Below are some of the more common questions we are asked by people who are considering filing for Bankruptcy. You may also find more information about many of these topics on other pages within the site. Please also feel free to contact us online, via email or by phone at (617) 227-8383 with any questions or concerns you may have.
Q: If I File For Bankruptcy, Will I Lose My House, Car Or Other Property?
For most people the answer to this question is no. The average person usually does not lose any of their property when they file for Bankruptcy. This is because the Bankruptcy Code provides that people are entitled to keep a whole list of things of varying values when they file for Bankruptcy. These are called exemptions and they are very generous so that the property held by the average person is usually protected. For more information, please refer the page on this site “What Stuff Do I get to Keep?”
Q: Will My Credit Be Ruined For A Long Time If I File For Bankruptcy?
A: There is no getting around the fact that a Bankruptcy will have an effect on your credit. Regardless of whether you file under Chapter 7 or Chapter 13, it will be on your credit report for 10 years. However, that does not mean that you will not be able to get credit for 10 years. In fact, many people start receiving credit offers within a few months of the Bankruptcy discharge being entered. These are typically not great offers (i.e., low available credit and high interest rates). However, I do encourage people to take some of these offers. If you do so, you need to be careful with this new credit. Buy smaller items that you can afford to pay cash for, like groceries, gas, etc. Then be sure to make the payments on time and if possible, pay the entire balance each month. You will be surprised at just how quickly your credit bounces back. If you kept a car or home with a loans against them during the Bankruptcy, your credit will also be helped tremendously by making these payments on time. To make a long story short, many of our past clients who have been careful after their Bankruptcy, have reported that their credit bounced back within 1 – 2 years. Also, if you are considering Bankruptcy as an option you probably already have things on your credit report which are having a negative effect. Things like high balances (even if you pay on time); missed or late payments; lawsuit judgments; repossessions; and foreclosures will all have serious effects on your ability to get credit. Many people have some or all of these things. Bankruptcy will eliminate at least some of these problems and allow your credit to recover more quickly.
Q: Will Filing For Bankruptcy Affect My Immigration Status?
No. Bankruptcy does not affect your immigration status. The laws are designed to help both citizens and non-citizens achieve a fresh start free from debt. Even those who do not currently have proper immigration status are eligible to file. As long as you live; have a residence; have property; or a business in the U.S. you can file for Bankruptcy. For more information, please refer the page on this site “Who Can File & Who Should File.”
Q: My Mortgage Company Sent Me A Foreclosure Letter. Can I Still Save My House?
Yes. A Bankruptcy filed under both Chapter 7 and Chapter 13 will stop a foreclosure sale, so long as the Bankruptcy is filed before the date and time of the sale noted on the letter you received. Under both, you receive the benefit of the “Automatic Stay.” This means that creditors must immediately cease all collection activity, including foreclosing on your home. On more than one occasion we have filed Bankruptcy for people in as little as an hour before the foreclosure sale and saved their homes. It is important to keep in mind though, that the automatic stay will not stop this forever, unless you either (1) make arrangements with your mortgage company to get caught up on your own (often times through a loan modification); or (2) file under Chapter 13 and include the back payments (also called arrears) in the Chapter 13 Plan and pay them down this way. If you are facing a foreclosure, you should really read more on pages of this site “Stop Foreclosure, Lawsuits, Calls & Harrassment”
and “Chapter 13.”
Q: What Can Bankruptcy Do For Me?
Bankruptcy may make it possible for you to:
- 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 manufactured 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.
Q: What Bankruptcy Cannot Do?
Bankruptcy cannot, however, cure every financial problem. Nor is it the right step for everyone. In Bankruptcy, it is usually not
- Eliminate certain rights of “secured” creditors. A creditor is “secured” if it has taken a mortgage or other lien on property as collateral for a 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 on the debt if you decide you decided to give back the property. But you generally cannot keep secured property 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, most student loans, court restitution orders, criminal fines, and some taxes.
- Discharge debts that arise after Bankruptcy has been filed.
Protect co-signers on your debts. When a relative or friend has co-signed a loan, and the consumer discharges the loan in Bankruptcy, the co-signer may still have to repay all or part of the loan. Co-signers on some debts can be protected, however, if a Chapter 13 bankruptcy is filed.
Q: Can I Own Anything After Bankruptcy?
A: Yes. Many people believe they cannot own anything for a period of time after filing for Bankruptcy. This is simply 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.
Q: Will I Have to go to Court?
A: In most Bankruptcy cases, you only have to go to a proceeding called the “creditors meeting” 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. In addition, while your creditors are invited to this meeting and are allowed to ask some limited questions of you, it is important to note that it is rare that any creditors will actually attend this meeting. Occasionally, if complications arise, or if you choose to dispute a debt, you may have to appear at a hearing. If you do need to go to court, you will receive a notice of the court date and time from the our office, as well as the Bankruptcy Court.