Chapter 13
When someone files for bankruptcy under Chapter 13 of the Bankruptcy Code, their aim is to have the opportunity to repay some or all the debts in their name, in better terms, i.e. lower or no interest. Unlike Chapter 7 which involves liquidation of assets, this process involves restructuring debts which allows the debtor to use whatever income they may have in the future to pay off the creditors. Filing Chapter 13 Bankruptcy is thus applicable for a debtor who has a regular income, and thus can afford to request for such adjustments or reductions.
The United States Bankruptcy Code gives the debtor a ceiling of 5 years, within which the creditors must be paid back. While the attorney will safeguard your interests, the entire process is carried out under the supervision of the courts.
Chapter 7
Chapter 7, otherwise known as "liquidation" or "straight bankruptcy" is generally the simplest and quickest and is available to individuals, married couples, corporations and partnerships. A trustee appointed by the court gathers and sells your nonexempt property. The proceeds from the sale pay your creditors. You're able to keep any "exempt" property.
Will I lose any assets or property?
Chapter 7 - Bankruptcy exempts most assets allowing over 90% of our clients to keep everything and lose nothing. In Chapter 13 - Debt Consolidation you keep all assets you choose as debts are paid "as if in full".
How often can I file Chapter 7 or 13?
Chapter 7 - Bankruptcy allows 1 discharge every 8 years. Chapter 13 - Debt Consolidation lets you file as often as needed, if filed in good faith and 70% of unsecured debts were paid in a previously discharged Chapter 13.
Must my spouse file with me?
No, but because California is a community property state, your debts are usually your spouses debts. Creditors may pursue your spouse (or ex-spouse) for the entire community debt.
How do I check my credit?
http://annualcreditreport.com
What happens to my credit?
Chapter 7 - Bankruptcy and Chapter 13 - Debt Consolidation remains on your credit report for 10 years. By not filing, credit may show negatives for 7 years from the time you become current. By filing, negative reporting stops immediately. This allows you to begin re-establishing credit faster by keeping house, auto or other payments current. Also, you may obtain a "secured" credit card to help re-establish.
Can I refinance or sell my home? When can I purchase a new home?
While in Chapter 7 - Bankruptcy or Chapter 13 - Debt Consolidation you must obtain court permission to sell or refinance. After discharge, you may immediately assume a sellers loan or, after two (2) years, qualify for a new home loan with some re-established credit and other normal credit characteristics.
Can you stop my home foreclosure?
Because your home is a secured debt, Chapter 7 - Bankruptcy can only temporarily stop foreclosure until your case is discharged or your creditor lifts the "automatic stay". Chapter 13 - Debt Consolidation completely stops foreclosure if back payments are kept current in the payment plan and regular payments are kept current after filing.
Does Bankruptcy eliminate all debts?
No. Chapter 7 - Bankruptcy will eliminate most all unsecured debts but not secured debts such as your home or car. To retain secured assets, payments must be made or modified. In Chapter 13 - Debt Consolidation you pay all or only a portion of your debts.
Do I have to list all my creditors?
You must list all creditors at filing except creditors with zero balance. Chapter 7 - Bankruptcy allows you to pay a desired creditor directly if you choose through reaffirmation. Chapter 13 - Debt Consolidation has restrictions on who you pay, how much, and when.
Can you remove a lien?
If the lien was not incurred to purchase the asset, was not consensual, and impairs an exemption, it may be removed by lien avoidance techniques.
Why try to payback creditors in Chapter 13, why not just file Chapter 7?
If mandated by the "Means Test" or If there is enough money left over after monthly living expenses the court may require full or partial payment to your creditors in Chapter 13 - Debt Consolidation. Other reasons are listed on the webpage entitled "Which Chapter is For You".
Can my co-signor be protected?
All consumer co-signors are protected under Chapter 13 - Debt Consolidation but not under Chapter 7 - Bankruptcy.
Will my employer be notified?
No, unless you owe your employer money or stop making timely Chapter 13 - Debt Consolidation payments.
Will my bank account be affected?
If your bank or credit union is an unsecured creditor, close your account and move to a bank where you owe nothing. Otherwise, at time of filing, your bank could offset or freeze your account.
Does Chapter 7 or 13 stop lawsuits and judgments?
Yes, immediately when we file your case.
Can I get out of a contract?
Both Chapter 7 - Bankruptcy and Chapter 13 - Debt Consolidation may cancel unwanted contracts if you discontinue the service and/or return the merchandise.
Can you stop wage garnishment?
Yes. We make most creditors stop garnishing wages when your case is filed. This doesn't apply to current child support payments.
Can you stop auto repossession?
Yes, immediately upon filing.
Can I use credit while in Chapter 7 or 13?
No, not until you receive a discharge. In Chapter 13 - Debt Consolidation you must get court permission to incur debt over $250, except in emergencies.
Will I have to go to court?
Generally only one trustee hearing appearance is required 30 to 45 days after filing. This is normally a short hearing. Your creditors may be present to ask questions. Our attorney will be present to represent you.
How long will I be in Chapter 7 or 13?
Chapter 7 - Bankruptcy takes about 5 months, although your dischargeable debts are gone the day we file your case. Chapter 13 - Debt Consolidation takes 3 to 5 years to repay debts unless you decide to pay faster.
Can I keep my vehicles if I file bankruptcy?
Yes. If you are behind on payments a bankruptcy will allow you to keep the vehicles and reorganize your payments.
What is a reaffirmation agreement?
A reaffirmation agreement is a new agreement to pay the debt. Oftentimes, clients like to do reaffirmations on vehicles, saving money by paying back what the vehicle is worth as opposed to what is owed.
What can I expect at bankruptcy court?
The bankruptcy process is quite informal. You will be asked a series of yes or no questions verifying that the information you have provided is correct. It will take approximately 10 to 15 minutes for your hearing.
If I’m married and want to file, does my spouse have to file too?
No. Married people can file without the other spouse.
How does a bankruptcy affect my credit?
Not as badly as you may think. Typically, by the time people are considering bankruptcy, they have fallen behind on their bills. The bankruptcy will allow you to discharge your debts, which will improve your debt to income ratio. This can improve your credit in the long term.
Can taxes be discharged in bankruptcy?
Sometimes. There are several qualifications to discharge taxes. Taxes would have to be at least 3 years old and filed in order to be discharged.
How are co-signers affected by my bankruptcy filing?
Co-signers would be obligated to pay the balance on the debts to which they were co-signed. If at a later date, you want to pay these yourself you can do that, however, your obligation to pay them is relieved.
Can I include lawsuits and judgments in my bankruptcy filing?
Yes you can. Lawsuits and judgments from the credit cards or past due medical bills are dischargeable in a chapter 7 or a chapter 13.
What can I do if creditors are harassing me?
Once retained, you can forward all of your creditor calls to our office. Some may still contact you, but we will let them know you are represented by counsel, and they should cease all contact with you.
How soon after filing a bankruptcy can I get approved for a home/vehicle loan?
I have had clients approved for vehicles within months of their discharge. There are several lenders who will approve home loans days after discharge.
How long will a bankruptcy stay on my credit?
10 years, though you will be able to get approval for credit soon after a discharge. I recommend this to re-build your credit.
Will bankruptcy discharge my student loans?
With rare exceptions, student loans are non-dischargeable.
What kinds of debts are non-dischargeable?
Student loans, certain types of taxes, debts for fraud are a few of the debts that are non-dischargeable in bankruptcy. Also debts incurred for intentional torts, such as assault and battery. This list is not exhaustive, but just a few examples.
Can you stop a wage garnishment by filing a bankruptcy?
Yes. It is one of the most popular reasons for filing a chapter 7 bankruptcy. You can also stop a repossession or foreclosure through a bankruptcy.
What should I bring for my initial consultation?
Please bring an accurate pay stub, your 2 most recent tax returns, your driver’s license or ID card and social security card. If possible, bring a credit report or we can obtain one for you.
How quickly can a foreclosure be stopped?
I have stopped foreclosures within 1 hour of the consultation, though I do not recommend waiting until that time. In the case of foreclosures and garnishments, time is of the essence and it is important to come for your free consultation as soon as possible.
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