What are exempt assets?

State and Federal law permit individuals (debtors) to retain certain types and amounts of property when they file bankruptcy. The property debtors can retain is called "exempt property". Exempt property or "exemptions" enable debtors to start over financially with some property after bankruptcy and, hopefully, reduce the likelihood that debtors will be forced into financial trouble in the future.

Will creditors and bill collectors stop calling me after I file bankruptcy?

Yes. One of the most important provisions of the Bankruptcy Code is called the "automatic stay". This part of the Code prohibits creditors from calling, writing, suing, or taking any other action against a debtor in an effort to collect a debt. If creditors persist in contacting a debtor after filing bankruptcy, the Court may sanction the creditors by ordering the creditors to pay compensatory and/or punitive damages, plus attorneys fees incurred by the debtor in bringing the matter before the Court.

Who notifies the creditors that I filed bankruptcy?

The Bankruptcy Court sends a notice to all creditors listed on your bankruptcy petition, schedules, statements and mailing matrix. You are required to provide the Court with an accurate list of your creditors for the Court to perform this function. The notice alerts the creditors of the bankruptcy filing, invites them to the meeting you have with the Trustee, and instructs them to take no further steps to try to collect their claims against you.

Do I have to list all my creditors when I file bankruptcy?

Yes. It is critical that you list every creditor to whom you owe money when you file. Even if you do not believe you owe the creditor money, but the creditor believes you owe money, you should list the creditor. In listing creditors, it is particularly important to list friends and relatives from whom you borrowed money.

Can I negotiate a settlement of my debts with creditors without filing bankruptcy?

Yes, it is possible to negotiate a settlement of debts with creditors, provided that the creditors are willing to work with you. Frequently, however, creditors will not agree to settle your debts because the debt was recently incurred (within the past year), or the creditors will insist upon payment settlement terms which you cannot meet. For example, creditors may require that a settlement be paid in cash immediately upon reaching an agreement with you.

If you do not have access to enough cash to pay the settlement, you may lose the opportunity to settle. Creditors also move accounts from one collection agency to another while they try to collect from you. Simply because you can reach an agreement with one collection agency for settlement doesn't mean you can reach that same agreement with the subsequent collection agency if you are unable to come up with the cash to complete the deal initially.

Finally, creditors who settle with you frequently send you a 1099 form at the end of the year which will label the money you did not pay them in the settlement as income to you. Example: If you owe a credit card company $10,000 and the company agrees to settle with you for $7,000, the company may send you a 1099 form at the end of the year showing that you had income of $3,000. You may have to pay both federal and state income taxes on that income.

Will my bankruptcy filing be in the newspaper?

Bankruptcy filings are public records and can appear in the newspaper. However, in the southern part of Maine, the newspapers have not listed bankruptcy filings for the past several years. It is unlikely that your bankruptcy will show up in print.