Are creditors harassing you? Are your wages being garnished? Are you facing foreclosure? The current economy is affecting many hard-working people, and causing financial hardships for many. Bankruptcy may be able to get you out of such tough financial situations. Talk to a Mountain View Law Group Bankruptcy Lawyer today to see if Bankruptcy is right for you.
Our Bankruptcy Attorneys can help you:
- Stop Bill Collectors
- Stop Pay Day Loans
- Stop Lawsuits
- Stop Repossessions
- Stop Foreclosures
- Stop Tax Garnishment
- Get help with Student Loan Debt
- Get help with Judgments
- Get Help with Back Taxes
Bankruptcy is a way to get a fresh start free of debt. A decision to file for Bankruptcy should be made only after determining that Bankruptcy is the best way to deal with your financial problems. This website cannot explain every aspect of the Bankruptcy process. Whether Bankruptcy is right for you depends on your unique financial situation, and can only be determined after meeting with an experienced Bankruptcy Lawyer but the information below should answer some of your basic questions.
What Is Bankruptcy?
Bankruptcy is a legal proceeding in which a person who cannot pay his or her bills can get a fresh financial start. The right to file for Bankruptcy is provided by federal law, and all Bankruptcy cases are handled in Federal Bankruptcy Court. Filing Bankruptcy immediately stops all of your creditors from seeking to collect debts from you, at least until your debts are sorted out according to the law.
Aren't there different kinds of Bankruptcy?
Yes. Bankruptcies can generally be described as “liquidation” or “reorganization.” Liquidation Bankruptcy is called Chapter 7 Bankruptcy. Under Chapter 7 Bankruptcy, a consumer or business asks the Bankruptcy Court to wipe out (or “discharge”) the debts owed. Certain debts, discussed below, cannot be discharged. In exchange for the discharge of debts, the business assets or the consumer’s nonexempt property maybe sold, and the proceeds are used to pay off creditors. The property a consumer might lose is discussed below.
The most common type of reorganization Bankruptcy is Chapter 13 Bankruptcy. In this type of Bankruptcy, you file a payment plan with the Bankruptcy Court proposing how you will repay all or a portion of your creditors. Some debts must be repaid in full; others you pay only a percentage; others aren’t paid at all. Some debts you have to pay with interest; some are paid at the beginning of your plan and some at the end. The repayment plan must comply with federal law and is approved or rejected by a Bankruptcy Judge.
Will filing for Bankruptcy stop harassing phone calls from bill collectors?
When you file either a liquidation or a reorganization Bankruptcy, something called an “automatic stay” goes into effect. The automatic stay prohibits virtually all creditors from taking any action to collect the debts you owe them unless the Bankruptcy Court lifts the stay and lets the creditor proceed with collections. The automatic stay typically prohibits creditors from contacting you directly, such as by telephone.
What generally happens in a personal Bankruptcy cases?
In a Chapter 7 Bankruptcy case, you file several forms with the Bankruptcy Court listing income and expenses, assets, debts and financial transactions you have made. A Court-appointed person, known as the “Trustee”, is assigned to oversee your case. About a month after filing, you must attend a “Meeting of Creditors” where the Trustee reviews your forms and asks any questions he or she may have about your forms. Despite the name, creditors rarely attend the Meeting of Creditors. If you have any nonexempt property, you must give it (or its value in cash) to the Trustee. Approximately two months later, you receive your discharge notice from the Bankruptcy Court. Then your case is over.
Chapter 13 Bankruptcy is a little different. You file the same forms plus a proposed repayment plan, in which you describe how you intend to repay your debts over the next three to five years. Here, too, a Trustee is appointed and you attend a Meeting of Creditors. Often one or two creditors attend the Chapter 13 Bankruptcy Meeting of Creditors, especially if they don't like something in your plan. Approximately one month after the Meeting of Creditors, you attend a hearing before a Bankruptcy Judge who either accepts (or “confirms”) or denies your repayment plan. If your repayment plan is confirmed, and you make all the payments called for under your repayment plan, you often receive a discharge of any balance owed at the end of your case.
Are there any debts that cannot be discharged?
The following debts are non-dischargeable in both Chapter 7 Bankruptcy and Chapter 13 Bankruptcy. If you file for Chapter 7 Bankruptcy, these will remain when your case is over. If you file for Chapter 13 Bankruptcy, these debts will have to be paid in full during your plan. If they are not, the balance will remain at the end of your case:
- Debts you forget to list in your Bankruptcy papers, unless the creditor learns of your Bankruptcy case
- Child support and alimony
- Debts for personal injury or death caused by your intoxicated driving
- Student loans, unless it would be an undue hardship for you to repay
- Fines and penalties imposed for violating the law, such as traffic tickets and criminal restitution
- Recent income tax debts and all other tax debts
In addition, the following debts may be declared non-dischargeable by a Bankruptcy judge in Chapter 7 Bankruptcy if the creditor challenges your request to discharge them. These debts may be discharged in Chapter 13 Bankruptcy. You can include them in your plan, and at the end of your case, the balance is wiped out:
- Debts you incurred on the basis of fraud, such as lying on a credit application
- Credit purchases for goods or services made within 90 days of filing
- Loans or cash advances taken within 90 days of filing
- Debts from willful or malicious injury to another person or another person's property
- Debts from embezzlement, larceny or breach of trust
What property can I generally keep if I file for Bankruptcy?
What property can I generally keep if I file for Bankruptcy? A Chapter 13 Bankruptcy case generally protects all of your property. In Chapter 7 Bankruptcy case, you select property you are eligible to keep from either a list of state exemptions or exemptions provided in the federal Bankruptcy Code. Most debtors use the exemptions provided by their state. Exemptions are generally as follows:
- Equity in your home. Typically, you can keep some or all of the equity in your home, called a homestead exemption.
- Retirement plans. Pensions which qualify under the Employee Retirement Income Security Act (ERISA) are fully protected in Bankruptcy. So are many other retirement benefits; often, however, IRAs and Keoghs are not.
- Personal property. You'll be able to keep most household goods, furniture, furnishings, clothing (other than furs), appliances, books and musical instruments.
- Public benefits. All public benefits, such as welfare, Social Security and unemployment insurance, are fully protected.
- Tools used on your job. You'll probably be able to keep up to a few thousand dollars’ worth of the tools used in your trade or profession.
Will I lose my house or apartment?
One of the biggest worries you may face in considering filing for Bankruptcy is the possible loss of your home. Though there are a few situations where you may lose your home, keep in mind that Bankruptcy is not designed to put you out on the street.
If you are behind on your mortgage payments, you will almost certainly lose your house if you file a Chapter 7 Bankruptcy. Your mortgage lender will ask the Bankruptcy Court to lift the automatic stay to begin or resume foreclosure proceedings. In a Chapter 13 Bankruptcy, you will not lose your house if you immediately resume making the regular payments called for under your agreement and repay your missed mortgage payments through your plan.
If you are current on your mortgage payments, you will not lose your house if you file for Chapter 13 Bankruptcy, as long as you continue to make your mortgage payments. In Chapter 7 Bankruptcy, whether or not you will lose your house depends on the amount of equity you have in the property and the amount of any homestead exemption (which varies state-to-state) to which you are entitled.
What Property Can I Keep in a Bankruptcy?
Filing for Bankruptcy does not mean that you will automatically lose all of your property. In a chapter 7 Bankruptcy case, you can keep all property which the law says is “exempt” from the claims of creditors. In determining whether property is exempt, you need to consider the value of the property and your equity in the property, if any. In a chapter 13 Bankruptcy case, you can keep all of your property if your plan meets the requirements of the Bankruptcy law.
Will Bankruptcy Affect My Credit?
Bankruptcy will stay on your credit for about 7 to 10 years. Unfortunately, if you are behind on your bills, your credit may already be bad and Bankruptcy will probably not make things any worse. Because Bankruptcy wipes out your old debts, this will help your credit score. Additionally, after your discharge you will likely be in a better position to pay your current bills, and you can immediately start rebuilding your credit.
Can I Choose What Debts to Include In My Bankruptcy?
No. You do have to list all of the debts that you owe and the property that you own. You cannot discriminate between creditors, even if you want to keep paying them. Some of your creditors may get paid after the Bankruptcy, but you must list all of your debts in your Bankruptcy paperwork.
Can Back Taxes Be Discharged In Bankruptcy?
It depends. You may be able to get rid of income taxes that are more than three years old by filing Bankruptcy. There are several qualifications that have to be met in order for the taxes to be wiped out, but having just a portion of the taxes discharged can be a big relief.
What If I Have Filed Bankruptcy Before?
Although you can file for Bankruptcy as many times as you like, you are limited by how often you can receive a discharge. You can receive a discharge from Chapter 7 Bankruptcy once every 8 years. If you receive a discharge in a Chapter 13 Bankruptcy case, you have to wait 6 years before getting a discharge from Chapter 7 Bankruptcy. If you receive a Chapter 7 Bankruptcy discharge, then you need to wait 4 years to get a discharge in a Chapter 13 Bankruptcy. Even if you have filed a prior case during these time frames, you may still have options and we would be happy to discuss those options with you.
Should I choose Chapter 13 or Chapter 7 Bankruptcy?
Although the overwhelming number of people who file for Bankruptcy choose Chapter 7 Bankruptcy, there are several reasons why people either elect to file or are better off filing a Chapter 13 Bankruptcy:
- You cannot file for Chapter 7 Bankruptcy if you received a Chapter 7 Bankruptcy discharge within the previous eight years. On the other hand, you can file for Chapter 13 Bankruptcy at any time.
- You have valuable nonexempt property which you don’t want to lose.
- You're behind on your mortgage or car loan. In Chapter 7 Bankruptcy, you'll have to give up the property or pay for it in full during your Bankruptcy case. In Chapter 13, you can repay the arrears through your plan, and keep the property by making the payments required under the contract.
- You have debts that cannot be discharged in Chapter 7 Bankruptcy.
- You have co-debtors on personal (nonbusiness) loans. In Chapter 7 Bankruptcy, the creditors will go after your co-debtors for payment. In Chapter 13 Bankruptcy, the creditors may not seek payment from your co-debtors for the duration of your case.
- You feel a moral obligation to repay your debts, you want to learn money management or you hope new creditors might be more inclined to grant you credit after a Chapter 13 Bankruptcy than they would after a Chapter 7 Bankruptcy.
Will Everyone Know That I Filed For Bankruptcy?
Bankruptcy is public record but unless you are a prominent official in society, people aren’t going to go looking. In most cases, the only people who are going to know are those who you tell and those who have access to the Bankruptcy Court record system.
Am I a “Bad Person” For Filing Bankruptcy?
No. There is a reason that over one million people file for Bankruptcy each year and it is not because they are bad people. Many times people have to file because they have lost their job, gone through divorce, or experienced medical illness. Bankruptcy is a solution to help good people get through a bad time. It provides hard working people with the fresh start that they deserve, but are not able to obtain on their own. Bad times don’t make a person bad.
Is It Hard To File For Bankruptcy?
Whether you choose to file Chapter 7 Bankruptcy or Chapter 13 Bankruptcy, the Bankruptcy process is not extremely difficult, but it is very technical and there is a lot of paperwork involved. However, having a skilled Bankruptcy Attorney makes the process much smoother. At your free initial consultation, we will discuss what information you need to gather before we file your Bankruptcy case.