What
happens when I file a chapter 7 bankruptcy?
You commence a chapter 7 bankruptcy proceeding
by filing a "petition" with the bankruptcy court.
The person filing a Chapter 7 is referred to as the "debtor."
The debtor is required to disclose to the court all his or
her property and debts and turn over all nonexempt property
to the bankruptcy trustee, who then converts it to cash for
distribution to the creditors. The debtor then receives a
discharge of all dischargeable debts. |
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What
are the most common reasons for a Chapter 7 bankruptcy?
The most common reasons for a Chapter 7 bankruptcy
are unemployment; large medical expenses; seriously over-extended
credit; marital problems and other large unexpected expenses. |
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| What
are the most common reasons for a Chapter 13 bankruptcy?
The most common reasons for a Chapter 13 are to catch
up past due mortgage or car loan payments and keep their assets.
Also, the debtor can pay most non-dischargeable federal taxes
over the term of the Chapter 13 plan without interest. |
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| What
are the most common reasons for a Chapter 13 bankruptcy?
Individuals may file chapter 13 bankruptcy petitions
if they reside, have a domicile, a place of business, or property
in the United States, or a municipality, have a source of regular
income, and on the date the petition is filed owe less than
$250,000 in non contingent, liquidated, unsecured debts and
less than $750,000 in non contingent, liquidated, secured debts.
Corporations and partnerships may not file a chapter 13 bankruptcy. |
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| Will
the bankruptcy stop bill collectors from calling? Yes.
The automatic stay prevents bill collectors from taking any
action to collect debts. |
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| How
long after filing will the creditors stop calling?
Once a creditor or bill collector becomes aware of a filing
for bankruptcy protection, it must immediately stop all collection
efforts. After you file the bankruptcy petition, the court mails
a notice to all the creditors listed in your bankruptcy schedules.
This usually takes a couple of weeks. Creditors will also stop
calling if you inform them that you filed the bankruptcy petition,
and supply them with the "docket number" for your
case. In some cases, we will contact the creditor immediately
upon filing the bankruptcy petition, especially if a lawsuit
is pending. If a creditor continues to use collection tactics
once informed of the bankruptcy they may be liable for court
sanctions and attorney fees for this conduct. |
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| Who
deals with my creditors and bill collectors during the bankruptcy?
We deal with all creditors. |
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| 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, it will not know you filed a bankruptcy petition.
If your employer or landlord is a creditor it must be listed
as a creditor on the schedules and receive notice of the bankruptcy
proceeding. Chapter 13 debtors are required to make payments
through wage deduction order and your employer will learn about
the bankruptcy. |
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| Does
the spouse of a married person also have to file bankruptcy?
No. In some cases where only one spouse has debts, or
one spouse has debts that are not dischargeable then it might
be advisable to have only one spouse file. If the spouses have
joint debts, the fact that one spouse discharged the debt may
show on the other spouses credit report. |
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| Can
I keep any credit cards? Under some circumstances
you may be able to keep some credit cards if the creditor agrees.
There are many factors, which must be considered. Some of those
include the credit card balance at the time of the bankruptcy,
what the credit card company is willing to do and your ability
to pay the present and future credit card debt. |
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| What
happens to my personal property, real property and other assets?
Often, all of your assets can be protected. Your assets
will either be "excluded" from the bankruptcy or "exempted,"
and you will be able to keep that property. However, if any
question exists regarding protection of your assets, we will
make sure to ensure that the exemptions are properly chosen
and applied to maximize the value of assets retained. |
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| Can
I keep my home and automobile? In many cases
you can retain your home and automobile in a chapter 7 bankruptcy
proceeding. You will lose your home or automobile in a chapter
7 if you are behind in making payments on a loan secured by
the home or automobile and cannot reach a payment agreement
with the creditor, or the home or automobile has equity in excess
of what you are allowed to exempt. If either of these two conditions
exists, you might consider filing a chapter 13 petition, which
allows you to develop a plan for repaying your creditors without
necessarily liquidating assets. |
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| Can
I keep my pension plans? The United States Supreme
Court has held that pension plans, 401(k) plans, and other "ERISA-qualified
plans" are generally "excluded" from the bankruptcy.
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| Can
I keep my IRA account? Yes. |
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| What
happens to my credit? The bankruptcy filing is
picked up and noted by several commercial credit reporting companies.
Federal law limits the length of time that this information
may be carried on a report. The limit on reporting bankruptcy
filing is 10 years. Also, the law prevents certain governmental
units and agencies from discriminating against persons who have
filed bankruptcy. |
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| Can
bankruptcy stop foreclosure on my home? In a Chapter
7 bankruptcy, the foreclosure action will temporarily stop until
you get a discharge or before if the mortgage company receives
relief from the automatic stay.In a Chapter 13 bankruptcy, the
foreclosure action is permanently stopped as long as the arrears
and monthly mortgage payments are kept current trough a confirmed
Chapter 13 Plan. |
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| What
kind of debts does Bankruptcy eliminate? In a
Chapter 7, almost all unsecured debts with certain exceptions
such as your most recent 3-years of income tax liabilities,
student loans, alimony and child support obligations. Chapter
7 does not eliminate secured debts, except for liens on personal
property that are redeemed for the fair market value of the
collateral in the bankruptcy.In Chapter 13, all debts dischargeable
in a Chapter 7, plus you get a super discharge. This means that
certain debts that are non dischargeable in Chapter 7 are discharged
in Chapter 13. You can also modify the rights of secured creditors
in Chapter 13, which means that you can strip down a lien to
the value of the collateral such as a car in your Chapter 13
payment plan. |
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| Do
I need to list all my debts? Yes. However credit
cards with zero balance are not considered debts. |
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| Does
Chapter 7 or 13 stop lawsuits and judgments?
Yes, immediately when we file your case. There are certain exceptions
to this rule. One major exception is for child support enforcement
suits. |
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| Can
I get out of a contract? Bankruptcy generally
cancels unwanted contracts if you discontinue the service and/or
return the merchandise. |
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| Can
you stop wage garnishment? Yes. Garnishment will
stop when your case is filed. However there is one exception
for child support enforcement suits. |
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| Can
you stop auto repossession? In a Chapter 7, the
bank cannot repossess your car once you have file bankruptcy.
You must, however, get the payments current before the case
is finished or before the bank receives permission from the
bankruptcy judge to repossess.In a Chapter 13, You can cure
defaults on your car loan or even lower the payments on your
car loan in Chapter 13. We also make the bank return the car
if it was repossessed within 10 days before you filed your bankruptcy. |
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| What
about back child or spousal support? A Chapter
7 bankruptcy cannot protect you after the discharge. Child and
spousal support and alimony are non dischargeable debts.In a
Chapter 13 bankruptcy, you pay back child and spousal support
in full, without further interest, in your payment plan. |
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| What
about back taxes? In a Chapter 7 bankruptcy,
secured taxes, such as property taxes, cannot be discharged.
Unsecured taxes, such as income taxes, may be discharged if
the taxes are 3 years old, you filed your tax return timely,
and you have not been assessed in the prior 240 days.In a Chapter
13, you pay back taxes without interest, in your payment plan.
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| What
happens to my student loans? In a Chapter 13
bankruptcy, you can pay student loans without interest, in your
payment plan. In a Chapter 7 bankruptcy, student loans may be
discharged if you are able to demonstrate hardship, which is
not easy to do. |
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| Can
I use my credit cards while in Chapter 7 or 13?
No, not until you receive a discharge. In a Chapter 13, you
must get court permission to incur debt over $250, except in
emergencies. |
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| How
long will I be in Chapter 7 or 13? A Chapter
7 bankruptcy takes about 5 months, although your dischargeable
debts are gone the day we file your case. A Chapter 13 takes
3 to 5 years for you to repay debts unless you are able to repay
faster. |
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| How
can I rebuild my credit after bankruptcy? Many
people find that if, after filing bankruptcy, they promptly
make the payments they are left with such as car payment, house
payments, rent or utility payments, they can re-establish their
credit ratings in about two years' time. However, individual
credit ratings are based on overall credit history, as well
as income and assets, and it may be harder for some people to
re-establish a good credit rating than it is for others. |
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