Bankruptcy Frequently Asked Questions
1. Will filing for bankruptcy stop my foreclosure?
The short answer to this question is generally yes, that filing for bankruptcy will stop your foreclosure. However, there are some caveats, especially if you’ve filed for bankruptcy in the recent past. If you have a pending foreclosure and would like to avoid foreclosure, contact our office immediately for a free consultation so our bankruptcy attorney can assist you.
2. Will I lose my retirement if I file for bankruptcy?
For most clients, their retirement is their biggest asset. Your retirement is protected 100%, whether you file for Chapter 7 or Chapter 13 bankruptcy. There is no need to worry about losing your retirement because of bankruptcy.
3. Will I lose my home or car if I file for bankruptcy?
If you would like to keep your home and car, you can do so. If your current on the payments and otherwise qualify for a Chapter 7 bankruptcy, we can proceed with a Chapter 7 filing. However, if you have missed payments on your home or car, but would like to keep those items, then filing for Chapter 13 may be best for you.
4. If I filed bankruptcy before, when can a file again?
- If your prior bankruptcy was a Chapter 13, and you need to file for Chapter 13 again, you have to wait 2 years
- If your prior bankruptcy was a Chapter 13, and you need to file for Chapter 7, you have to wait 4 years
- If your prior bankruptcy was a Chapter 7, and you need to file for Chapter 7 again, you have to wait 8 years
- If your prior bankruptcy was a Chapter 7, and you need to file for Chapter 13, you have to wait 6 years
5. My vehicle has been repossessed, will filing for bankruptcy help?
Once a vehicle has been repossessed, there usually is a shortage owing to the creditor (the loan balance minus the auction price for the vehicle). This shortage is known as a “deficiency.” We can relieve you of the deficiency is either a Chapter 7 or a Chapter 13 bankruptcy.
6. How long is the bankruptcy process?
A Chapter 7 bankruptcy is generally a three month process. A Chapter 13 bankruptcy is a repayment plan that lasts for three to five years.
7. I was recently married, and my debts are from before my marriage. Can I file without my spouse filing as well?
Yes, only one spouse can file for bankruptcy, and in the case of a recent marriage, it may make sense for only that spouse to file. However, the non-filing spouse’s financial information is included in the bankruptcy. If both spouses have debts, we should discuss your options so you can determine if just one or both spouses should file.
8. What documents do I need to provide you if I file for bankruptcy?
In general, we need your financial information, which includes proof of income, taxes, monthly budget, and bills. At our consultation, we will provide you with a bankruptcy packet which provides you with a complete checklist of what you need to bring in.
9. What happens to my business if I file for bankruptcy?
If you are currently operating a business, and wish to continue operating the business during the bankruptcy, in most cases, you will be able to do so. If you are closing your business, we can assist you to wind it down properly and minimize your liabilities with the bankruptcy filing.
10. What determines if I qualify for bankruptcy?
In general, qualifying for bankruptcy is determined upon whether or not you have the ability to repay your creditors. If you do not have the financial ability to repay your creditors, then Chapter 7 bankruptcy may be an option for you. If you are able to repay a portion or all of your debt, but just need restructuring, then Chapter 13 bankruptcy may be an option for you.
11. Are some debts not dischargeable in Chapter 7 bankruptcy?
Yes, there are some debts which are not dischargeable in a Chapter 7 bankruptcy. This would include:
- Most taxes
- Student loans
- Court fines and restitution
- Debt based on fraud, theft, or dishonesty
- Debt owed due to a personal injury caused while driving while intoxicated
- Child and spousal support
- Debts allocated to you in a divorce
Some of the items that are not dischargeable in a Chapter 7 may be dischargeable in a Chapter 13.
12. How long will bankruptcy affect my credit score?
While many clients are concerned about the affect filing for bankruptcy will have on their credit score, they are surprised to find that many times, their scores quickly increase after filing. The main reason this happens is because prior to filing for bankruptcy, there usually are multiple credit accounts reporting the missed payments to the credit bureaus. Once we file the bankruptcy, all negative reporting stops. An example of how quickly one’s credit can recover is that clients who’ve filed for Chapter 7 bankruptcy have been able to purchase a home two years afterwards. Clients who’ve filed for Chapter 13 bankruptcy have been able to purchase a home within two years of filing their Chapter 13 bankruptcy.