I’m Thinking of Filing for Bankruptcy. What Should I Do First?
The most obvious answer to this question is give Contant Law a call. We will be happy to speak with you on the telephone to answer a few questions. We also offer a complimentary in person consultation. Beyond that, my best advice is to get organized. Start gathering the documents your attorney will use to assess whether you qualify for bankruptcy and what type. Gather things like your tax returns, pay stubs, bank statements, retirement account statement, credit card bills, mortgage statements, car payment statements, collection letters, lawsuit papers, etc. These are all things your attorney will want to review. At Contant Law, we email a checklist to our clients to help them get organized for their first meeting with us.
If I Filed for Bankruptcy Before, Can I File Again?
It depends on when you filed your last bankruptcy case and what happened with that case. You cannot file your case again for 180 days (approximately 6 months) if your case was dismissed:
- By the court for willful failure to abide by court order or appear before the court; or
- Voluntarily by you after a creditor filed a motion for relief from the automatic stay
If you received a discharge in a Chapter 7 case, you cannot file another Chapter 7 case for eight years. However, you can file a Chapter 13 case after four years.
If you received a discharge in a Chapter 13 case you cannot file under Chapter 7 for six years unless your payment plan under Chapter 13 was made in good faith, using your best efforts and paid at least 70% of the allowed unsecured claims. However, you can file another Chapter 13 case after two years.
It is important to note here that the time period begins to run from the date that the previous case was filed, not discharged. For instance, if you filed a Chapter 13 case on July 1, 2008, but did not receive your discharge until June 21, 2013, you would be eligible to file a case under Chapter 7 after July 1, 2014.
Am I Going to Lose My House if I File for Bankruptcy?
If the equity in your house is less than $500,000 and you have a valid Homestead properly filed with your local Registry of Deeds, there is no reason why filing for bankruptcy would cause you to lose your house. However, you must continue to pay and remain current with your mortgage. If you do not remain current, then your mortgage company will have the right to foreclose on your home.
What Type of Bankruptcy Do I Need to Save My House?
If you are behind on your mortgage and facing potential foreclosure, any type of bankruptcy will, at least temporarily, stop the foreclosure. However, to keep your home long term, a Chapter 13 is likely the best type of bankruptcy to save your home. In Chapter 13 you are in a Court structured repayment plan for no less than 3 years and no more than 5 years. That plan can be used to help you get caught up on your mortgage. As long as you have enough income to (1) make your Chapter 13 plan payment; and (2) your current (going forward) mortgage payments, then a Chapter 13 Bankruptcy may be a great option to help you save your house.
Can a Bankruptcy Stop a Foreclosure on My Home?
Yes. Filing for bankruptcy will, at least temporarily, stop the foreclosure of your home. We are often called by people facing imminent foreclosure. It is not unusual to receive a call from a client a day or two before the scheduled foreclosure. When we file their bankruptcy they immediately receive protection under what is known as the “automatic stay.” The automatic stay protects the person from creditors making any further attempts to collect on their debts, including, continuing with a foreclosure. However, keep in mind the protection from the automatic stay can be temporary. If you fail to become current with your mortgage, either on your own or through a Chapter 13 Bankruptcy, the mortgage company can seek permission from the Bankruptcy Court to get past the automatic stay and continue with the foreclosure.
If I File for Bankruptcy, Will I Lose My House, Car, Bank Accounts, Retirement Accounts and Other Stuff?
Generally, most people do not lose their possessions when they file for bankruptcy. Each person is entitled to keep certain things when they file for bankruptcy. These are called exemptions. There are lists of things with varying values that you will be able to exempt in bankruptcy. In recent years these exemption lists are quite generous, so that the average person does not end up losing any of their property. You will need to review all your belongings with your attorney, so that he or she can select the best exemptions for your situation.
Will Bankruptcy Wipe Out My Student Loans?
Unfortunately, at this time, in most circumstances you will not be able to discharge your student loans. The exception to this is where you can show that the loans pose an “undue hardship.” However, as demonstrated by past cases, this is extremely difficult to show, and most people are left without the ability to discharge their student loans. But you may be able to discharge unpaid tuition payments to the college or university. There is a distinction between this unpaid tuition debt and student loans.
How Will Bankruptcy Affect My Credit Score?
Many people are reluctant to consider bankruptcy because they fear they will never be able to re-establish credit. It is true that filing for bankruptcy will have an effect on your credit score. It is a negative mark on your credit. That mark will be there for 10 years. However, your credit score is determined by many things, such as the amount of credit used, number of inquiries, late payments and length of time credit has been established. While a bankruptcy will be on your credit report for 10 years, it does not mean that you will not be able to get credit during that period. Most of our clients have told us that after the bankruptcy they were able to re-establish good credit in approximately 1 -2 years. They did this by being careful with their spending, credit use and always making payments on time. Where bankruptcy can have a positive impact on your credit, is that it will eliminate a large amount of debt that has likely been bringing your credit score down for years. You will likely receive credit offers shortly after your bankruptcy discharge has entered. We encourage people to accept one or two of these. The offers will not be great (high interest rate and low credit limit), but if you are careful they will help you to re-establish credit more quickly.
Can Creditors Keep Calling Me if I File for Bankruptcy?
No. Once you file for bankruptcy you are immediately protected by what is called the “automatic stay.” This will not allow creditors to continue collection activity of any kind, including harassing telephone calls, demand letters, lawsuits, repossession, foreclosures, etc. the Bankruptcy Court will notify your creditors by mail that you filed for bankruptcy. If they continue to call or otherwise try to collect money from you after receiving this notice, the court can impose sanctions on them, including ordering them to pay you a sum of money and payment of your attorney’s fees.
If I File for Bankruptcy, Do I Still Have to Pay My Mortgage?
Yes, if you want to keep your home you will have to continue making your mortgage payments. If you do not, the mortgage company will have the ability to seek to foreclose on your home. If you do not want to keep your home, the bankruptcy will protect you from any additional monies the mortgage company may have otherwise sought from you after a foreclosure.
What Do I Need to Create a List of My Household Items to File for Bankruptcy?
When you file for Bankruptcy we are required to provide a list of everything you own. You are allowed to keep certain things after filing for Bankruptcy. These are called “exemptions.” If you have property that we are unable to exempt, then the Bankruptcy trustee may seek that property, or its equivalent value in cash, in order to help them pay your creditors. As a practical matter, most average people do not end up losing any of their household good or other property. The exemptions are generous so that the average person’s possessions are typically exempt from taking. At Contant Law we will review your property and the applicable exemptions with you to ensure that you are protected as much as possible under the law.
If I Am Being Sued, Is It Too Late to File for Bankruptcy?
No. Once you file for bankruptcy you are immediately protected by what is called the “automatic stay.” This will not allow creditors to continue collection activity of any kind, including lawsuits, harassing telephone calls, demand letters, repossession, foreclosures, etc. Once we file your bankruptcy we will notify the creditor’s attorney and the court. The court where the lawsuit is filed will “stay” (a/k/a suspend) the lawsuit until the bankruptcy is over. If you receive a discharge in the bankruptcy, the lawsuit against you will be dismissed.
If Someone Has a Court Judgment Against Me, Can I Discharge It in Bankruptcy?
In most cases yes. So long as the debt is dischargeable in bankruptcy, the judgment will be too. Some of the more common debts which are not dischargeable in bankruptcy include:
- Domestic support obligations (alimony, child support and divorce property divisions)
- Debts relating to personal injury caused by a driver under the influence of alcohol or drugs (includes boats and airplanes)
- Debts relating to injuries that were the result of willful or malicious acts
- Student loans (in most circumstances)
- Certain taxes
- Debts incurred through fraud
- Court ordered restitution or fines for criminal acts
This list does not include all debts which are non-dischargeable. We are happy to discuss your particular issues with you to determine if your debts are dischargeable in bankruptcy.
If I File for Bankruptcy, Will I Have to Go to Court?
Yes. Everyone who files for bankruptcy will have to go to court to see the Bankruptcy Trustee assigned to their case at least once. The Trustee will ask you several questions concerning your assets, debts and why you filed for bankruptcy. This meeting is often referred to as a “creditor’s meeting” because your creditors are invited to attend and allowed to ask you relevant questions concerning your financial condition. However, as a practical matter, creditors rarely choose to attend this meeting. While you can expect to be there for approximately 1 hour (usually waiting to be called), the actual questioning typically only takes about 5 to 10 minutes.
Can Bankruptcy Help Me Remove Attachments, Judgment Executions and Other Judicial Liens From the Title to My Home?
In most cases, through a bankruptcy we are able to remove attachments, judgment executions and other types of judicial liens from the title to your home. However, this does not occur automatically once you file for bankruptcy. We will need to file a particular motion with the court and demonstrate that you are eligible to have the liens removed.
Can Bankruptcy Discharge or Wipe Out My Back Income Taxes?
The short answer is sometimes. The general rule is that income taxes which are older than three years and for which a return has been filed more than 2 years ago, may be dischargeable in bankruptcy. However, there are many exceptions to this general rule. For instance, as to Massachusetts State income taxes, if you filed your returns even one day late, you won’t be able to discharge them in bankruptcy. Also, if the taxing authority has filed a tax lien against your property, it is unlikely you will be able to discharge the income taxes associate with that tax lien. At Contant Law we will review your taxes and situation to determine whether any of your income taxes can be discharged.
What Will I Be Asked at the Creditor’s Meeting?
At the creditor’s meeting, the Trustee assigned to your case you will first ask you to identify yourself by providing a government issued photo ID (driver’s license, military ID, etc.) and proof of social security number (i.e. social security card, Medicare card or tax form like a W-2). The Trustee will then administer you an oath and you will have to agree to answer questions truthfully. The Trustee will then ask your several questions concerning your bankruptcy petition and your financial condition. While the questions asked by the different Trustees will vary, most will typically ask:
- If you signed your bankruptcy petition and schedules after reading them carefully;
- If the bankruptcy petition and schedules are accurate
- About some of the property listed within the petition and schedules in order the verify that is all that you own
- If you recently received or are likely to receive an inheritance within the next 6 months
- If you have any pending claims for personal injuries (i.e. auto accidents, slip and fall, dog bite, work injuries, etc.)
- If anyone owes your money which you could realistically collect through a lawsuit or otherwise
- Why you filed for bankruptcy
Creditors are also invited to attend this meeting and may ask relevant questions concerning your financial condition. However, as a practical matter, creditors rarely choose to attend this meeting.
Can I File for Bankruptcy if I Have Money in a Retirement Account or Pension?
Yes. You will both be able to file for bankruptcy and is most cases be able to keep your retirement accounts and/or pensions. The Bankruptcy Code has exemptions which are very generous as they relate to most qualifying retirement accounts. For most retirement accounts there is no limit as to how much money you may have in the account. At Contant Law we will review your retirement and pension accounts to ensure that they are protected by one of these exemptions prior to filing your bankruptcy.
Why Do My Taxes Have to Be Filed Before I Can Declare Bankruptcy?
It is a requirement of the Bankruptcy Laws that you have filed your Federal and State tax returns for the most recent four years.
Do I Need to Pay My Back Income Taxes Before I Can File for Bankruptcy?
No. While the Bankruptcy Laws require that you have taxes filed for the most recent four years, there is no requirement that you have paid any taxes owed prior to filing for bankruptcy.