1. What are some of the Warning Signs that I may need to consider Bankruptcy.
• Harassing calls from creditors
• Home posted for foreclosure
• Unable to keep up with credit card payments.
• IRS is looking for me
• Suit filed against me
• Car repossessed or up for repossession
• Dramatic decrease in monthly income
• Dramatic increase in monthly expenses
• Overwhelming medical and/or credit card debt.
• Work injury leading to income reduction
• Credit cards are maxed out and it will take 15 to 20 years to pay back.
• I retired and am now on a fixed income
• Most of my monthly resources pays for medical bills and prescription costs
2. What type of Bankruptcy is available to consumers?
Typically a consumer will file a Chapter 7 or a Chapter 13 Bankruptcy. Chapter 7 is the simpler bankruptcy. In Chapter 7 there is no repayment plan and dischargeable debts are wiped out. In most of the cases we file the debtor does not loose any property or personal possessions, as these are considered exempt. Chapter 7 can be a useful tool to get out from under medical and /or credit card debt and provide you with a “fresh start.”
3. What is a Chapter 13 reorganization?
Chapter 13 provides a way to reorganize and repay certain debts. Typically payments are set-up to be made to a trustee for a period of 36 to 60 months. Home mortgage arrears and IRS taxes can be paid in your plan and some cars refinanced; Chapter 13 can be used to stop foreclosures and repossessions. Credit card debt is frozen, and depending on the circumstances, only a small portion of unsecured debt may have to be paid back. The credit card debt that is paid back is paid back with no interest.
4. If I file when will the creditors stop calling?
As soon as our office is retained we start taking all creditor calls.
5. When can I quit paying on my credit card debt?
As soon as you make a firm decision to file for bankruptcy relief no more credit card payments should be made as they will be dealt with in your bankruptcy.
6. If I am married does my spouse have to file with me?
This depends on the circumstances and whose name the debt is in. If the debt is joint and only one spouse files the creditors can come after the non-filing spouse. There may be a presumption that the debt is joint depending on what state you are in.
7. What happens to: Student Loans – Child Support – Tax Debt?
Student Loans – As a general rule, student loans will not go away with bankruptcy. Under special circumstances you may be able to file for a hardship discharge and you may get some temporary relief from garnishments.
Child Support – Child support is not affected by bankruptcy and in order to get a discharge you must be current with your child support obligations. Child support arrears can be caught up through a Chapter 13 Bankruptcy.
Tax Debt – Tax debt may be dischargeable if over 3 years old and your tax return was accurately and timely filed. Chapter 13 is an excellent vehicle, which can be used to sometimes reduce and pay back tax debt without fear of garnishment. Bankruptcy can be a very effective tool in dealing with old taxes.
8. Am I able to get credit after I have filed Bankruptcy?
A bankruptcy is reported to the credit bureau and can stay on your record for 10 years but this does not prevent you from beginning immediately to reestablish your credit. A positive effect is that your debt to income ratio will be immediately improved. You may get multiple offers for new credit cards or loans. Choose wisely; check available interest rates and limits placed on the account. Making payments on time after filing on secured debt will go a long way to improve your credit. Within one to two years after filing you should be well on your way to reestablishing your credit.
9. Do I need to pull my credit Report prior to filing Bankruptcy?
Our office strongly recommends that you obtain your credit report prior to filing to verify debt and pick up any debt you may have forgot about. There are three credit-reporting agencies as listed below. We recommend you get your report from each one at www.annualcreditreport.com.
10. What happens to my house and car in Bankruptcy?
As a general rule you will not lose your homestead or vehicle in Bankruptcy, however you must continue to pay your mortgage and car payment. There may be rare situations, which would be an exception to this rule which you would need to discuss with your attorney.
11. Can I get rid of a car that I am upside down on?
Bankruptcy is an effective tool in being able to get out from under high car and/or mortgage payments on property, which cannot be sold for what is owed against it. Property can be surrendered back to the lender with no further liability on the note, although in a Chapter 13 the creditor is free to file a claim for any deficiency and may share in any distributions made to unsecured creditors, if any.
12. Can anything be done to get out of a car or apartment lease?
Yes. Leases can be rejected in Bankruptcy, which relieves you from any further liability. Once rejected you can give the car back to the creditor or relocate to a new apartment. Again in Chapter 13 the creditor may file a claim for any deficiency and may share in any distribution made to unsecured creditors, if any.
13. Can I pick and choose what creditors I want to list?
No. In Bankruptcy all creditors must be listed and treated equitably. However, even if a debt is discharged you may, after discharge, go back and pay any individual creditors you wish to pay although you have no legal obligation to do so.
14. I co-signed on a car for a family member who is making the payments, what happens to the car?
As long as you do not reaffirm the debt, should your family member default on the note you will no longer be personally liable. Obviously if the family member wants to keep the vehicle they need to continue to make the payments.
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