes into the debt consolidation plan. The plan is not based on what you owe, but what you can repay. Chapter 13 forces creditors to negotiate with you subject to a bankruptcy trustee’s approval.

In Chapter 7 bankruptcy, you’re not required to repay most unsecured debts. Those debts are wiped out completely and permanently. Chapter 7 bankruptcy is also called “liquidation bankruptcy” or “straight bankruptcy.” Property is sold or liquidated to pay off as much debt as possible, while leaving you with enough property to make a fresh start. The most common reasons for a consumer Chapter 7 bankruptcy are unemployment, major medical expenses, over-extended credit, and other large unexpected expenses.

Both Chapter 13 and Chapter 7 have numerous rules -- and exceptions to those rules. Kevin L. Mason can explain all the legal details such as: What kinds of debts are covered, who can file, and what property you can and cannot keep.

Will I ever get any credit if I declare bankruptcy?

Yes. Many banks in Connecticut and nationwide now offer secured credit cards. These cards allow a debtor to deposit a certain amount of money (as little as $200) in a bank account to guarantee payment. Usually the credit limit is the same as this deposit. Gradually the credit limit increases. Two years after bankruptcy, you may be eligible for mortgage loans with terms equal to other people with a financial profile similar to yours but who never filed bankruptcy.

A secured bank credit card can be a fast, effective way to re-establish you as a good credit risk in the eyes of new creditors.

Will my employer, landlord, or others know about my bankruptcy?

While bankruptcy petitions are public records, only creditors normally find out that you have filed. Sometimes under Chapter 13 bankruptcy, the debtor pays through wage garnishment. In those cases, the employer learns about the bankruptcy.

Who files for bankruptcy and should I feel guilty if I do?

Wealthy or poor; working or unemployed; young or old -- all types of people and businesses filed for bankruptcy. Many must file through no fault of their own – unavoidable economic downturns, poor financial decisions by others, and sudden unemployment are among the financial factors that can create the need for declaring bankruptcy. You can’t control the economy, senior management at an international corporation, severe health issues, or other critical financial factors. But you can take control of your own financial situation by using bankruptcy appropriately. Bankruptcy does not carry the stigma today that it once did. By filing bankruptcy with a qualified Connecticut attorney you give yourself a chance to rebuild and re-establish credit while strictly adhering to the law. Don’t feel guilty. Bankruptcy is all about starting over with a clean record.

What should I do to prepare to file for bankruptcy?

Always begin by consulting with a qualified bankruptcy attorney. An attorney will help you plan for the bankruptcy, decide when to file a bankruptcy petition, or even avoid filing for bankruptcy. Other things to consider include:

1. Stop using your credit cards. If you borrow money with the specific intent of discharging the debt in bankruptcy instead of paying it back, the debt is not dischargeable. Some luxury purchases and cash advances of $1000+ within 60 days of the bankruptcy filing are presumed nondischargeable.
2. Don't transfer your assets to friends, family, or business associates. The transfer may be considered a fraudulent conveyance. If it is, you may lose both the property and your right to a bankruptcy discharge.
3. Keep all your business and financial records. If records are missing or destroyed, you can lose your right to a bankruptcy discharge.
4. Carefully choose the creditors you pay. Some creditors, such as landlords, secured creditors, and some utilities should be paid under most circumstances. But if you pay a credit card debt that eventually will be discharged, you may be throwing money away. Attorney Kevin L. Mason can advise you on which debts to pay while you prepare to file a bankruptcy petition.

I don’t live in Connecticut. Can you represent me?

Attorney Kevin L. Mason is licensed to practice law only in the State of Connecticut.