Answering Common Questions About Bankruptcy
1. What are some of the common signs of financial trouble?
There are many different reasons why a person may be having issues making ends meet. Some of the most common reasons that people find themselves in financial hardship include credit card debt, medical debt, failing businesses or other unplanned significant expenses. When you are unable to meet your obligations and start receiving notifications from creditors, you may need to consider if bankruptcy is the right step for you.
2. Will filing for bankruptcy stop my foreclosure?
The short answer is generally yes. 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 it, contact our office immediately for a free consultation so our bankruptcy attorney can assist you.
3. Will I lose my retirement fund if I file for bankruptcy?
For most clients, their retirement fund 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.
4. 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 you’re 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.
5. If I filed bankruptcy before, when can I file again?
- If your prior bankruptcy was a Chapter 13 and you need to file for Chapter 13 again, you have to wait two years.
- If your prior bankruptcy was a Chapter 13 and you need to file for Chapter 7, you have to wait four years.
- If your prior bankruptcy was a Chapter 7 and you need to file for Chapter 7 again, you have to wait eight years.
- If your prior bankruptcy was a Chapter 7 and you need to file for Chapter 13, you have to wait six years.
6. 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 in either a Chapter 7 or a Chapter 13 bankruptcy.
7. How long is the bankruptcy process?
8. 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 nonfiling 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.
9. 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 that includes a complete checklist of what you need to bring in.
10. What happens to my business if I file for bankruptcy?
If you wish to continue operating the business during the bankruptcy, in most cases, you can. If you are closing your business, we can help you wind it down properly and minimize your liabilities with the bankruptcy filing.
11. What determines if I qualify for bankruptcy?
In general, qualifying for bankruptcy depends on whether you can repay your creditors. If you cannot repay your creditors, then
Chapter 7 bankruptcy may be an option for you. If you can repay a portion or all of your debt, but just need restructuring, then
Chapter 13 bankruptcy may be an option for you.
12. Are all debts dischargeable in Chapter 7 bankruptcy?
No, some debts 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 drunk
- Child and spousal support
- Debts allocated to you in a divorce
Some debts not dischargeable in a Chapter 7 may be dischargeable in a Chapter 13.
13. How long will bankruptcy affect my credit score?
While many clients are concerned about the effect that 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 later. Clients who’ve filed for Chapter 13 bankruptcy have been able to purchase a home within two years of filing their Chapter 13 bankruptcy.
14. What advantages are there to working with an attorney compared to debt relief companies?
Debt relief companies constantly advertise their services, promising to help people regain financial independence without having to file for bankruptcy. Unfortunately, these companies often charge high fees of their clients, taking all of the financial resources that a person needs to pay his or her bills. The bills continue to add up, and creditors can become much more aggressive in seeking amounts they are owed. The debt companies neglect to pay these bills, and you are eventually looking at having to file for bankruptcy anyway. An attorney can help you explore these options sooner, and determine what can be done to eliminate the harassing calls and letters that creditors may be sending.