How Bankruptcy Works

We at Lepant & Lentz, pride ourselves on great service and a friendly, non-judgmental attitude. It is our commitment to make sure that you fully understand the whole concept of bankruptcy. Learn more about it here on this page.


Foreclosure happens to a lot of homeowners. People sometimes find themselves in financial difficulty and they just cannot make their home loan payments for a period of time. A lot of people file for protection under the Bankruptcy Code primarily to save their house.

Once you have defaulted on your home loan, your lender will file a deficiency notice and begin the foreclosure process. You can stop this process by filing for bankruptcy and by providing for the arrearage through your bankruptcy. Bankruptcy can save your home and bring your loan current. Until a trustee sale has occurred, you still have time to save your home.


It is tough to survive or feed your family when someone takes up to 25% of your hard-earned money away from you. Many people who have missed credit card payments, medical bill payments, or found themselves owing a landlord after being evicted or moving out are sued and judgments are rendered against them.

After a judgment is filed against you, the next step for the creditor is to collect the money by garnishing your wages and/or bank account(s). Bankruptcy not only stops this process dead in its tracks, but it could also allow you to get some of your money back.

There is a provision in the Bankruptcy Code that allows you to recover transfers of your property (including money) to your creditor. This can be done as long as it occurred 90 days prior to your filing for consumer debtors, that the property exceeds $600.00 in value, and the transfer was not your own voluntary choice. The day you file bankruptcy, your attorney at Lepant & Lentz, PC LLO will demand that money back from your creditor.


The day you file bankruptcy, all civil lawsuits against you must stop. Your attorney will file a notice in each case you are involved and the case will be dismissed.

Meeting of Creditors

Everyone who files bankruptcy, whether it be Chapter 7, 11, 12, or 13, must make an appearance at a “Meeting of Creditors” or what is also called as “341 Meeting.” This is where the bankruptcy trustee, who is appointed to your case to oversee it, will ask you questions about the paperwork you filed and questions about your situation.
A judge is not present at the meeting of creditors. You will be under oath, but your attorney will be there to help you and guide you through the process.
Many people are intimidated by the meeting of creditors, but the meeting itself is quite simple. It is not an inquisition; it is a chance for the trustee to make sure you are familiar with the information contained in your bankruptcy schedules and to clear up any questions he/she may have. Creditors typically only ask about any applicable collateral on secured loans, if they show up at all.
Most meetings of creditors are conducted quickly and in a conference room with several other people who have filed bankruptcy. You do not have to feel embarrassed or be nervous about the meeting because you will be with your attorney and other people who have filed bankruptcy.

Misconceptions About Bankruptcy

We hear a lot of ideas about the process and results of filing bankruptcy that are not true or are not always true in every case. The following are things that we have heard people say and an attempt to explain why that may or may not be the case:

1. “I make too much money to be allowed to file bankruptcy.”

There are income limitations to filing bankruptcy but just because you may make more than an average person does not mean you cannot file for protection under the bankruptcy code.

2. “I do not have enough debt to file bankruptcy.”

There are no minimum debt requirement to file.  

3. If I file bankruptcy, I will lose my car/house/possessions/etc.

Most of the people who file bankruptcy file because they want to keep a house or car that creditors are trying to take. The fact that you own property does not exclude you from filing bankruptcy and it does not mean you will lose everything if you file. There are exemptions in bankruptcy to allow you to keep your property. In most cases, it is your choice whether you want to keep your property or surrender it.

4. I cannot get rid of my student loan obligations in bankruptcy.

Although somewhat rare, student loan obligations may be discharged in bankruptcy. If you can prove hardship, you may be able to discharge your student loans.

5. Filing bankruptcy will ruin my credit.

Although your bankruptcy filing will appear on your credit report, so does all the debts you owe, late payments, and judgments against you. So, even though a bankruptcy filing is not necessarily a good thing on your credit report, it is likely not any worse than the other negative information already on your credit report.

6. If I file a Chapter 13 bankruptcy, I will have to pay back all my creditors.

Sometimes people who file a Chapter 13 bankruptcy will have to pay back some or all of their debt, but this is not always the case. You are required to contribute your monthly disposable income into your Chapter 13 Plan. This could mean you pay only your attorney and/or car loan(s) in the plan or it could mean you pay everyone. It all depends on your situation.