Bankruptcy Q&A

Bankruptcy Law

When will creditor calls stop?

Upon the filing of your case, creditor must stop calling. Filing for bankruptcy creates an automatic stay which prohibits any creditor from contacting you. So calls will stop once your creditors are notified of your bankruptcy filing.

If I file bankruptcy, does this make me a bad person?

No, each member of society is entitled to a fresh start. Certain events in a person's life can lead to a downward spiral. The law affords the opportunity to each individual to start fresh through bankruptcy.

If I am married, do I have to file bankruptcy with my spouse?

No, although married couples can file jointly, they only should file jointly if their debt are joint or if each spouse has a significant amount of individual debt. Just because one spouse is filing bankruptcy does not mean the other spouse is required to do so. In most cases the non filing spouse's credit will not reflect the bankruptcy filing of the other spouse.

If I file bankruptcy will I loose everything that I own?

Most people who file bankruptcy can retain all of their belongings including their car and home if they are below the state exemptions listed above. If your assets exceed the state exemptions chapter 13 bankruptcy might be a better option if you wish to retain those assets. A careful analysis of your assets by an attorney in our office will provide you with sound legal advice for your specific situation.

Is debt consolidation better then filing bankruptcy?

No, usually bankruptcy is a better option then debt consolidation. This is because bankruptcy is a quicker and cheaper way to get back on tack and rebuild ones credit. Most debt consolidations fail and those which don't prove to be very expensive. Debt consolidation, unlike bankruptcy, requires that a certain amount of the original debt be paid back to creditors. The usual settlement is about 40% of the original debt. Debt Consolidation agencies also usually charge an additional 15% (of the total outstanding debt) as a service fee. If a debt settlement is reached, you have income tax liability for all sums forgiven by the creditor. On the other hand, most debts are discharged in Chapter 7 bankruptcy without any repayment and there is never any income tax liability for debts discharged through bankruptcy.

Will I be able to get credit after bankruptcy?

Yes, you will be able to get credit after you file bankruptcy. Most people find that shortly after filing bankruptcy they receive many credit card offers which, if used properly, will help you rebuild your credit.

Can I file for bankruptcy more then once?

Yes, you can file a chapter 7 bankruptcy every 8 years. If eight years have not past since you last filed for a chapter 7 bankruptcy you may be able to file for Chapter 13 bankruptcy. If you filed a chapter 13 bankruptcy previously and it was discharged, you must wait 6 years to file a Chapter 7. If you file a Chapter 13 and it was dismissed, you may file another chapter 13 bankruptcy if you can show a change in circumstance since the prior filing.

Will my employer know that I filed for bankruptcy?

Generally, Chapter 7 bankruptcy information is not disclosed to your employer. Some exceptions are if your wages are garnished before filing, the payroll department of your employer will have to be notified of your bankruptcy filing to stop garnishment. Other situation where your employer might know about your bankruptcy filing is if you work in a field which offers financial advice to people. Some licenses such as the series 7 license may not be renewed due to a bankruptcy filing. However, in most cases employers are not notified about a bankruptcy filing. It is important to note that even if your employer finds out about your bankruptcy, they have a legal obligation not to discriminate against you because of you bankruptcy so your employment will be unaffected.

What is the obligation of my co-signer on debt I list in my bankruptcy?

Co-signers are infarct co-owners of a debt. What this means is that if one of the owners can not pay his or her obligations the creditor has the right to pursue the other party for the full debt. Unfortunately a bankruptcy filed by one of the co-signers does not release the other co-owner liability.

Can I discharge my child support or alimony in bankruptcy?

No, child support and alimony obligations are not dischargeable in bankruptcy. You will remain liable for these debts after your bankruptcy is discharge.

Can I file bankruptcy on my income taxes?

Generally, all personal income taxes which are timely and properly filed for periods more then 3 years preceding the bankruptcy filed will be dischargeable. Taxes must have been filed on or before the original due date and no subsequent audits could have occurred. If an audit was conducted, 2 years must pass from the new determination for the taxes to be dischargeable.

Can I file bankruptcy on fees and fines I owe to the government?

Generally, all fees and fines owed to the government are not dischargeable. This includes traffic violations, parking tickets, toll ways and code violations.

Can I filed bankruptcy on my student loans?

No, generally student loans are not dischargeable in a bankruptcy. Because they are government backed, these loans can not be discharged. In some instances filing for bankruptcy can make you eligible for deferments or a reduced repayment.

If I am a licensed professional can I file bankruptcy?

Yes, all individuals are entitled to bankruptcy relief. In most cases professional licenses such as a CPA, Realtor License, Medical License and Legal License is unaffected by a bankruptcy filing. Only individuals who are licensed to give financial advise, such as a series 7 License may be denied the renewal of that license.

Can I seek bankruptcy relief if I am not a US Citizen or a Green Card holder?

Yes, the bankruptcy code does not require proof of citizenship or proof of permanent residency for individuals seeking bankruptcy relief. However, individuals filing for bankruptcy must have a valid ID and a valid Social Security Card.

How will bankruptcy affect my foreclosure?

The filing of your bankruptcy case will trigger the automatic stay. The automatic stay will stop your mortgage lender form pursuing the foreclosure, buying you valuable time. In most cases the lender will file a motion with the court seeking relief from the stay and reinstatement of the foreclosure. These motions are routinely granted. Once foreclosure is reinstated, the lender will continue with the foreclosure which takes several months. During the foreclosure process you will receive various court documents informing you of the foreclosure status and the amount of time you may remain in your home.

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