Who will know I filed for bankruptcy?

Naturally, all of your creditors will receive notice that you filed for bankruptcy. Otherwise, they wouldn’t know you discharged your debt. Employers are not notified unless (a) you owe a debt to your employer, (b) you are currently being garnished and your attorney has to send your employer a notice to stop the garnishment, (c) you file Chapter 13 and your plan payments are taken out as a payroll deduction.
Bankruptcy is a matter of public record, but I am not aware of any region that publishes them in the newspaper anymore. Quite frankly, there are far too many bankruptcies being filed. Based on current filings, I would estimate that the state of Wisconsin will bear somewhere between 20-25,000 filings in 2009. You are far from alone, particularly given the nature of the current economy.
Pretty much the only people who bother searching for bankruptcy cases in public records are debtor attorneys and creditors. Most people think that they don’t know anyone else who has filed for bankruptcy. In reality, the average debtor (unbeknownst to them) has several close family and friends who have filed.

Do I have to take classes?

Yes. Under BAPCPA, all debtors are required to take a course in Credit Counseling before your bankruptcy case is filed. The course must be taken within 180 days of the day you file for bankruptcy. After your case is filed, you are required to take a second course in Financial Management (also known as Debtor Education). Failure to complete the second course can result in the denial of discharge.
There are plenty of companies nationwide that offer these counseling courses. Your attorney will often have an arrangement with a certified vendor so that you don’t have to hunt for one yourself. Most companies offer these courses over the phone or on the internet, and these courses usually take an hour or two.

Should I reaffirm my secured debts?

Before we discuss the financial prudence of reaffirming on the debt, we should first establish whether the court will allow you to reaffirm on a secured debt. We first look to whether the reaffirmation would be an abuse. Expect that each jurisdiction has different levels of scrutiny. In my home district, the court is relatively relaxed on the subject. In Chapter 7, most of my clients can reaffirm on any debt they choose without much hassle. Where it gets sticky is when debtors choose to reaffirm unusually expensive debts and/or debts for “toys”. If the debtor could conceivably afford to pay their unsecured debt by ditching luxury items, then the trustee could certainly object that there is some abuse going on. In Chapter 13, the analysis is much the same, but a little more restrictive. Secured debts squeeze out money available for unsecured creditors. Our trustee tends to disallow secured debts for luxury or recreational items (including more than one vehicle per debtor) unless the debtor is willing to match the secured payment for the unsecured creditors – which may be expensive!
Once it has been established that the reaffirmation is not an abuse, the next question is whether it is financially wise for you to reaffirm. You will need to make a prudent decision as to whether the reaffirmation is in your best financial interest. Here, the court will largely defer to your decision, but they will often step in to evaluate your decision and in some cases, override your decision. The basic factors to consider:
Is the debt necessary? Usually yes if it is your home or primary vehicle. Less so if it is for a timeshare, your third vehicle, or big-screen TV.
Is the collateral over-financed? It might be time to cut your losses if you are paying $18,000 for a 1994 Geo Metro, even if you can afford it.
Can you afford the payment? Analyze the principal balance, the interest rate, length of the loan, and monthly payment. If you’re living on $20,000 per year, you probably can’t afford a $300,000 mortgage.
Can you get a new loan for new collateral at a better deal after bankruptcy? Reaffirming on secured debts that existed before filing for bankruptcy is an excellent and easy way to rebuild your credit. But don’t discount the possibility of finding a new loan after bankruptcy that will have better terms.
In Chapter 7, many of your secured creditors will send you a reaffirmation agreement to sign. Even if you have decided to reaffirm the debt, you might not necessarily want to sign the agreement. First and foremost, if you default on your loan payment after you have entered into a reaffirmation agreement – you will be liable for the whole amount of the debt. Your bankruptcy discharge will not protect you from collection efforts. Second, although failure to sign a reaffirmation agreement can be interpreted as a technical default and invite repossession, the odds are next to nil that a creditor would repossess your property despite you remaining current on payments.
In short – reaffirming secured debts can help rebuild your credit, but you should only reaffirm on what you need and can afford.

What happens to my tax refund if I file for bankruptcy?

Your tax refunds are treated as an asset just like all of the other property that you own, and ordinarily it can be taken as exempt. In Chapter 7, this basically boils down to you keeping your tax refunds.
In Chapter 13, your tax refunds for the years while you are in the Plan may also play a role in your plan payments. The reason for this is because in Chapter 13, all of your projected disposable income is supposed to come into the Chapter 13 Plan. Tax refunds are an indication that you have over-withheld. In theory, if your withholdings had been adjusted properly, there would be no refund and more money would have been available throughout the year. For below median debtors, your Plan is calculated based on your budget, for which taxes are based on your withholdings. Therefore, in the Eastern District of Wisconsin, the Trustee takes one half of all state and federal tax refunds. For above median debtors, their taxes are calculated on the Means Test, which is based on actual tax liability, so withholdings are irrelevant. For this reason, above median debtors do not have to pay in half of their tax refunds. However, if their withholdings are too high, they may find they have a hard time affording their regular Plan payments.
There are, of course, exceptions to each rule under special circumstances. One of the common misconceptions is that tax refunds help pay off a Chapter 13 Plan faster. Unless you are scheduled for a 100% Plan (meaning all creditors are repaid in full), this is not the case. Tax refunds are additional funds allocated to creditors in excess of what they are entitled to under the original plan calculations. I will discuss the effect of floor amounts and buying your way out of Chapter 13 early at a later time.