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In today’s harsh economy, more and more people are considering filing for Bankruptcy.  There are a lot of conflicting messages in the media, and consumers often find themselves misinformed as to their options under the Bankruptcy Code.  The attorneys at Valdez & Paré will sit down with you and give you an honest evaluation of your financial situation to help you find the right solution - even if it isn’t filing for Bankruptcy.  We can help you stop pending foreclosures and repossessions, and inform you of your legal rights against collectors. 

Bankruptcy Frequently Asked Questions:*

Is Bankruptcy the right option for me?

Bankruptcy is not right for everyone.  It is important that you meet with an attorney to discuss the specific aspects of your financial situation.  If any of the following describe your situation then bankruptcy might be the right choice for you.  

·        My house is up for foreclosure or I’m so far behind on my house note I don’t know how I can catch up.

·        My creditors are threatening to repossess my car if I don’t pay soon.

·        Creditors are calling me constantly.

·        A creditor has sued me.

·        My bills are out of control, and I feel like I can never catch up.

·        I’m cutting necessary spending to pay my creditors.

·        I’m swamped with medical bills due to an injury or illness. 

If any of these sound familiar, call to schedule a free consultation.  We can give you an honest evaluation of your situation. Even if bankruptcy is not the best choice for you, we may still be able to help.

Will I have to repay my debts?

It depends on your specific situation.  You may qualify for a Chapter 7, which discharges most debts without a repayment plan.  The qualification process for a Chapter 7 can be a little complicated, and it is important to discuss this with an attorney.  The primary qualification is your income minus certain qualified expenses.  If you do not qualify for a Chapter 7, then you will repay a PORTION of your unsecured debt in a Chapter 13 repayment plan.  The amount you have to pay will depend on your monthly income minus certain qualified expenses.  Any unsecured debt not repaid through the plan will be discharged just as though you filed a Chapter 7.  There may be other reasons why repaying a portion of your debt through Chapter 13 is the best option for you.  Please call for a free consultation so we can recommend the best choice for you.

What types of debts are discharged in bankruptcy?

Most unsecured debts are dischargeable in bankruptcy.  These debts include: most credit card bills; loans that are not secured by any property; medical bills; old utility bills; debt still owed on an old repossession or foreclosure, and most personal loans. Debts that will not be discharged in a bankruptcy include: certain marital debts decreed to you in a divorce; child support obligations; student loans; and most federal and state income taxes.

My house is posted for foreclosure – can bankruptcy stop the bank from taking it?

Yes. The filing of a bankruptcy petition puts into effect an “automatic stay” which means that your mortgage company or any other lien holder cannot foreclose on your home without court approval.   If you file a Chapter 13, you have the opportunity to catch-up on your house payments through a Chapter 13 payment plan.  As long as you make your plan payments on time, you won’t lose your home. 

Can bankruptcy stop repossession?

Yes. The filing of a bankruptcy petition puts into effect an “automatic stay” which means that a car finance company or any other lien holder cannot repossess your car without court approval.   If you file a Chapter 13, you have the opportunity to catch-up on your car payments through a Chapter 13 payment plan.  As long as you make your plan payments on time, you won’t lose your car. 

Does filling for bankruptcy destroy my credit forever?

No.  A bankruptcy does stay on your credit report for up to 10 years and is considered a negative item, but it does not destroy your credit.  It is important to be pro-active to rebuild your credit after bankruptcy.  You will find that you have many options for opening credit cards and taking out auto loans made for customers with bankruptcies.  Being smart about taking on new credit will help you rebuild your credit much sooner.  

I operate my own business. Can I file for bankruptcy and keep my business?

This can be a complicated question.  In some cases you will be able to keep your business and in others you may not be able to.  It is important that you speak with an attorney regarding your particular situation.  Some of the things that have to be considered are:

• What type of business entity do you have?
• Is your debt personal debt or business debt?
• How much gross and net income are you bringing in from the business?
• Are their other people involved in your business?
• What kind of assets does your business have?

Will my friends and family know I filed?

Bankruptcy filings are public records, but they are not published in newspapers or periodicals.  In order for someone to find out about your bankruptcy, they would have to search the courts records.  The only time a friend or family member could receive notice of your bankruptcy is if you owe them money or they have co-signed on one of your debts.  Even though your friends and family members do not have to know about your bankruptcy, it is something that you should not be embarrassed to discuss with those close to you.  Often discussing your situation with loved ones makes it easier.

Creditor Harassment/Lawsuit Frequently Asked Questions:*

Creditors are calling me all day.  Will bankruptcy stop the calls?

When you file for bankruptcy, the automatic stay prohibits your creditors from contacting you.  Additionally, when you retain an attorney for the purposes of filing bankruptcy, third party creditors are prohibited from contacting you for collection while you and your attorney work to get your petition prepared and filed.

Are creditors allowed to call me at work or to call my friends and family?

Creditors are allowed to call you at work unless and until you notify them that you are not allowed to receive such calls at work.   Creditors are also allowed to contact friends or family member to get a message to you if they are unable to reach you.  However, creditors MAY NOT disclose to anyone else that you owe a debt, and they may not discuss the specifics of your situation.  If creditors are harassing you at work or telling friends and family about your debt, contact us – you may have a case against them for violating the law.

Can my creditors sue me?

Creditors can sue you for collection of a debt within the statute of limitations and before you file for bankruptcy.  Once you have filed, creditors are prohibited from filing a collection suit against you, but can in some cases take adversarial action against you in bankruptcy.  Once the bankruptcy court formally discharges you, the debts are no longer valid and you cannot be sued for collection. 

What can I do if I’ve already been sued?

If you have already been sued and a judgment was rendered against you for non-payment of an unsecured debt, bankruptcy can wipe the debt out in the same way it does other unsecured debt.   If you have recently been sued, you should file an answer and follow-up on all discovery requests.  An attorney can help you do that.  If you are not planning on filing for bankruptcy, it is important to defend yourself in the suit.  A judgment allows your creditor to take any legal action to collect from you, including attaching unprotected property. 

 

* The information contained herein is not intended to be legal advice and is for informational purposes only. Please call for a free consultation to receive legal advice specific to your circumstances.