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The New Law has gone into affect. The Law contains many new provisions, such as "means testing". Allow our experienced bankruptcy attorneys to represent you. We can be contacted at 800-287-1202.
Will bankruptcy affect my credit?
Bankruptcy affords one the opportunity to obtain a fresh start on ones’ credit rating. Unfortunately, if you are behind on your bills, your credit may already be bad. In addition, since bankruptcy wipes out your old debts an individual may be placed in a substantially improved income v. liability position. Bankruptcy does stay on your credit report for a period of 7-10yrs.
Persons seeking a mortgage or refinance of their home can expect to pay a higher interest rate especially for the first 2 years after obtaining a discharge.
How long will my bankruptcy stay on my credit report?
The Credit Bureaus are allowed to leave a Chapter 7 bankruptcy on your credit reports for up to ten years from the time of the filing. A Chapter 13 bankruptcy is removed after seven years from the filing date. Accounts included in either type of bankruptcy should come off after seven years.
Can Co-Signers Be Protected?
In the event that you and your attorney determine that it is in your interest to file a chapter 7 bankruptcy proceeding, your creditors may have the right to immediately demand payment from your cosigners. However, in a Chapter 13 proceeding, your creditors may be restrained from demanding payment from cosigners as long as you keep up your repayment plan.
Will bankruptcy wipe out all of my debts?
Bankruptcy will not discharge:
- Money owed for child support or alimony and some taxes.
- Loans obtained by providing false financial information to a creditor, most student loans owed to a school or government body unless the court decides that payment would be an undue hardship.
- Debts resulting from willful or malicious conduct such as intentionally hitting or harming somebody or some liabilities resulting from a drunken driving accident.
- Mortgages or other liens which are not taken in the bankruptcy case (but bankruptcy will wipe out your obligation to pay any additional money if the property is sold by the creditor).
Can Bankruptcy Help Tax Matters?
Taxes are debts to a government agency much like debts you might have to individuals and companies. However, governmental agencies collecting these taxes have greater power over you and your property than other creditors have.
Since the Bankruptcy Code provides for protection to anyone filing bankruptcy, these taxing authorities may have less ability to affect you and your property while you are under bankruptcy protection. The filing of a bankruptcy case may stop collection activity of governmental agencies for the collection of taxes owed. A Chapter 13 bankruptcy can provide for level monthly payment of your tax obligation without additional interest or penalties. Chapter 7 and Chapter 13 can reduce or eliminate certain tax obligations that have been due and payable for more than three years.
Can the monthly payment amounts to my creditors be reduced?
If you have unmanageable debt and file a Chapter Seven straight bankruptcy, you will not be required to repay certain debts. This affords you a clean slate with which to approach future obligations. Those electing to repay their debts under Chapter Thirteen must first determine their expected future monthly income or take-home pay. All types of income can be considered, such as wages, commissions, child support, spousal support, social security, workers compensation, unemployment, disability benefits, retirement, and dividends, so long as they constitute regular income.
After determining income, an amount should be set aside to provide for normal living expenses. The amount of income remaining after providing for living expenses is the maximum amount available for debt payments. Your debts may be paid in a plan lasting a maximum of five years.
Can I Own Anything After Bankruptcy?
Yes! Many people believe they cannot own anything for a period of time after filing for bankruptcy. This is not true. You can keep your exempt property and anything you obtain after the bankruptcy is filed. However, if you receive an inheritance, a property settlement, or life insurance benefits within 180 days after filing for bankruptcy, that money or property may have to be paid to your creditors if the property or money is not exempt.
What will I need to bring to my initial conference with the bankruptcy attorney?
A bankruptcy proceeding is initiated by the filing of a bankruptcy petition. The form for this petition is designated by the US Bankruptcy Court. In order to complete the bankruptcy petition the attorney will need to have an estimation of an individual’s assets, income, expenditures, and liabilities. It is recommended that at the initial conference the individual bring copies of any credit card statements, medical bills and mortgage and car payment statements plus an employment check stubs. After the initial conference you will be advised as to any further documents needed to complete the bankruptcy proceeding.
What are the steps to filing a bankruptcy petition?
There are four steps to filling any type of bankruptcy: First, you file a Voluntary Petition along with all supporting documents. This petition is a request to the Bankruptcy court to discharge your debts (in the case of a Chapter 7 Bankruptcy) or to approve your payment plan (in the case of a Chapter 13 Bankruptcy). Next, the bankruptcy court trustee gives notice to all of your creditors to inform them that you have sought protection under the bankruptcy code. This allows your creditors to review the information that you submitted in your Voluntary Petition for accuracy. The third step is to meet with the bankruptcy court trustee and your creditors. It is highly probable that none of your creditors will attend this meeting. During this meeting, any disputes or objections are discussed and settled. Lastly, the attorney may attend a hearing with a judge who will discharge your debts (Chapter 7) or approve your payment plan (Chapter 13).
What can I do if a creditor is still harassing me after they were included in my bankruptcy?
If a creditor attempts collection efforts on a discharged debt, the debtor can file a motion with the court, reporting the action and asking that the case be reopened to address the matter. The bankruptcy court will often do so to ensure that the discharge is not violated. The discharge constitutes a permanent statutory injunction prohibiting creditors from taking any action, including the filing of a lawsuit, designed to collect a discharged debt. A creditor can be sanctioned by the court for violating the discharge injunction. The normal sanction for violating the discharge injunction is civil contempt, which is often punishable by a fine. If the bankruptcy court inadvertently fails to send any creditor a copy of the discharge order this does not affect the validity of the order granting the discharge. So as long as the creditor was included in the bankruptcy and the discharge was granted, they cannot collect on the debt even if they did not receive a copy of the discharge order.
What if I forgot to include a creditor in my bankruptcy, can I go back and somehow include them?
It may be difficult to re-open your case for the purpose of adding an additional creditor. For this reason it is very important that you make sure that you have included every one of your debts that you wish to have discharged through the bankruptcy court. Once your bankruptcy is finalized, you will not have the option of including additional creditors. However, there is some case law that appears to indicate that an inadvertently left out creditor may still be discharged and barred from collecting a debt. Creditors with whom you have no balance due may be left out if you wish to continue a relationship with them. Beware that some creditors may revoke your credit privileges even if they are not included in the bankruptcy.
What will happen to my house and car if I file bankruptcy?
In most cases you will not lose your home or car during your bankruptcy case as long as your equity in the property is fully exempt. Some of your creditors may have a “security interest" in your home, automobile or other personal property. This means that you gave that creditor mortgage on the home or put your other property up as collateral for the debt. Bankruptcy does not make these security interests go away. If you don’t make your payments on that debt, the creditor may be able to take and sell the home or the property, during or after the bankruptcy case.
There are several ways that you can keep collateral or mortgaged property after you file bankruptcy. You can agree to keep making your payments on the debt until it is paid in full, or you can pay the creditor the amount that the property you want to keep is worth. In some cases involving fraud or other improper conduct by the creditor, you may be able to challenge the debt. If you put up your household goods as collateral for a loan (other than a loan to purchase the goods), you can usually keep your property without making any more payments on that debt.
Can I pay a debt that was discharged through my bankruptcy?
You may voluntarily repay any debt that was discharged through your bankruptcy, even if the debt can no longer be legally enforced. This process of repaying a discharged debt is known as "reaffirmation." Sometimes a debtor wants to repay a debt because it is owed to a family member or because it represents an obligation to an individual for whom the debtor's reputation is important, such as a family doctor. Some debtors agree to reaffirm a debt in exchange for the right to keep the property. If you included a secured debt in your bankruptcy you will be required to surrender the secured property to the creditor unless you execute a reaffirmation agreement. Reaffirmation agreements such as this need to be filed with the bankruptcy court by the creditor. Failure to do so is a violation of federal bankruptcy law and can carry severe penalties for the creditor.
What if a creditor is harassing me to reaffirm a debt?
You are not obligated in any way to reaffirm a debt which was discharged by a bankruptcy court. Some debtors choose to reaffirm one or more debts, but a creditor cannot force you to do so.
Will my employer and landlord find out about my bankruptcy?
Bankruptcy petitions are public records. However, under normal circumstances, unless your employer or landlord is a creditor, they will not know you filed a bankruptcy petition. If your employer or landlord is a creditor they must be listed as a creditor on the schedules and receive notice of the bankruptcy proceeding. In some states, chapter 13 debtors are required to make payments through wage garnishment and their employer will learn about the bankruptcy.
Will I have to go to court?
About 30 to 40 days after filing the bankruptcy petition, you will have to attend a hearing presided over by a bankruptcy trustee. This hearing is called the First Meeting of Creditors. The trustee is not a judge, but an individual appointed by the United States Bankruptcy Court to oversee bankruptcy cases. At the First Meeting of Creditors the trustee will ask you questions under oath regarding the content of your bankruptcy papers, your assets, debts and other matters. Creditors will also be permitted to ask you questions, although in the majority of cases creditors do not ask questions, or appear at the First Meeting of Creditors. After the initial meeting you normally do not need to return to court. However, if a creditor or the trustee files a motion or an adversary action you may have to appear in court with your attorney.
Do I have to disclose all of my assets?
Yes. If you knowingly and fraudulently conceal an asset from the court you have committed a felony and can be fined up to $5,000, imprisoned for up to five years, or both. In addition, the court can deny you your discharge, or dismiss or convert your bankruptcy proceeding.
What Else Should I Know?
Utility services—Public utilities, such as the electric company, cannot refuse or cut off service because you have filed for bankruptcy. However, the utility can require a deposit for future service and you do have to pay bills which arise after bankruptcy is filed.
Discrimination– An employer or government agency cannot discriminate against you because you have filed for bankruptcy.
Co-signers– If someone has co-signed a loan with you and you file for bankruptcy the co-signer may have to pay your debt. If you file a Chapter 13, you may be able to protect co-signers, depending upon the terms of your chapter 13 plan.
As with any area of the law, it is important to carefully select an attorney who will respond to your personal situation. The attorney should not be too busy to meet you individually and to answer questions as necessary.
In bankruptcy, as in all areas of life, remember that the person advertising the cheapest rate is not necessarily the best. Many of the best bankruptcy lawyers do not advertise at all.
A reputable attorney will generally provide counseling on whether bankruptcy is the best option. If bankruptcy is not the right answer for you, a good attorney will offer a range of other suggestions.
If you have further questions, please fill out the information below and one of our qualified attorneys will contact you.
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