Frequently Asked Questions about Chapter 7 and Chapter 13 bankruptcy
Can I still file bankruptcy after the new bankruptcy laws passed by Congress?
Yes. We have filed well over three thousand cases under the new laws, and for most people, the changes have little impact on their ability to obtain some type of bankruptcy protection. While there are some relatively minor increases in court costs, we are committed to keeping our fees at reasonable levels and to making sure that you are able to eliminate as much debt as possible.
Will I lose my home, car or other assets if I file for bankruptcy?
No. It is unfortunate that so many people have been led to believe that they will have to give up assets if they file for Chapter 7 bankruptcy. So long as you are willing to keep paying your mortgage or car loan, there is no risk that you will lose your home or car if the right type of bankruptcy is filed on your behalf. The bankruptcy laws also provide exemptions for other assets, such as wages, household furnishings, pensions, life insurance policies, bank accounts, tax refunds, and many other items.
How can bankruptcy help me if I am behind on mortgage payments or real estate taxes?
The Chapter 13 bankruptcy laws are designed to allow homeowners with a regular source of income catch up on delinquent mortgage payments and real estate taxes over a period of 3-5 years. You will begin making regular mortgage and tax payments after your case is filed, and you will also make an extra, affordable payment each month towards the delinquent sums. In most cases, Chapter 13 will also help you eliminate the majority of other debts that you owe. You can file Chapter 13 at any point until your home is actually sold at foreclosure. If you are in foreclosure and call us immediately, there is an excellent chance we can help.
Is it too late to file bankruptcy after a wage garnishment has started or my bank account has been restrained?
No. Many of our clients call us (understandably upset) because they have been served with a wage garnishment or bank account restraint. If your wages are being garnished, the filing of a bankruptcy will force the creditor to terminate the garnishment, usually within one pay period. Also, if your bank account has been restrained because you have a judgment against you, the creditor will have to release the account as soon as they receive notification of your bankruptcy filing.
How will bankruptcy effect my credit?
In our experience, most people already have significant credit problems by the time they contact our office. While the filing of a bankruptcy will obviously have negative credit implications, these are generally far outweighed by the benefits clients receive by obtaining a fresh start from their debts. The appropriate question to focus on when making the decision to file for bankruptcy is whether you can pay your debts on time and in full each month. If not, then your credit score is probably going to get worse each month if you do not file bankruptcy. On the other hand, if you file bankruptcy, your credit score will begin to improve and within a few years should be at least as good (and often much better) than it was just before you filed bankruptcy. Most people are able to obtain car loans and mortgages within 2-3 years after filing bankruptcy, so long as they have sufficient income.
Is bankruptcy better than debt settlement or consumer credit counseling?
This is a question that we can only answer after we know specifics about your overall debt situation and monthly budget. However, what we have found over the years is that the reduction in payments that can sometimes be achieved through credit counseling programs is generally not enough to solve a client’s financial problems. If a person is barely able to make their minimum credit card payments each month, it is unlikely that their problems will be magically eliminated by a counseling program. However, there are some situations where we do believe that credit counseling is the better option. For example, if your total debt is less than $5,000, then bankruptcy is probably not a good choice. Also, there are some people that have too many assets or too much income to qualify for bankruptcy. After we review your situation, we will tell you if a credit counseling program is the right option for you.