FAQ
If you feel overwhelmed by the bankruptcy process, you should know that you are not alone. Attorneys at Patel Law understand what you are going through and have made it their goal to help you through the bankruptcy process, by ensuring that your decision is an informed one.
To help you better understand your situation, we have listed a number of frequently asked questions about bankruptcy below. We understand that this section is not wholly comprehensive, and we ask you to contact our offices for assistance with specific bankruptcy questions or concerns. Call our offices at: 602. 266. 2169
These questions and answers are not intended to serve as or replace legal advice. If you need legal advice or have questions regarding your matter, please contact our offices.
- What is Bankruptcy?
- Should you file for Bankruptcy?
- Who can file for Bankruptcy?
- How often can you file for Bankruptcy?
- What is the difference between secured and unsecured debt?
- What can I keep if I file for Bankruptcy?
- Will I loose my home if I file for Bankruptcy?
- Can I keep my car if I file for Bankruptcy?
- How long will the Bankruptcy stay on my record?
- Will Creditors keep contacting me after I file Bankruptcy?
- What does a Trustee do?
- Can a Creditor object to a filing for Bankruptcy?
- Will I be able to use my credit cards after I file for Bankruptcy?
- Will I ever get credit again?
- What Debt is not discharged?
- Will a Bankruptcy stop wage garnishments?
- Will I loose my retirement savings?
- Does my spouse have to file for Bankruptcy?
- What is the difference between Chapter 7 and Chapter 13?
A: Bankruptcy allows individuals or businesses (debtors) who owe others (creditors) more money than they’re able to pay to either work out a plan to repay the money over time or completely eliminate (discharge) most of the bills
Should you file for bankruptcy?
A: This is ultimately your decision. Your attorney’s job is to make sure your decision is an informed one. Your attorney should discuss consequences and the process of Bankruptcy, as well as your alternatives to filing Bankruptcy.
A: With few exceptions, any person or business owing money to a creditor can file a bankruptcy petition.
How often can you file for bankruptcy?
A: A Chapter 7 can be filed every 8 years from a previous chapter 7 filing or 6 years from a prior chapter 13 filing. A Chapter 13 can be filed 4 years from a prior Chapter 7 filing or 2 years from a prior Chapter 13 filing.
What’s the difference between secured and unsecured debt?
A: Secured debt is a claim that’s secured by some type of property, either by an agreement or involuntarily with a court judgment or taxes. Creditors can generally claim the property that secures the debt in the event of bankruptcy. Unsecured debt is not tied to any type of property, and the creditor doesn’t have a claim to their property. A mortgage is a secured debt on you property.
What can I keep, if anything, if I file bankruptcy?
A: Exemptions allow an individual to “exempt”, or keep, certain kinds of property. State law defines what assets are considered “exempt,”. Your attorney can explain exemptions allowed in your state, as they apply to you.
Will I lose my home if I file for bankruptcy?
A: Possibly. The factors that impact your ability to keep your home are: The state you are in and the exemptions allowed; the status of your loan (current or in foreclosure) ; the type of bankruptcy you’re filing (Chapter 13 provides more protection than Chapter 7 as long as payments are current).
Can I keep my car if I file for bankruptcy?
A: Yes. What you must do to keep the car through a Chapter 7 varies depending on whether there is non exempt equity in the car. If there is no equity in the car, after subtracting any car loan and exemption from the car’s present sale value, the bankruptcy trustee will not take the car.
If you still owe money on the car, you can choose to reaffirm the debt to the secured lender, keep the car, and continue paying under the existing terms. You can also buy the car from the secured creditor in a single payment for its present value (redemption). If you choose, you can surrender the car and be free of any obligation to pay for it.
How long does a bankruptcy stay on my record?
A: Bankruptcies remain on credit reports anywhere from 7 to 10 years.
Will creditors keep contacting me after I’ve filed for bankruptcy?
A: During the time the debtor is working out a plan or the trustee is gathering and preparing the assets to sell, the bankruptcy code dictates that creditors must stop all collection efforts against the debtor. As soon as the bankruptcy petition is stamped “Relief Ordered” upon filing, you are immediately protected from your creditors. This is called an automatic stay.
After that time, if a creditor attempts to collect a debt, immediately notify the creditor in writing that you have filed bankruptcy, and provide them with either the case name number and filing date, or a copy of the petition that shows it was filed. If the creditor still continues to collect, you may be entitled to take legal action against them.
A: The trustee’s job is to: Administer the bankruptcy and make sure creditors get as much money as possible. The Trustee is also the one who will run the first meeting of creditors (also called the “section 341 meeting”). The Trustee will collect and sell non-exempt property (in a chapter 7 case) or collect and pay out money on a repayment plan (in a chapter 13 case). The United States Trustees are appointed by the bankruptcy court, but aren’t necessarily lawyers. Their fees are covered by the bankruptcy filing fee or are a set percentage of the money distributed in the bankruptcy.
Can creditors object to a bankruptcy filing or plan?
A: Yes. Bankruptcy filings allow creditors to object to specific debts in the plan or the repayment or cancellation in its entirety. In a Chapter 7, creditors generally have 60 days after the first creditors meeting to object to the discharge of a specific debt. If no objections are filed, the court issues the discharge order and the trustee collects and sells the assets then distribute the proceeds to the creditors under a predetermined schedule. If there are objections, the bankruptcy proceedings, less the objected debt(s), continues. A trial may be necessary to resolve the objectionable issues.
In a Chapter 13, creditors can object to the plan for repayment and the court may take this into consideration. If no objections are filed by creditors or the trustee, the plan may be confirmed as filed.
Will I be able to use my credit cards after I file for bankruptcy?
A: As soon as you anticipate filing bankruptcy, stop using your credit cards. Bankruptcy law allows the review of questionable purchases for potential fraud. If purchases are made 40 days prior to filing or cash advances taken within 20 days of filing, the debt may possibly be excluded from the bankruptcy and it can be dismissed.
A: Yes! A number of banks now offer “secured” credit cards where a debtor puts up a certain amount of money (as little as $200) in an account at the bank to guarantee payment. Usually the credit limit is equal to the security given and is increased as the debtor proves his or her ability to pay the debt. Two years after a bankruptcy discharge, debtors are eligible for mortgage loans on terms as good as those of others, with the same financial profiles, who have not filed bankruptcy. The size of your down payment and the stability of your income will be much more important than the fact you filed bankruptcy in the past. The fact you filed bankruptcy stays on your credit report for 10 years. It becomes less significant the further in the past the bankruptcy is.
What debts are not discharged in bankruptcy?
A: The scope of the discharge varies in each chapter. In Chapter 7, debts incurred by fraud, intentionally harmful actions, dishonesty, as well as priority taxes, taxes not filed, family support and debts to a former spouse, student loans, criminal fines and restitution cannot be discharged. In Chapter 13, you can discharge non support debts to a former spouse, government fines, and some intentional torts that could not be discharged in Chapter 7.
Will bankruptcy stop wage garnishments?
A: Yes. Once your case is filed, creditors are no longer entitled to garnish your wages for debts that existed at the beginning of the case. The only exception may be for on-going child or family support ordered by a court. The discharge of a debt will forever eliminate a creditor’s right to garnish your wages on account of that debt.
Will I lose my retirement savings?
A: No, most forms of retirement savings are unaffected by a bankruptcy filing, either because they are not property of the estate or because they may be claimed exempt from the claims of creditors. The 2005 amendments to the Bankruptcy Code expanded the protection for retirement assets.
Does my spouse have to file bankruptcy with me?
A: No, you may file without your spouse. The effect on your spouse and any debts you have jointly will vary depending on the marital property laws in your state. In community property states, all of the community property (the debtor’s half and the non debtor’s half) becomes property of the estate. In return, the community property acquired by a debtor and his non debtor spouse after the bankruptcy is not liable for payment of community claims listed in the bankruptcy though the non debtor spouse may have liability to the extent of the non debtor’s separate property.
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