Many people have heard stories from others who have filed bankruptcy and base their decision on whether to file on what is often second hand and incorrect information. Having accurate and up to date information is important. Below are some frequently asked questions related to bankruptcy:
- What can bankruptcy do for me?
Bankruptcy can help you get a fresh financial start by eliminating the legal obligation to pay all or most of your debt, which is known as a “discharge” of debts. Bankruptcy can stop foreclosure on your home, stop repossession of your automobile, stop wage garnishments and help you take back control of your financial well-being. The first step in deciding if bankruptcy will benefit you is to sit down with a qualified bankruptcy attorney so that you can get answers specific to your needs and your situation. The attorneys at The Sellers Law Firm are ready to sit down and discuss your options.
- What can bankruptcy not do?
Bankruptcy is not the best option for everyone and not all situations require bankruptcy. Bankruptcy cannot eliminate your obligations to certain “secured” creditors, which means if you owe someone for items such as houses or vehicles, bankruptcy may allow you to keep possession of the property but you will still have to make future payments to maintain it. Also, some debts, such as child support arrearage, are non-dischargeable. This means that you cannot file a bankruptcy and simply discharge the debt and have it go away. You will have to satisfy any debts such as past-due child support. Bankruptcy will not protect co-debtors; therefore, if you are a co-debtor or co-signor with someone on a loan or debt, only the person filing will be protected; not the co-signor or co-debtor. Instead of simply guessing about what benefits bankruptcy can offer, sit down with one of the experienced bankruptcy attorneys at The Sellers Law Firm.
- Can I choose what debts to include in the bankruptcy?
You must disclose all your debts in your bankruptcy; however, simply disclosing them does not mean you are “including” them in your bankruptcy plan. Which chapter you file affects whether certain debts can be included. The best option is to sit down with an experienced attorney, such as those of The Sellers Law Firm, and find out which option is best for you.
- Do I need to hire a bankruptcy lawyer?
You do not have to be represented by an attorney to file a bankruptcy case; however, if you do not have a working knowledge of bankruptcy laws, rules and regulations, you could jeopardize your property and financial future. If you file your own bankruptcy you could leave something out or miss filing required forms, which could actually make your situation worse than it was before. Having your case handled by an experienced, knowledgeable attorney, such as those at The Sellers Law Firm, is very important and will ensure the best results.
- Do I qualify for bankruptcy?
Whether or not you qualify for bankruptcy depends on many factors, such as how much debt you owe, how much property you own, and what your monthly household income is. Providing the information required by bankruptcy laws is necessary to determine if you qualify and which chapter you qualify to file. Sitting down with a knowledgeable bankruptcy attorney, such as those at The Sellers Law Firm will allow you to find out if you qualify.
- How long does a bankruptcy filing stay on my credit report?
A bankruptcy filing can stay on your credit report for up to ten years.
- How much does bankruptcy cost?
The filing fee for a Chapter 7 bankruptcy is $299 while the filing fee for a Chapter 13 bankruptcy is $281. However, you may pay Chapter 13 filing fees in installments, which means you can file a Chapter 13 bankruptcy for as little as $84 at The Sellers Law Firm. In addition to the filing fees, you will also have to pay the attorney’s fees as agreed upon by you and your attorney. These fees are all regulated and limited by federal law.
- Is there more than one form of bankruptcy?
Yes. There are actually several different “chapters” of bankruptcy; however, there are only certain chapters that can be filed by individual consumers. The most common consumer bankruptcies are Chapter 7 and Chapter 13. Both chapters provide you with a legal release of debts once your case is completed; however, determining which chapter you qualify for is very important. Sitting down with an attorney is the best way to find out which chapter you qualify for and which chapter will best suit your needs.
- Which form of bankruptcy is best for me?
The Sellers Law Firm has experience in the area of bankruptcy law. We will meet with you and discuss your concerns and depending upon your individual situation, advise you as to which option is best. In some cases bankruptcy may not be the answer. Sitting down with one of our qualified bankruptcy attorneys is the first step to finding out what is best for you.
- What is a Chapter 13 bankruptcy?
A Chapter 13 bankruptcy takes your outstanding debts and consolidates them into a payment plan that you can afford. Depending on how much debt you owe and how much property/ assets you own, you may end up paying back only a small portion of your debt. Chapter 13 is often called the “debtor’s consolidation bankruptcy” or “repayment bankruptcy” because you are set up to make monthly payments over a period of 3-5 years, which will pay off all or some of your debt. One of the most important things about a Chapter 13 bankruptcy is that it enables you to keep valuable property.
- What is a Chapter 7 bankruptcy?
A Chapter 7 bankruptcy is often called a “straight” bankruptcy. Chapter 7 allows debts to be discharged without a monthly payment plan. In fact, unlike Chapter 13 which requires monthly payments over a period of 3-5 years to obtain a discharge of debts, a Chapter 7 discharge can be obtained in months. Chapter 7 does not insure that you will be able to keep all valuable property. If you own too much property, you may have to surrender it or give it up in order to get your debts discharged. This is because bankruptcy laws only allow a Chapter 7 debtor to keep a certain amount of property, which is “exempt” from the bankruptcy. For those who own property that is not exempt and wish to keep it, Chapter 7 may not be the best option. Also, a Chapter 7 will not allow you to catch up past due home or car payments and still keep the property. For those who are behind on property payments but want to keep the property, Chapter 7 is not the best option.
- What is the difference between a "secured" debt and an "unsecured" debt?
Secured debts are those for an item of value has been pledged in exchange for a loan or where you have directly financed property and owe money. Some examples of secured debts are home mortgages, automobile loans and financed furniture or appliances. Unsecured debts are those accounts where there was nothing pledged such as personal loans, signature loans, medical bills and credit cards.
- What happens if I find additional bills or debts after I file my bankruptcy case?
Your attorney can amend your case and include any debts or bills that you had prior to filing your case.
- Will filing for bankruptcy stop foreclosure and protect my home?
Yes. Filing a Chapter 13 bankruptcy will stop foreclosure proceedings and allow you to protect your home. When you file a Chapter 13 bankruptcy, an “automatic stay” takes effect, which means creditors are stopped from continuing their efforts to seize property. A chapter 13 bankruptcy allows you to put the amount of past-due mortgage payments in the bankruptcy plan, thereby allowing you to start back making your regular monthly mortgage payments. While filing a Chapter 13 will stop foreclosure, it is up to you to make the future mortgage payments in order to keep your home.
- Will filing for bankruptcy protect my car from being repossessed?
Yes. Filing a Chapter 13 bankruptcy will keep your vehicle from being repossessed and allow you to maintain use and possession of it. When you file a Chapter 13 bankruptcy, an “automatic stay” takes effect, which means creditors are stopped from continuing their efforts to seize your property, such as your automobile. The amount you owe on the vehicle is included in a Chapter 13 monthly payment plan and upon completion of your bankruptcy, the vehicle will be paid off.
- Will filing for bankruptcy stop wage garnishments?
Yes. When you file bankruptcy, an “automatic stay” takes effect, which stops creditors from collecting debts and garnishing your hard earned wages. This “automatic stay” puts an immediate stop to wage garnishments and protects you from intimidation and harassment by your creditors.
- Will I have to go to court?
Yes. You will be required to attend at least one hearing known as a “meeting of creditors”, which allows the bankruptcy trustee as well as creditors to ask questions verifying your information, such as income and property you own. In most cases, this is the only hearing you will have to attend; however, there are situations where additional hearings may be required. Each case is different.
- Will bankruptcy eliminate all of my debt?
Yes; however, there are certain exceptions. Normally, bankruptcy will not wipe out:
- Child support or child support arrearage
- Most student loan debts unless the court determine repayment would be an
- undue hardship
- Debts or loans you incur after your bankruptcy is filed
- Will filing bankruptcy make me lose my Social Security benefits?
No. Filing bankruptcy will not cause you to lose your Social Security benefits.
- Will filing bankruptcy affect my tax refund?
Filing bankruptcy alone will not affect a debtor’s tax refund; however, if a debtor owes back state or federal taxes, depending on the time period for which the taxes are owed, the IRS can seize or take the tax refund. Likewise, if a debtor owes child support arrears (past due child support), the appropriate state agency can seize or take the debtor’s tax refund.
- What happens if you're married and only one spouse files?
Filing bankruptcy is something that should be discussed with your spouse. In fact, at The Sellers Law Firm, we encourage both parties to come in for the initial consultation so that we can answer questions and address the concerns of everyone involved. If you and your spouse have joint debts and just one of you files, the other spouse may be held responsible for some of the debts. The best thing to do is sit down with your attorney and let them advise you whether it is best to file separately or possibly have both parties file a joint bankruptcy.