ROB-BEN

Should I File for Bankruptcy Q & A

 

Will all of my debts be canceled in bankruptcy?   It depends on the type of debt you have. Bankruptcy is a good vehicle for eliminating credit card, medical debt, deficiencies resulting from a repossession or foreclosure, and other unsecured debt.

 

Some debt is never discharged (canceled) in bankruptcy -- including child support and spousal support arrears, student loans (except in very limited circumstances), and tax debts first due within the previous three years.

 

If I file for bankruptcy, can I keep my property?    If you file for Chapter 13 bankruptcy, the answer is yes. In Chapter 13 bankruptcy, you repay all or a portion of your debts through a repayment plan over a period of three to five years.

 

I'm facing foreclosure and want to keep my home. Is bankruptcy my best option?  Filing for Chapter 13 bankruptcy can be a good way to save your home from foreclosure.   Chapter 13 bankruptcy lets you pay off a mortgage "arrearage" (late, unpaid payments) over the length of a repayment plan that is approved by the court -- usually between three and five years.    In order for this option to work, you'll need enough income to at least meet your current mortgage payment at the same time you're paying off the arrearage.--- However, we only prepare paperwork for those filing Chapter 7.

 

I'm in over my head with debt, and I just lost my job. Should I file for Chapter 7 bankruptcy?  If you think you'll incur significant debts in the near future, it might make sense to wait to file for Chapter 7 bankruptcy.  Although your current debts (with some exceptions) will be discharged in your bankruptcy, debts incurred after you file for bankruptcy won't be.   Because you can't file for bankruptcy for eight years after the filing date in a previous Chapter 7 discharge, you'll be on the hook for those debts for a long time.

 

Debt collectors won't leave me alone! Will bankruptcy stop the harassment? Yes, bankruptcy's automatic stay requires most creditors and debt collectors to stop all collection efforts against you until the bankruptcy is over.

 

Do you have to disclose personal loans when you file bankruptcy?  When you file a bankruptcy petition, you have an obligation to disclose all of your debts. This includes credit card debts, mortgages, car loans, tax debts, any overdue child support or alimony, overdrawn bank accounts, foreclosure and short sale deficiencies, lease deficiencies, and any other debt you have at the time of the filing - including personal loans. So yes, if you borrowed any money from parents, friends, or any other person, it has to be disclosed.

 

What if you don’t want to include your car in bankruptcy?  First of all, what does it mean to include or not include something in bankruptcy? And is there a choice in terms of what can be "included"? When you file either Chapter 7 or Chapter 13 case, you have an obligation to disclose all of your assets (cars, real estate, bank accounts, etc.). If something is in your name, even if somebody else is using it, you have to disclose it and list it on your petition. You also have an obligation to list all of your creditors, car lenders including. The court wants to have a complete picture of your financial situation.However, just because an asset is listed in the petition, does not mean that the court or the lender will take it away. Usually, that's not the case. The court and the trustee will not take the car because you are can usually exempt it. Keep in mind that if the car is not completely paid off yet, the court does not take consider full value of the car to be your asset. Only your equity in the car is an asset. If any equity is nevertheless not exempt, you may be able to buy out the car from the trustee in Chapter 7, or (a safer route) file Chapter 13 and pay whatever is non-exempt to creditors over a period of three to five years. This usually translates into a low monthly payment.

 

If you file bankruptcy, do you have to file with your spouse? If you are married, you don’t have to file together with your wife or husband. You can file separate cases, or you may resolve your debts through the bankruptcy case while your spouse tries another route.That said, remember that all of your household’s income, assets and expenses will be considered by the court when determining how much you can afford to pay back creditors. Also, some debts may be “community” debts even if only one spouse’s name is on the account – the creditor may try to get something from the non-filing spouse on the theory that he or she also benefited from the use of that account.Last but not the least, if you are able to file together if often makes it easier for you both to get a fresh start, and to have a clear unified plan as to how to get ahead financially.

 

How long will bankruptcy stay on your credit report?  According to a report by Fair Isaac, a company that issues FICO credit scores, Chapter 7 bankruptcy remains on a person’s credit report for up to 10 years from the date the case was filed. In contrast, completed Chapter 13 bankruptcies typically get removed faster from the credit report – 7 years from the date the case was filed. For example, if you complete a 5-year Chapter 13 plan, that means that the record of your case would stay on your credit report for only two more years after completion of the case.Keep in mind that court records can include older history of case filings.

 

Do you have to be in default on your loans to file bankruptcy? No. However, be sure that you don’t favor some creditors over the others before the bankruptcy case is filed – for example, don’t send a huge payment to credit card A while credit card B gets a minimum payment. Don’t repay personal loans at the expense of other debts – any personal creditors, such as friends and relatives, have to be treated the same way as other general unsecured creditors.

 

 

 BANKRUPTCY STATISTICS