1) Should I pay off my favorite credit card before I file to try and keep it?

This may not be your best choice. Credit card companies have a “tickler system” where they periodically check data bases for bankrupcy. When they discover you filed bankruptcy they will do one of the following:

1. Cut you off

2. Reduce your limit

3.  Leave things as they are

Chances are they will cut you off or reduce your limit drastically. Consequently you will lose money that could have been used toward living expenses.


2) Will I have to go before a judge in court if I file bankruptcy?

No. You will have a meeting with a court appointed auditor known as a Trustee. The meeting is officially known as a meeting of creditors but creditors rarely attend so I refer to it as a trustee meeting.

Some of the trustee’s main duties are:

1. To make sure you qualify for bankruptcy.

2.To determine if you have any unexempt of unprotected assets that should go to your creditors.

3. To determine if you have taken part in any recent transactions that violate the rules of bankruptcy such as:
a. Paying back family members in the past year.
b. Transferring assets out of your name without receiving fair market value.


3)Can I go on vacation if I am filing bankruptcy?

This question frequently arises. We bought tickets to go to Florida six months ago. What will the Trustee think if he sees out of town expenses on my bank statement?

This should not pose a problem. As long as you don’t book a trip to Europe or a cruise around the world, the Trustee should not be concerned. Use a prudent approach. For instance a $75 dinner out is fine, but a $700 dinner for 12 of your closest friends might cause the Trustee to have a question or two.


4) Can I pick and choose which debts I file bankruptcy on?

No. Bankruptcy debts are treated the same. You can get denied a discharge by knowingly omitting certain creditors from your bankruptcy.


5) How can I rebuild my credit after bankruptcy?

Despite a Chapter 7 bankruptcy staying on your credit for 10 years and a Chapter 13 staying on your credit for 7 years, the good news is, you can fairly quickly rebuild your credit. Keep the following in mind:

1. Secured or long standing lines of credit work better than unsecured or revolving credit.
2. Mortgage or car payments that you either reaffirm through the bankruptcy or get after the bankruptcy can be helpful.
3. Timely student loan payments are great.

Helpful hint: Obtain a small secured loan or credit card from a bank or credit union then put a small amount of collateral in a savings account. Get a credit line or card for that same amount. This works better to rebuild your credit than a regular credit card.


6) Can I sign over my expensive car to my family member before I file bankruptcy?

No. You may sell it to a family member for market value prior to filing if you could use the money, but you can not “under sell it” or simply sign it over.

Transferring assets outright or below market value are considered fraudulent transfers and the danger is the bankruptcy trustee can require you give the value of that asset to creditors.


7)Home searches during bankruptcy

No. You are required under oath to list all of your assets. The Trustee is highly unlikely to come out to your house to search. You will, however, need to list everything. That being said, most bankruptcy filers do not lose any assets when they file bankruptcy. In a Chapter 13 Bankruptcy you can actually protect assets that would not normally be protected in a Chapter 7.

Serving the following counties, listed North to South: McHenry, Lake, Kane, DuPage, Cook, Will, Kankakee, Livingston, Iroquois.

Chandraiah Law Firm is a bankruptcy law firm helping people file bankruptcy under the bankruptcy code.