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FREQUENTLY ASKED QUESTIONS
CHAPTER 7
CHAPTER 13
CHAPTER 7 BANKRUPTCY vs. CHAPTER 13 BANKRUPTCY, WHAT IS THE DIFFERENCE?
BANKRUPTCY AUTOMATIC STAY
CARS AND HOUSES IN BANKRUPTCY
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Frequently Asked Questions About Bankruptcy
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At Daniels & Daniels , we work to keep you informed
about your choices. If your creditors are harassing you, if your wages
have been garnished, if you are being threatened with foreclosure, or
if you can’t keep up with your bills, you need to understand how bankruptcy
may help you get out of debt and give you a fresh financial start. Many
people have misconceptions about bankruptcy that prevent them from considering
it as a viable alternative. Do not let the fear that you will never have credit
again or will never be able to buy a house stop you. Bankruptcy should not
prevent you from regaining credit, buying a house or a new car if you have
a steady income and do not incur more debt. Bankruptcy may be a good
solution for you. Get the facts!
1. Can a debt counseling service help eliminate bills?
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Debt counselors do not eliminate your debts, nor can they stop your creditor from
suing and/or harassing you. Once we file your bankruptcy case with the court, many
of your creditors are prohibited by law from proceeding with any legal actions against
you, when your bankruptcy is complete, and you receive the discharge many of your
debts are gone forever. In between that time Daniels & Daniels, Attorneys at
Law will handle your creditors. So that they stop harassing you, because creditors
will no longer be able to contact you. They have to talk to us! YOU DO NOT HAVE
TO TALK TO CREDITORS. This should end harassing phone calls! Debt Counselor Services
are OFTEN OWNED BY THE CREDITORS. Don’t let the words “ non-profit” fool you. When
you use a debt counselor, someone is making a profit, and in many cases you’ll still
be in debt. Debt counselors work by making arrangements for you to pay off your
debt, usually over a long period of time, and often with interest still accruing
on the unpaid balance. Stop, think about it, if you had the money to make payments
you would have dealt with the creditor yourself. Ask yourself Do I need a debt counselor
or do I need an attorney who may be able to get rid of my debt forever?
2. How has the Law changed? Is bankruptcy still available to discharge debt?
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Bankruptcy is still alive and well and available to the many people. In October
2005, new bankruptcy laws went into effect that may make it more difficult for some
individuals to qualify for Chapter 7 relief. However, those in serious financial
trouble will still be able to qualify for protection under the Bankruptcy Code if
they meet the requirements
3. Does filing for Bankruptcy mean that you will never have credit again?
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No! What ruins a person’s credit? The inability to pay your bills, consistently
paying them late or making minimum payments forever so that your debt to income
ratio never improves! Once you file for bankruptcy and your debts are discharged
they are gone forever as if they never existed. You will have a clean slate to make
a fresh start! It will be up to you how you handle your finances going forward.
If you keep up with any new debts that you incur after the bankruptcy, your credit
record should improve. So the myth that noone will give you credit after bankruptcy
doesn’t make sense. Think about it, assets the risk the same way a new creditor
will. If you owned a credit card company, who would you rather give a credit card
to: someone who has a massive debt load and is behind on their bills, or someone
whose bills have been eliminated and just has their day to day living expenses?
Probably the latter, right? That’s why if you have a job with steady income you
should be able to get credit after bankruptcy. No debt and the fact that you won’t
be able to file bankruptcy again for another eight years, combined make you a good
credit risk after bankruptcy.
4. Does a previous foreclosure and/or car repossession mean that I will never be able to buy a house or car, or rent an apartment, after bankruptcy?
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If you work, file tax returns and prove you have a steady income and then we should
be able to rebuild your credit after the bankruptcy. Without any debt you should
be a good credit risk, and companies will want you to make these types of purchases
(houses, cars, etc). At our post-bankruptcy session Daniels & Daniels Attorneys
at Law, P.A. will share with you the factors that creditors look for to raise your
credit scare so that your life after bankruptcy will be as smooth as possible. Daniels
& Daniels Attorneys at Law are experienced attorneys, we offer a credit planning
session after the bankruptcy is over because we know that you may need help to identify,
plan and reach your goals.
5. Can you ever discharge debts like student loans and taxes?
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While this may be difficult under Chapter 7 Bankruptcy, unless you meet certain
criteria, the fact that in many instances you can include students loans and taxes
in a Chapter 13 filing and a repayment plan will allow you to pay them off over
time.
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CHAPTER 7 BANKRUPTCY vs. CHAPTER 13 BANKRUPTCY, WHAT IS THE DIFFERENCE?
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The answer to this question depends on your specific circumstances. Chapter 7 bankruptcy
may be better for people who have a lot of unsecured debts, like credit card and
medical bills without owning much else. If your income is low, or you are unemployed
and most of your debts are unsecured, and you owe more than you own then, you might
want to consider Chapter7 bankruptcy. For those who have regular income and non-exempt
property that they’d like to keep, Chapter 13 may be the better option. It takes
a full analysis of your situation with one of our attorneys to determine which is
the best option for you.
CLICK HERE -->
7or13.pdf
to view a chart that will help you compare, but the final decision must be made
when you come in for a consultation as there are often factors that may affect this
decision!
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WHAT IS AN AUTOMATIC STAY UNDER THE BANKRUPTCY LAW?
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If You qualify how will it help?
The automatic stay will remain in effect until:
HOW DOES THE AUTOMATIC STAY PROTECT YOU?
AN AUTOMATIC STAY DOES NOT STOP:
If you qualify how will it help?
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Under the bankruptcy code a debtor (the person who owes
the money) is offered protection under some situations. An automatic stay stops
any lawsuit filed against you and almost any other action against you, your property
and your paycheck In fact, with some limited exceptions, this “stay”, doesn’t just
stop but it prohibits any and all collection activity once the petition for bankruptcy
is filed. This means that once you file for bankruptcy all of your creditors must
stop trying to collect from you. Creditors cannot continue to call you or send you
collection letters. They cannot sue you, or repossess your car. They cannot garnish
your wages, even if a garnishment order is already in effect. NOTE: There are limited
circumstances in which the automatic stay does not automatically activate when your
bankruptcy case is filed, and may require Daniels & Daniels, Attorneys at Law
to act on your behalf and file a motion in Federal Court to keep it in effect. You
may not be entitled to an automatic stay if you have recently filed another Bankruptcy.
The automatic stay will remain in effect until:
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1. You complete the bankruptcy and receive a discharge;
2. The bankruptcy judge lifts the stay at the request of the creditor;
3. The property you want to protect is no longer part of the bankruptcy estate.
HOW DOES THE AUTOMATIC STAY PROTECT YOU?
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1) FORECLOSURE: If the
bank has instituted a foreclosure action against you and you are in jeopardy of
losing your home, the automatic stay will stop the foreclosure action. The filing
of a Chapter 13 bankruptcy may be able to save your home from foreclosure. Usually
a Chapter 13 bankruptcy petition to save your home can be filed anytime prior to
the sale of your home. In many cases, even the filing of a Chapter 7 bankruptcy
will temporarily stop a foreclosure action.
2) REPOSSESSION: The automatic stay also stops your creditors from
regaining possession of your automobile. However this is a SHORT-TERM SOLUTION.
To keep your vehicle under a Chapter 7 bankruptcy, you must reaffirm the car loan.
Before you make this decision it is important to analyze your entire financial situation.
How long do you have left to pay on the car loan? Are you upside down in the lease?
If you discharge your other debts will you have enough income to keep up your car
payments for the life of the loan? Is the car worth keeping? We need to look at
the fair market value of the car , is it worth what you are actually paying for
it? Chapter 13 bankruptcy may save your car, but you still have to make all the
payments timely, or the trustee and/or the loan company can ask the judge to “lift
the stay” and lawfully repossess your car.
3) UTILITY SHUT-OFF: If your water, electric, and/ or gas have
been disconnected by the utility company, filing for bankruptcy will trigger on
automatic stay which will force the utility company to reconnect your service. The
utility company may require a small deposit to be paid within a reasonable time
after the Petition for bankruptcy is filed. Beware, failure to make this deposit
may result in your utilities being turned off!
4) LAWSUITS/ GARNISHMENTS: Filing bankruptcy can stop your wages
from being garnished and lawsuits from proceeding. The automatic stay works to protect
your paycheck from creditors thereby allowing you to continue taking home a full
paycheck. Under Chapter 7 you may eliminate the entire outstanding debt.
5) TAX LEVIES: While an automatic stay may stop the IRS from issuing
a tax levy or seizing your property to satisfy delinquent tax debt. The IRS can
still audit you, require you to file tax returns , assess tax liability, and/or
demand payment of fines and assessments.
AN AUTOMATIC STAY DOES NOT STOP:
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CRIMINAL PROCEEDINGS: If you are charged
with a crime such as fraud, driving under the influence or, theft then the filing
of bankruptcy will not stop the state from prosecuting you or from imposing fines
and court costs. However, if a criminal action can be separated then the creditor
may be stayed from collecting on the underlying debt.
CHILD SUPPORT ACTIONS: The automatic stay will not stop a lawsuit
against you seeking to establish paternity or to establish, modify, or collect child
support.
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CARS AND HOUSES IN BANKRUPTCY
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