Bankruptcy Frequently Asked Questions
There are generally a large set of questions that many individuals ask about bankruptcy. These questions are important not only to a basic understanding of the bankruptcy process, but also the consequences on your financial life, and to dispel false bankruptcy myths. Remember that the answers to these questions are very general in nature and do not apply to each and every individual. Each person’s financial situation is unique.
How Often Can I File for Bankruptcy?
The answer to this question can be a bit complicated. For Chapter 7 you cannot file a bankruptcy until 8 years have passed since the date of filing of your prior Chapter 7 bankruptcy. For Chapter 13, you must generally wait 6 years after the filing of the prior Chapter 13 case (there are some exceptions, such as if you paid 70% of the creditor claims in the prior case and it was your best effort).
Please note that these deadlines only apply if you received a bankruptcy dischargeSo, if your case was dismissed, you can re-file immediately. Also, there are certain circumstances where you may wish to file both Chapter 7 and then Chapter 13. In that case, even if you received a Chapter 7 discharge, you can immediately thereafter file a Chapter 13 case (although you can’t get a discharge in the Chapter 13 case).
How Long Does Bankruptcy Stay on My Credit Report
A bankruptcy in which you received a discharge will stay on your credit report for 10 years. If you filed a Chapter 13 case and it was dismissed, it will remain on your report for 7 years. A dismissed Chapter 7 case remains on your credit report for 10 years.
Is My Spouse Required to File with Me?
Strictly speaking, no, there is no requirement that a married spouse also need to file for bankruptcy. However, the spouse may want to file for bankruptcy if the spouse is also liable on the debts.
Are my Debts Wiped Out by Filing a Bankruptcy?
Yes and no. The bankruptcy discharge is personal, this means that it “wipes out” your obligation to pay the debt (except non-dischargeable debts). So, if someone else owes on the debt, then the creditor can still collect from that other person. In that sense, the debt still exists even after the bankruptcy filing. However, if you are the only person obligated on the debt and you receive a discharge, the debt is effectively wiped out (it technically still exists, but the creditor cannot collect on it).
In the case where a creditor is secured, which means they have a lien on your property (such as your house), the bankruptcy discharge will not wipe out the lien. This means the creditor can foreclose on the property to satisfy the debt.
Why Should I Consider Bankruptcy?
Eliminate the legal obligation to pay most or all of your debts. This is called a “discharge” of debts. It is designed to give you a fresh financial start.
Stop foreclosure on your house or mobile home and allow you an opportunity to catch up on missed payments. (Bankruptcy does not, however, automatically eliminate mortgages and other liens on your property without payment.)
* Prevent repossession of a car or other property, or force the creditor to return property even after it has been repossessed.
* Stop wage garnishment, debt collection harassment, and similar creditor actions to collect a debt.
* Restore or prevent termination of utility service.
* Allow you to challenge the claims of creditors who have committed fraud or who are otherwise trying to collect more than you really owe.
What Doesn’t Bankruptcy Do?
Bankruptcy cannot, however, cure every financial problem. Nor is it the right step for every individual. In bankruptcy, it is usually not possible to:
* Eliminate certain rights of “secured” creditors. A “secured” creditor has taken a mortgage or other lien on property as collateral for the loan. Common examples are car loans and home mortgages. You can force secured creditors to take payments over time in the bankruptcy process and bankruptcy can eliminate your obligation to pay any additional money if your property is taken. Nevertheless, you generally cannot keep the collateral unless you continue to pay the debt.
* Discharge types of debts singled out by the bankruptcy law for special treatment, such as child support, alimony, certain other debts related to divorce, most student loans, court restitution orders, criminal fines, and some taxes.
* Protect cosigners on your debts. When a relative or friend has co-signed a loan, and the consumer discharges the loan in bankruptcy, the cosigner may still have to repay all or part of the loan.
* Discharge debts that arise after bankruptcy has been filed.
What Doesn’t Bankruptcy Cost to File?
The Filing fee for a Chapter 7 bankruptcy is currently $335.00, and the filing fee for a Chapter 13 bankruptcy is $310.00. If you are unable to afford the filing fee you may be eligible for a filing fee waiver from the court if you meet certain criteria. Additionally, the court will usually approve an installment payment plan that would allow you to pay the court filing fee over 4 months with as little as $100.00 down.
Our attorney fees vary by the complexity of the case. Our typical Chapter 7 bankruptcy costs most clients $1,000.00. Chapter 13 bankruptcy fees are regulated by the Bankruptcy Court, and are often paid with your plan payment. At the end of your initial consultation one of our attorneys will provide you with a firm flat-fee quote.
What Property Can I Keep
In a chapter 7 case, you can keep all property which the law says is “exempt” from the claims of creditors. In Washington, you can choose between state or federal law exemptions. We will help you understand how these exemptions apply to your situation, so that you may keep everything you are entitled to under the law.
Keep in mind, while your exemptions allow you to keep property even in a chapter 7 case, they do not affect the right of a mortgage holder or car loan creditor to take the property to cover the debt if you have fallen behind.
What Happens to My Home and Car When I File Bankruptcy?
In most cases you will not lose your home or car during your bankruptcy case as long as your equity in the property is fully exempt. Even if your property is not fully exempt, you will be able to keep it, if you pay its non-exempt value to creditors in chapter 13.
However, some of your creditors may have a “security interest” in your home, automobile or other personal property. This means that you gave that creditor a mortgage on the home or put your other property up as collateral for the debt. Bankruptcy does not make these security interests go away. If you don’t make your payments on that debt, the creditor may be able to take and sell the home or the property, during or after the bankruptcy case.
There are several ways that you can keep collateral or mortgaged property after you filebankruptcy. You can agree to keep making your payments on the debt until it is paid in full. Or you can pay the creditor the amount that the property you want to keep is worth. In some cases involving fraud or other improper conduct by the creditor, you may be able to challenge the debt. If you put up your household goods as collateral for a loan, other than a loan to purchase the goods, you can usually keep your property without making any more payments on that debt.
Can I Own Anything After I File for Bankruptcy?
Yes! Many people believe they cannot own anything for a period of time after filing for bankruptcy. This is not true. You can keep your exempt property and anything you obtain after the bankruptcy is filed. However, if you receive an inheritance, a property settlement, or life insurance benefits within 180 days after filing for bankruptcy, that money or property may have to be paid to your creditors if the property or money is not exempt.
Will I have to go to Court?
In most bankruptcy cases, you only have to go to a proceeding called the “341 meeting” or “first meeting of creditors” to meet with the bankruptcy trustee and any creditor who chooses to come. Most of the time, this meeting will be a short and simple procedure where you are asked a few questions about your bankruptcy forms and your financial situation.
Occasionally, if complications arise, or if you choose to dispute a debt, you may have to appear before a judge at a hearing. If you need to go to court, you will receive notice of the court date and time from the court and/or from our office.
Will Bankruptcy Affect My Credit?
There is no clear answer to this question. Unfortunately, if you are behind on your bills, your credit may already be bad. Bankruptcy will probably not make things any worse. The fact that you’ve filed a bankruptcy can appear on your credit record for ten years. But because bankruptcy wipes out your old debts, you are likely to be in a better position to pay your current bills, and you may be able to get new credit.
We recommend you pull a copy of your credit report from each of the three credit bureaus approximately two (2) months following receipt of your discharge in bankruptcy. You should carefully check these reports to see that all of your debts are listed correctly. If not, there is a procedure to correct the error.
My Friend Went Through Bankruptcy and is Telling Me Something Different.
You have probably already received or will receive advice on what to do from well-meaning friends and relatives who have themselves experienced financial problems. Just like no two people are alike, no two bankruptcies are alike. Take the advice of your well-meaning friends and acquaintances with the proverbial “grain of salt.” If you have a specific question about anything related to your bankruptcy, make it your rule to ask your attorney, and he or she will try to provide you with an answer that applies to your special situation.
Can I Keep My Favorite Credit Card and Not Include It In My Bankruptcy?
You cannot selectively “pick and choose” some particular creditors and decide to pay them outside of your bankruptcy proceedings. All of your debts must be dealt with through the Court. Any payments which you make to a creditor must be paid under the authority of the Court, by the terms of the law, and not by any personal desires. If you want to pay creditors, you must do so through a Chapter 13 plan.
Are Student Loans Dischargeable?
Most student loans are not discharged in bankruptcy. You should refer more specific questions to your attorney.
Will My Employer Find Out About My Bankruptcy
The Bankruptcy Court does not contact your employer when your case is filed. Your payroll department may be contacted to stop garnishment, but most times they are told to stop without a reason why. Though anyone may be able to go to the courthouse and find out if you’ve filed for bankruptcy, this rarely happens.
The Law Office of Erin Bradley McAleer will fight to ensure that you achieve the best possible outcome in your case. Call us today at (360) 334-6277 to schedule a free, confidential consultation.
The Law Office of Erin Bradley McAleerrepresents clients throughout Southwest Washington State, including in Clark County, Cowlitz County, and Skamania County and Vancouver, Battle Ground, Camas, La Center, Ridgefield, Washougal, Woodland, Yacolt, Castle Rock, Kalama, Kelso, Longview, North Bonneville, and Stevenson. Attorney Erin Bradley McAleer focuses on the areas of Criminal Defense, Bankruptcy, Traffic Infractions, Landlord Tenant, Personal Injury, Firearm Rights Restoration, and Post-Conviction Relief (Vacating & Sealing Criminal Records).