FAQ'S in Bankruptcy Law
What is the Automatic Stay?
This is an injunction that goes into effect automatically upon the filing of a bankruptcy.
It strictly prohibits the commencement or continuation of any acts to collect on a debt that
arose prior to filing the bankruptcy. This includes enforcement of judgments, creating or
perfecting liens, and many other actions. (It does not apply to collecting alimony maintenance
and support)
Will filing bankruptcy destroy my credit?
Filing bankruptcy generally improves bad credit. A credit report is a reflection of your
financial situation. Most people filing for bankruptcy have too much debt, which is
obvious to any lender who reviews your credit report. If you have too much debt,
it's going to be apparent to a lender that you are on the verge of bankruptcy or may be considering
filing for bankruptcy. Bankruptcy dramatically improves your income to debt ratio in a
very short period of time. It also insures a lender that their loan is not going to
be subject to a proceeding in bankruptcy as you can only file once every eight years.
Do I have to include my car loan in my bankruptcy?
Anyone filing for bankruptcy has to disclose the existence of all of their debts on their
bankruptcy schedules. Bankruptcy does provide a way for taking a debt outside of
the scope of a bankruptcy discharge. This procedure is known as re-affirmation of a debt
and is common practice in Chapter 7 cases for car and home loans. Re-affirmation agreements
legally bind the bankruptcy debtor to repay the debt and reinstate all of the debtors rights
under the original agreement. You may also voluntarily repay any debt that you choose to
after your bankruptcy discharge.
Does bankruptcy include everything?
Bankruptcy includes everything that most people have. However, there are
certain classes of debts that are non-dischargeable. These include
student loans, child support, and back income tax. Do not despair however
because we may have a remedy for you in Chapter 13. Chapter 13 allows you
to pay back these debts in a court approved plan, generally at the expense of
other creditors that you owe money to.
What are exemptions?
An exemption in an item of property, means that the property may not be taken and sold by
a creditor to satisfy a money judgment. Thus if a piece of property is "exempt" a creditor may
not levy on it, restrain it, or sell it. Some exemptions exist both at state law and in bankruptcy law,
however many exemptions only apply in bankruptcy. When filing for bankruptcy, a trustee evaluates
whether you have property that is non-exempt.
Will filing for bankruptcy be published in the newspaper?
Bankruptcy filings are not generally reported in the newspapers unless they are
newsworthy. Unless
your bankruptcy is newsworthy for some reason, that is, it affects the general public, such as
a large company filing for bankruptcy, you can bet on the fact that your bankruptcy will go unnoticed.
The bankruptcy court or the trustee's do not report your bankruptcy or publish the filing of bankruptcy
in the newspaper.
What are your fees for Chapter 7 bankruptcy?
With any new potential client, we first need to analyze whether Chapter 7
is the best case for your situation. If chapter 7 is right for you, we
can quote you a fee after a short initial consultation where we meet with
you and review your financial affairs. Not all chapter 7 cases require the
same amount of work and if there were one fee for all, most people would be
paying too much and some people would be paying to little. We can usually
start your case for a relatively small down payment and accept regular monthly
payments on the balance. Bankruptcy is the most cost effective of all legal
services and it is also time consuming when done properly. Bankruptcy clients
generally request or require constant attention through the process and often
question us concerning their financial problems for years after the case closes.
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