1. Can I file for bankruptcy if I have already filed before?
A person cannot receive a discharge of debts in a Chapter 7 bankruptcy that is filed within eight years of a prior Chapter 7 bankruptcy filing that resulted in a discharge or within six years of a prior Chapter 13 bankruptcy filing that resulted in a discharge. In order to obtain a discharge of debts in a Chapter 13 bankruptcy, the petition cannot be filed within four years of a previous Chapter 7 filing that resulted in a discharge or within two years of a previous Chapter 13 filing that resulted in a discharge. There may still be some benefits in filing a Chapter 13 bankruptcy even though the debtor cannot obtain a discharge.
2. Will my filing for bankruptcy affect my spouse?
No. Although a husband and wife may file a joint bankruptcy petition, if only one spouse is filing bankruptcy that filing will not have any effect on the non-filing spouse. The debts of the non-filing spouse, however, will not be discharged in the bankruptcy.
3. Won’t filing for bankruptcy ruin my credit score?
For most people who are contemplating bankruptcy (because they have credit cards they cannot afford to pay, their property is being foreclosed or a car repossessed, a court judgment has issued against them for money owed, etc.), their credit score has already taken a hit. Filing for bankruptcy in those cases will most likely not cause the credit score to dip much lower. And, because the debt is being discharged, a bankruptcy often results in the credit score increasing a year or so after the bankruptcy filing.
4. Is there a certain amount of debt I need to have in order to file bankruptcy?
There is no minimum amount of debt that someone has to have in order to file for bankruptcy. It is a personal decision as to what amount of debt should prompt someone to need the debt relief afforded through bankruptcy. There are limits of slightly over $1 million in secured debts and slightly over $300,000 in unsecured debts which a debtor cannot go over in order to file a Chapter 13 Bankruptcy.
5. How long does bankruptcy take?
In a Chapter 7, once all of the information and documents have been gathered by the attorney and the bankruptcy has been filed, then a meeting with the Chapter 7 Trustee (called the 341 meeting of creditors) takes place in approximately 30 days. A discharge is received 60 days after this meeting. In a Chapter 13 bankruptcy, the discharge is received once the plan has been completed, which can take between three and five years.
6. Can I discharge student loans in bankruptcy?
Generally, student loans will not be discharged in bankruptcy. The sole exception to this rule is if the debtor can prove that non-dischargeability of the student loan would cause undue hardship to the debtor or his dependents. Debts owed directly to educational institutions for tuition, however, are dischargeable in bankruptcy.
7. What determines what type of bankruptcy I can file?
Individuals with primarily consumer debt must complete a “means test” which takes into consideration the debtor’s income for the six months prior to the bankruptcy filing along with certain allowable expense deductions. A debtor who passes the means test can file a Chapter 7 whereas a debtor who fails the means test is required to file a Chapter 13 bankruptcy. Other factors, such as the extent of non-exempt assets and amount of surplus income (monthly income less expenses) determine which type of bankruptcy one can file. Also, a debtor who is behind on his mortgage and is attempting to save the house from foreclosure would only be able to accomplish that through a Chapter 13 filing.
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8. Which is better, a short sale or bankruptcy?
Although the answer to this question depends to a great extent on your specific situation, the advantage of the bankruptcy is a discharge of the debt whereas the short sale will likely result in the issuance of a 1099 from the mortgage company as forgiveness of debt, which may result in a tax liability. A bankruptcy filing will also usually afford you much more time in the house prior to being forced to leave.
9. Can I file for bankruptcy and still keep my car?
Debtors filing for bankruptcy are able to keep their car so long as there are sufficient federal or state exemptions available, which is most often the case. The debtor would have to continue making payments on whatever outstanding loan balance there is on the vehicle. If, on the other hand, the debtor feels he cannot afford to continue making the loan payments, he can surrender the vehicle and discharge the car loan in the bankruptcy.
10. Do I need a lawyer to file bankruptcy?
A person can file for bankruptcy on his own without the assistance of a lawyer. However, the bankruptcy laws are very complex and often confusing. The risk of filing bankruptcy with incomplete or false information can have adverse and unintended consequences, including dismissal of the bankruptcy, forcing the debtor from a Chapter 7 filing to a Chapter 13 filing or denying a discharge of the debts.
11. Do I have to go to court when I file for bankruptcy?
In most cases, you will not need to go to court. Every debtor must appear at a so-called 341 meeting of creditors to answer questions of either the Chapter 13 Trustee or the Chapter 7 Trustee. Generally, an individual only needs to appear before a U.S. Bankruptcy Court Judge in response to actions a trustee or creditor wants to take or if the debtor is seeking permission from the court on a specific issue. These situations rarely occur in Chapter 7 cases.
12. What types of questions are asked at the 341 Meeting?
Most Trustees want to know what prompted the bankruptcy filing, whether there have been any changes since the date of the filing and details about the various assets owned (or to be owned in the near future) by the debtor.
13. If I am behind on my mortgage and the mortgage company refuses to work with me, can I file for bankruptcy and keep my house?
One of the benefits of a Chapter 13 bankruptcy is that you do not need the cooperation of the mortgage company in order to put a Chapter 13 plan together that will allow you to keep your house. So long as the Chapter 13 plan is properly prepared, the mortgage company will have no reason to object (or the Chapter 13 trustee, for that matter). In any event, despite your prior dealings with your mortgage company, it is not opposed to having you catch up on your mortgage payments through a Chapter 13 bankruptcy so long as you follow through and make the monthly plan payments.
14. If I cannot afford to keep my house and have to let it go to foreclosure, how can a bankruptcy help me?
A bankruptcy can still be beneficial to someone who is surrendering their house. First, it will delay the foreclosure as the mortgage company must seek permission from the court prior to resuming any foreclosure activity. Once the house is finally sold at auction, the bankruptcy will discharge any liability that may exist if the house is sold for less than what is owed on the mortgage (the deficiency). Also, because the debt is being discharged, there is no potential tax liability that could otherwise occur if the mortgage company decides to not pursue you for the deficiency but instead forgives the debt (as may occur through a short sale).
Speak With Our Bankruptcy Lawyer Today
For more information about bankruptcy or to schedule a free initial consultation with an experienced bankruptcy lawyer, please contact the Law Offices of Ira C. Yellin, LLC, today.
When representing consumer debtors in connection with bankruptcy, the Law Offices of Ira C. Yellin, LLC, is a debt relief agency as defined by the Bankruptcy Code, 11 USC § 101(12A).