Bankruptcy Frequently Asked Questions

Do I have any options other than bankruptcy?

Bankruptcy is never the only option. During our initial consultation we will evaluate your total debt and determine whether bankruptcy is the best option. For most clients with credit card and medical debt, we can discuss whether credit counseling might be appropriate. We also represent many clients in direct negotiation and settlement of their debts, including the defense of pending lawsuits. Business clients also have many options to avoid bankruptcy, and we will formulate the best possible strategy.

Which chapter is right for me?

If you are more than a payment behind on your mortgage, have valuable assets, owe significant debts for electronics, appliances, or furniture, or you can afford to make monthly payments toward your debts, then Chapter 13 may be appropriate for you. For those with mostly credit cards and medical bills, Chapter 7 may be appropriate. We will analyze your situation carefully and explain how Chapter 7 and Chapter 13 can help you.

Can I keep my house?

Most of our clients keep their homes, regardless of whether they file Chapter 7 or Chapter 13. We will analyze your situation carefully, and we will give our honest opinion as to whether we believe you can afford to keep your home. If so, we will recommend a solution that provides the best relief from your other debts to protect your home.

Can I keep my car?

Most of our clients keep their car, regardless of whether they file Chapter 7 or Chapter 13. In most cases, you will continue to make your monthly car payment as if you never filed bankruptcy. Sometimes, however, we may be able to recommend a solution that actually lowers your car payment.

Will I lose any of my property?

You will never lose property in a Chapter 13 reorganization plan. In a Chapter 7, however, there are limits to what you may keep. Most of our clients keep all of their possessions. We will discuss all of your assets and recommend a solution that allows you to keep everything you wish to keep.

Do I have to list all of my creditors?

You must list all of your debts. You will be asked to testify under oath that you listed all of your debts. Therefore, you must include debts that you intend to pay after the bankruptcy is filed, including mortgages, car loans, credit unions, and loans from family members. Even though a debt is listed, bankruptcy law does not prohibit you from paying the debt. For example, most people keep their homes and cars, and some debts must be paid because they cannot be discharged, such as taxes and student loans. Your attorney will explain how each of your debts will be treated.

What if I have creditors I don’t know about?

Many people owe debts for which they no longer receive statements. If you have debts that were charged off, or you simply cannot be sure whom you owe, we recommend that you obtain a credit report. There are three major credit reporting bureaus in the United States: Equifax, Experian, and TransUnion. Each credit reporting bureau is required to provide you with a free credit report every year. To obtain free credit reports, visit www.annualcreditreport.com. If you are no longer eligible for a free credit report, you may contact the credit reporting bureaus directly:

In most Chapter 7 cases, all debts will be discharged, regardless of whether they are listed, as long as they are not omitted intentionally. In some cases, however, a debt will not be entirely discharged if it is not listed. You should not feel obligated to obtain a credit report if all of your debts are relatively recent and you possess enough information to provide every creditor with notice of the bankruptcy. Otherwise, you should make every reasonable effort to identify all of your creditors.

What if I want to pay some of my creditors?

Bankruptcy law does not prohibit you from paying debts after your bankruptcy case has been filed. For example, most people keep their homes and cars, and some debts must be paid because they cannot be discharged, such as taxes and student loans. In addition, you may repay loans to your family, friends, employer, and credit union. You may also continue to repay loans from your retirement plan. In some cases, the debt will be discharged and repayment will be entirely voluntary. In other cases, you will reaffirm the debt and it will not be discharged. Your attorney will explain how each of your debts will be treated.

What happens with my income tax refunds?

Income tax refunds are considered cash in a bankruptcy. Therefore, it is important for you to consult with an attorney before you file your tax returns, or at least before you receive your refunds. When you receive an income tax refund prior to filing a bankruptcy, you should never pay back loans to family members, friends, or employers, and you should never send more than $600.00 to one of your creditors. If you file bankruptcy before you receive your refunds, however, your bankruptcy trustee may keep all or a portion of your income tax refund and send payments to your creditors. Your attorney will discuss this issue with you and recommend a solution that protects all or most of your income tax refunds.

What happens to my credit?

Bankruptcy has the most adverse impact on your creditworthiness. Your debts will remain on your credit report for an additional seven years, and each should be reported as included in your bankruptcy. The bankruptcy case itself will be reported for ten years. If bankruptcy is the right solution for you, your attorney will discuss some of the best ways to re-establish your credit after bankruptcy. Regardless, you must be prepared for the serious and permanent impact that bankruptcy can have on your credit.