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.
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