FAQs
1. If I Don't file bankruptcy, am I personally liable for the balance of my home loan that was not paid off in a foreclosure or short sale?
1. If I Don't file bankruptcy, am I personally liable for the balance of my home loan that was not paid off in a foreclosure or short sale?
It depends. California is a “non-recourse” State and does not allow deficiency judgments on loans you obtained to purchase your home. If your first mortgage or your first and second mortgage is used to purchase your residence, the protections of Cal. Code Civ. Proc. §§ 580b prohibit the lender from pursuing you for a deficiency. So, in this situation, if your home is foreclosed upon or is sold at a trustee’s foreclosure sale or short sale, you will not be liable for the balance of the loan that was not paid off in the foreclosure or short sale.
If you refinanced your original home loan or obtained a second mortgage after you purchased your home, this protection technically does not apply. However, most lenders chose to foreclose through the expedited trustee’s sale process, which generally will provide you with the same anti-deficiency protection for the loan being foreclosed, but not any junior liens. Also, the agreement with your lenders allowing a short sale may include a provision where the bank waives its right to collect any deficiency from you, but you need to be careful to be sure that such a provision is included in the contract.
2. If I Don't file bankruptcy, am I personally liable for the balance owed on a second trust deed that is not paid off in a foreclosure or short sale?
If your home is foreclosed or sold at a short sale and your loan is secured by a second or third trust deed that is not purchase money (for example, a home equity line of credit, a loan to pay off credit cards or to make home improvements), you run the risk of the “junior” lender filing suit directly against you on your unpaid notes.
Extinguishing the debt in a short sale is often a matter of negotiating with the bank. But even when lenders are willing to extinguish some or all of the debt, many borrowers may not be aware that they have to ask for a release. So, if you are pursuing a short sale and your second mortgage is not a purchase money loan, it is of the utmost importance for the bank to release you from any further obligation in the short sale agreement.
A short sale does not automatically extinguish the remaining balance of your non-purchase money second mortgage unless settlement is clearly indicated on the acceptance of offer. If your second mortgage is not paid off in the short sale of your home and your lender will not agree to release you from any further obligation on the debt, then you must negotiate with your lender in order to obtain a settlement of the amount owed. This may include negotiating a payment plan or lump sum payment. If all else fails, then filing bankruptcy may be your only course of action to resolve the debt.
3. If I Don't file bankruptcy, am I responsible to pay off any deficiency of my home loan when the lender forecloses?
California is a “non-recourse” State and doesn’t allow deficiency judgments on loans you obtained to purchase your home when your home is sold in a trustee’s sale or short sale. California’s anti-deficiency laws prevent a lender from obtaining a judgment against you for any difference between the unpaid balance of the loan and the amount produced at a trustee’s sale if its loan was used to purchase residential real property and that property secured repayment of the loan. This is “purchase money” anti-deficiency protection. Cal. Code Civ. Proc. §§ 580b.
You may be protected even if your loan is not a purchase money loan. Another type of protection is triggered if your lender elects to foreclose on real property of any kind through a private sale, such as the normal trustee’s sale, rather than a judicial foreclosure, whether or not the loan was purchase money. Cal. Code Civ. Proc. §§ 580d.
4. If I Don't file bankruptcy, am I liable for any deficiency on the new loan that I obtained when I refinanced my home?
Even if you refinance your original loan and thereby lose your purchase money protection, most lenders in the residential real estate market choose to utilize the private power of a trustee’s sale to satisfy their unpaid loans, as it is quicker and its procedures are less burdensome. Once the lender conducts a private trustee sale, you will again gain the benefit of Cal. Code Civ. Proc. §§ 580d. Technically, if you refinance your mortgage; your lender has the option of seeking a judicial foreclosure and thereafter obtaining a deficiency judgment against you, so you would have some exposure if you refinanced you mortgage. However, as stated above, judicial foreclosures are rare in California and are not typically cost effective. So, barring any exceptional circumstances, your lender will most likely conduct a private sale, thereby providing you with Cal. Code Civ. Proc. §§ 580d protection.
5. If I Don't file bankruptcy, am I personally liable for any deficiency for a loan on my rental property?
If your property is a rental property, then technically you are not dwelling in that property and the protection of Cal. Code Civ. Proc. § 580b is not available to you. However, as stated above, if your lender elects to foreclose on your real property of any kind through a private (trust deed) sale rather than a judicial foreclosure, whether or not the loan was purchase money, then you are protected from your lender pursuing you for a deficiency under Cal. Code Civ. Proc. §§ 580d.
6. If I Don't file bankruptcy, am I personally liable for any deficiency for a loan secured by commercial real estate?
A commercial property would normally be covered under Cal. Code Civ. Proc. §§ 580d and therefore, you would not be subject to a deficiency. However, most commercial real property transaction agreements contain clauses that waive any ant-deficiency protection afforded to a person under California law. Therefore, you must negotiate with your lender in order to obtain a settlement of the amount owed. This may include negotiating a payment plan or lump sum payment. If all else fails, then filing bankruptcy may be your only course of action to resolve the debt.
7. If I Don't file bankruptcy, will I owe taxes on the difference between what I owe on my home and what it is sold for in foreclosure or a short sale?
Any difference in the amount you owe on your mortgage and the amount your home is sold for in a trustee sale or a short sale is technically considered income by the IRS. Your lender may issue a 1099 to you for the difference. However, there are exemptions available to you under the tax code that may allow you to escape having to pay taxes on this income. Consult a tax professional who can guide you through the different exemptions available to you.
8. What is Bankruptcy?
Bankruptcy is a federal court process designed to help individuals, corporations, and other entities eliminate all, or a portion, of their debt or to repay their debt under the protection of the bankruptcy court.
9. What is a Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is a legal process by which most unsecured debts can be descharged, or eliminated.
10. What is a Chapter 11 bankruptcy?
A Chapter 11 Bankruptcy is available to allow a business to reorganize its debt.
11. What is a Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is a full or partial debt repayment plan administered by the bankruptcy court. The debtor submits a plan to the court for approval and, when a plan is approved, the debtor makes monthly payments to the bankruptcy trustee.
12. Who Can File Bankruptcy?
Generally, any person who is 18 years or older may file bankruptcy, regardless of their citizenship status. Married couples may file jointly or individually. There are some restrictions on obtaining a discharge of your debts after you file bankruptcy if you previously filed bankruptcy within the last 8 years or do not satisfy other requirements under the law.
13. Who Can File a Chapter 13 Bankruptcy?
People who usually qualify for Chapter 13 make enough income to cover any living expenses, but not enough to completely pay off all of their debts. When individuals do not qualify to file for a Chapter 7 bankruptcy, they often will be eligible to file for a Chapter 13 bankruptcy because there is no “means test” to disqualify them as there is with a Chapter 7.
14. Who Can File a Chapter 7 Bankruptcy petition?
Generally, individuals, partnerships, or corporations can file a chapter 7 bankruptcy petition if they reside, have a place of business, or property in the United States. However, if you were granted or denied a Chapter 7 discharge in a prior case within the last 8 years, you might not be entitled to receive a discharge in a subsequently filed Chapter 7 bankruptcy in California. Additionally, individual consumers generally need to pre-qualify under a “means test” or qualify by other methods to legitimately file a Chapter 7 bankruptcy petition. An individual may still be able to file a Chapter 7 bankruptcy even if they do not meet the means test requirement under certain circumstances, such as when much of their debt is business related. You should seek legal advise before assuming that you do not qualify to file a Chapter 7 bankruptcy petition.
15. What is the Means Test?
A consumer generally must qualify under the Chapter 7 means test in order to file for Chapter 7 bankruptcy protection. The means test first compares your income to the median income in your state. If your income is lower than the median income in your state, you can file for Chapter 7 bankruptcy. However, if your income is greater than the median income in your state, additional calculations regarding your income and allowable expenses are required to determine whether or not you can file for Chapter 7 bankruptcy.
16. Who Can File a Chapter 7 Bankruptcy in California?
For bankruptcy purposes, a persons’ residency and domicile is the location where that person has lived for the majority of the 180 days preceding the bankruptcy filing. So, someone could file bankruptcy in California after living here for 91 days.However, a individual can only claim California’s asset exemptions if he or she has resided in California for the previous two (2) years.
17. Does my Spouse Have to File Bankruptcy as Well?
No. It often makes sense and saves money for both the husband and wife to file bankruptcy together, but it is not a requirement. In many cases, both spouses are obligated on a lot of the debt, but in some situations most of the debt is under only one of the individual’s name or that spouse’s debt is not dischargeable, so it might be advisable for only one spouse to file bankruptcy.
18. Can I File Bankruptcy If I Am In the Middle of a Divorce?
Yes. However, filing bankruptcy will most likely delay the finalization of your divorce. State courts are not allowed to make any final ruling in a divorce case while one of the party’s bankruptcy case is pending, unless the parties go into the bankruptcy court and file a motion to lift the automatic stay. Additionally, you should be aware that you need to list your future ex-spouse’s information (both property and income) in your bankruptcy schedules even though your future ex-spouse is not filing bankruptcy with you.
19. What should I do before I file bankruptcy?
First, you should consult with a bankruptcy attorney. An attorney can advise you regarding your particular situation and help you plan for your bankruptcy. The attorney will help you decide the best time to file your bankruptcy petition, and may even be able to help you avoid filing for bankruptcy altogether.
Additionally, you should consider which creditors you will continue to pay prior to filing the bankruptcy. For example, you may be wasting your money paying credit card debt that may be completely eliminated in your bankruptcy. However, some bills should probably still be paid such as rent, utilities and payment on secured debt such as your car payment.
Do not transfer any of your assets to your family or friends to protect the property from your creditors. This may be deemed a fraudulent transfer. You may not only still lose your property but also may jeopardize having your other debts discharged in bankruptcy as well. Also, do not destroy any financial or business records, as this may also jeopardize your right to a discharge of your debts through bankruptcy.
Finally, stop using your credit cards. You may not be able to discharge debt you incur if the credit card companies can convince the court that you did not intend to repay the debt at the time you borrowed the funds.
20. What Information and Documents Do I Need For My Initial Appointment?
a. Your most recent pay stub showing your gross income year-to-date, including your spouse’s pay stub
even if the spouse is not filing bankruptcy with you.b. W2s for the past two (2) years.
c. Proof of other income such as 401K and IRA withdrawals and tax refunds.
d. If you are self employed, your last two years tax returns.
e. If you are self employed, a month-to-month Profit and Loss statement for the past six (6) months.
f. A list of your creditors, account numbers, and the amount of your debt.
g. Payoff amounts on all vehicle loans and the mileage on the vehicles.
h. Mortgage statement for your home loan showing the payoff amount, and have an idea of the approximate
value of the property.i. Information regarding any student loans.
j. Information regarding any tax obligations.
k. Information regarding in co-signed loan obligations.
l. Information regarding any lawsuits, judgments, liens or wage garnishment against you.
m. Copy of any trust instrument that you have a beneficial interest in.
n. A general idea of your household expenses.
21. What is the general process in consumer bankruptcy cases?
First, you need to complete a credit counseling course (typically on-line), then we prepare the bankruptcy petition listing your assets and debts along with other information. About a month later we will accompany you to a “Meeting of Creditor” where the trustee assigned to your case will confirm your identity and ask you some basic questions. Typically, creditors rarely attend, and the meeting only last a few minutes, except for the time waiting for the trustee to finish other cases he calls before yours. Prior to your debts being discharged (forgiven) you will need to complete another course (typically on-line) on financial management. A couple of months after the Meeting of creditors, you should receive a notice from the court stating that “all debts that qualified for discharge were discharge” and your bankruptcy case will be over. It is normally that simple and quick.
22. How long does the Chapter 7 bankruptcy process take?
Typically, a Chapter 7 bankruptcy takes about 3-4 months after the petition is filed for the process to be completed.
23. Do I need to take any educational courses before I file bankruptcy or before my debts are discharged?
Yes. You will be required to take two educational courses (typically on-line). The first course is a credit counseling course that needs to be completed before you file a Chapter 7 or Chapter 13 bankruptcy. You will also need to complete a financial management course before your debts are discharged. Individuals typically complete both courses on-line or over the phone before they file. Each course usually last about 30 minutes. These courses need to be approved by the California Bankruptcy District where you will be filing.
24. What happens when I file a Chapter 7 bankruptcy?
You will be required to disclose all of your property and debts. Additionally, if you have any nonexempt property, you will be required to turn it over to the bankruptcy trustee, who will then sell it and distribute the cash to your creditors. You will then receive a discharge of all of your dischargeable debts.
25. Will I have to fill out any forms?
Yes, but we will help you. We will give you some basic forms to fill out so that we can then use that information to complete the official bankruptcy petition.
26. Do I nedd an attorney to file bankruptcy?
Individuals may file a bankruptcy petition without using an attorney; however, it is generally not advisable. The bankruptcy code is very complex and filing a bankruptcy petition without a thorough knowledge of the law could result in severe unintended consequences.
27. What about non-attorney bankruptcy services?
Only an attorney is allowed to give you legal advice. Bankruptcy petition preparers are only allowed to type in your information on the form. They are not permitted to provide you with any legal advice. They are not allowed to help you prepare for the Meeting of Creditors or appear with your at the meeting or in court. In addition, non-attorney preparers might not be familiar with all of the protections offered by the Bankruptcy Code, and might not be able to determine if you are a canidate for a lien strip.
28. Can I file a bankruptcy for my debts, but not include my assets?
No.
29. Can I choose which debts and assets to include in my bankruptcy petition?
No. You must disclose all of your property and all of your debts to the bankruptcy court. This includes debt owed to family or friends, debts you intend to keep paying, and property you hope to keep. You will be certifying under penalty of perjury that all of your assets and liabilities are listed when you sign your petition and when you appear at the Meeting of Creditors.
30. Do I have to disclose all of my assets?
Yes. If you knowingly conceal an asset from the court you have committed a felony and can be fined up to $500,000 imprisoned for up to five years, or both. Additionally, the court can dismiss your bankruptcy filing or refuse to grant a discharge of your debts.
31. Can I transfer title of my car to a relative if I own it free and clear?
No. This would be a fraudulent transfer and the trustee would likely discover the transfer and take the vehicle. Additionally, this could subject you to further penalties for bankruptcy fraud.
32. Should I pay off debts I owe to relatives before I file bankruptcy so that I won’t have to include them in the bankruptcy petition?
No. Payments made to relatives within one year before filing bankruptcy are considered a “preference” and subject to being re-captured by the trustee and paid to your other creditors. You could also be subject to additional penalties.
33. Do I have to list a bank account that is not mine that I am a signer on?
You should consult with an attorney, but generally yes.
34. Do I have to list someone else’s debt that I co-signed for?
Yes.
35. Do I have to list past due alimony or child support even though it will not be discharged?
Yes. Even though spousal support and child support cannot be discharged, it must be listed with all of your other debt.
36. What happens to all of my property when I file bankruptcy?
When you file bankruptcy all of your real and personal property, including your right to receive property in the future, become the property of the bankruptcy estate. This means that the bankruptcy trustee has the right to take this property and sell it to satisfy your creditors.
However, certain property is exempt and you will be able to keep any property that is exempt. California uses two different schedules to determine what property is exempt. The exemptions you should use will depend on the type and value of your property. Often, you will be able to keep all of your assets.
37. What is an exemption?
Certain property is protected from being seized by creditors in a lawsuit and in bankruptcy. This property is known as exempt property.
38. What property is exempt?
California law provides for two separate schedules to determine exempt property. Figuring out what property is protected depends on the exemption scheme you choose. Determining what property is exempt requires a complete understanding of these exemption laws and laws regarding residency.
The following is a partial list of property exempt from being seized and sold pursuant to the enforcement of a judgment or bankruptcy liquidation:
Property Value or equityPersonal residence $75,000 + homestead exemption Single motor vehicle $3,300Jewelry, heirlooms, art $6,750Personal Property used in business$6,750 or $13,475 if jointly owned with spousePersonal Injury award $20,725Life insurance loan value etc. $11,075There are multiple statutes with conflicting dollar amounts that overlap, so it is important to seek legal advice regarding property that may be exempt.
39. Can I keep the money in my retirement accounts?
Generally, yes. Pension plans are usually protected. The United States Supreme Court has held that "ERISA-qualified" pension plans, such as 401(k) plans, are "excluded" from your bankruptcy estate. However, IRA accounts are not ERISA-qualified plans, so they are part of your bankruptcy estate, but are exempt if they fall within the parameters of the above mentioned schedules or to the extent they are necessary to support the debtor and his dependents.
40. Is my home exempt?
Under California statutes, the homeowner exemptions are $75,000 for a single person, $100,000 for a married person or head of household and $175,000 for a person 65 years old or older or a disabled person or a person 55 years old or older with an income less than $15,000 or $20,000 if married. This means you can have as much equity in your home as the applicable amount mentioned above before the trustee will consider taking your home and selling it liquidate the excess equity for the benefit of your creditors.
41. Can I keep my home if I file Bankruptcy?
Usually yes, unless you have a lot more equity in your house above the exempt amount mentioned in the previous question. However, you will still need to make your payments and keep the insurance in force.
42. Do I still need to make my house payments while I’m in bankruptcy?
Yes, if you want to keep your house.
43. Can I keep my car?
Generally yes. You can keep your automobile if you remain current with your car payments and the vehicle does not have more equity than the exempt amount. This means the amount of money you would receive if you sold your car would be more that the above mentioned exempt amounts after you paid off your loan on the car.
Also, if you want to keep your vehicle, you must continue to make your car payments after you file bankruptcy and keep the insurance in force.
44. Will I have to continue to make payments on my car?
Yes, if you want to keep your vehicle. However, if you do not want to keep your automobile, you can turn the vehicle in to your lender and this debt will be eliminated through your bankruptcy.
45. Can I still agree to pay certain debts?
Yes, but be careful. Sometimes you may want to keep a debt, such as your car loan so that your lender will allow you to keep your vehicle. This is done through a reaffirmation agreement. This agreement must be voluntary and in your best interest. Typically, a reaffirmation agreement can be cancelled within 60 days after the agreement is filed with the court or before your debt is discharged, whichever is longer.
But, be careful, because if you reaffirm a debt you will still owe it even after your bankruptcy. Often vehicle finance companies will allow you to keep your vehicle without you executing a reaffirmation agreement.
You can always voluntarily pay anyone, even if you do not formally reaffirm a debt.
46. What is the difference between secured and unsecured debt?
Unsecured debt is an obligation to pay someone without any real or personal property being pledged as collateral to secure this debt, for example: credit cards, medical bills, rent, utility bills, etc. The creditor cannot seize your property until after the creditor files a lawsuit and obtains a writ from the court granting the creditor the right to attach your property.
A secured debt is an obligation to pay a creditor where you have pledged real or personal property as collateral to secure the payment of the loan, such as a mortgage or car loan. A secured debt gives the creditor various rights to repossess or foreclose on the collateral if you default on your loan. A creditor generally keeps its security interest in the collateral after you file bankruptcy, but there are restrictions on its ability to exercise its right to seize the property without bankruptcy court approval.
47. Will filing bankruptcy save my home from foreclosure?
At least temporarily. Filing bankruptcy will immediately stop a foreclosure proceeding, however the lender may be able to obtain permission from the bankruptcy court to lift this stay and then proceed with the foreclosure. Regardless, filing bankruptcy may give you enough time to modify your mortgage or arrange for a short sale.
You may also be able to keep your home through certain legal proceeding in a Chapter 13 bankruptcy that will force your creditors to accept a payment plan or even eliminate some of your mortgage debt. Usually, you will need to reach an agreement with the lender and keep making your payments.
48. Will bankruptcy stop an eviction?
Yes, for a short time, but the landlord may be able to obtain relief from the automatic stay and proceed with the eviction during the bankruptcy proceeding. Regardless, the landlord will be able to proceed with the eviction after your bankruptcy is discharged. But, don’t be too hasty to file bankruptcy solely to avoid an eviction as this may be considered an abuse of the system resulting in your bankruptcy being dismissed immediately and you receiving monetary or other legal sanctions.
49. What is the "automatic stay?"
Bankruptcy law mandates that your creditors immediately stop any collection effort once you file bankruptcy. This automatic order is called the “automatic stay.” It stops foreclosures, evictions, repossessions, lawsuits, wage garnishments, and creditors from seizing bank accounts. However, it does not stop criminal actions, spousal support actions or any police or governmental regulatory action.
50. Will filing bankruptcy stop creditor from calling me?
Yes. As soon as you file bankruptcy the court imposes an automatic stay prohibiting your creditors from calling you or taking any other action to collect on their debt. Any creditor who violates this automatic stay can be punished by the bankruptcy court.
Additionally, once you retain legal counsel, you can instruct all of your creditors to only deal with your attorney so that you will no longer be bothered by their harassing phone calls, even before you file bankruptcy.
51. How long will it take for creditors to stop calling me after I file bankruptcy?
As soon as you file bankruptcy, the court mails a notice to all of the creditors you list in your bankruptcy schedules. The creditors must immediately stop all collection efforts as soon as they become aware of the bankruptcy. This usually takes a few days, but in urgent cases we will contact a creditor immediately upon filing of your bankruptcy. Regardless, once you retain legal counsel, you can instruct your creditors to stop calling you and deal exclusively with your attorney.
52. Who notifies my creditors of the bankruptcy?
The court mails a notice to all or your creditors that are listed in your bankruptcy schedules.
53. Who deals with my creditors during the bankruptcy?
We will deal with your creditors as soon as you retain our firm to represent you.
54. What if my creditors ignore the automatic stay?
First, make sure the creditor is aware that you filed bankruptcy by giving him your case number or a copy of the first page of your bankruptcy petition showing that it has been filed with the court. If the creditor does not immediately stop all collection efforts, please let your attorney know so that the attorney can handle the matter. If a creditor willfully violates the automatic stay the creditor may be held in contempt of court and subject to pay your actual damages, costs, attorney fees and in some circumstances even punitive damages, and may even be subject to incarceration.
55. Will filing bankruptcy stop collection on a judgment?
Yes. Almost all collection efforts are automatically stayed once you file bankruptcy.
56. Will filing bankruptcy stop a wage garnishment?
Yes.
57. Will a bankruptcy remove a lien on my property?
Possibly. Some liens may be removed, but this is not automatic. Your attorney must file a motion with the court regarding this matter before the court will consider lifting a lien.
58. What is a “lien strip”?
One of the biggest advantages of filing a Chapter 13 bankruptcy is that it may allow you to wipe out a junior lien on your home. This is called “lien stripping.” You must file a separate action in bankruptcy court and show that the value of your home is below the amount you owe on your first mortgage and then you may be able to eliminate the security interest of your 2nd or other junior mortgages. For example: if your home is worth $400,000 but you owe $450,000 on your first and a $100,000 on a home equity line, then a chapter 13 bankruptcy may enable you to eliminate the $100,000 lien on your home.
59. Can I file bankruptcy simply to stall collection by a creditor?
You should not file bankruptcy solely to delay collection by a creditor. This may be considered an improper purpose and subject you and your attorney to sanctions.
60. What are the Bankruptcy Court filing fees?
Chapter 7 filing fees are $299.00.
Chapter 13 filing fees are $274.00.
61. What happens after I file bankruptcy?
The bankruptcy court mails each of the creditors you list in your bankruptcy schedules a "Notice of Commencement of Case," notifying them that you have filed bankruptcy and the date of the First Meeting of Creditors.
About a month or two after you file your bankruptcy petition, you will be required to attend a hearing called the First Meeting of Creditors. This hearing will not be in front of a judge but will be conducted by an individual appointed by the United States Trustee to be the trustee to oversee your case. The trustee will ask you questions under oath regarding your assets and liabilities, and the paperwork you filed with the court.
Normally, the Bankruptcy Court will automatically grant an Order of Discharge closing your bankruptcy case about 60 to 80 days after the First Meeting of Creditors.
62. Will I have to go to court?
Not exactly. About a month or so after you file your bankruptcy petition, you will be required to attend a hearing called the First Meeting of Creditors at the court building but it will not be in a formal courtroom. This hearing will not be in front of a judge but will be conducted by an individual appointed by the United States Trustee to be the trustee to oversee your case. The trustee will ask you questions under oath regarding your assets and liabilities, and the paperwork you filed with the court.
Even though this hearing is called the First Meeting of Creditors, in most cases no creditor even attends the hearing. However, in the rare event one does, the creditor is allowed to ask you questions about your financial affairs as well as the trustee.
We attend the First Meeting of Creditors with all of our clients, however we are not allowed to speak for you.
After this initial hearing, you normally will not need to appear in court. However, if a creditor or the trustee files a motion or an adversary action, you may have to appear in court.
63. What is a section 341(a) meeting of creditors?
This is the same thing as the First Meeting of Creditors mentioned in the answer above.
64. What will happen at the meeting of creditors?
You will be placed under oath and be required to show two proof of your identity. The trustee will then ask you questions about your assets and debts and your bankruptcy petition. The trustee is primarily looking for non-exempt property and seeking to verify that the income and expenses itemized in your bankruptcy filing is correct. On the rare occasion a creditor attends, the creditor is also allowed to ask you questions regarding your bankruptcy.
65. What will I need to bring to the meeting?
You will be required to bring two (2) pieces of proof of identity to the First Meeting of Creditors. One of these must verify your social security number and preferably at least one picture ID. Typical acceptable IDs include: driver license, social security card, passport, military ID card, green card, pay stub, W-2 form, or a medical insurance card.
66. Will my employer find out that I filed bankruptcy?
Maybe. Bankruptcy filings are public records, however, unless your employer is listed as a creditor, you employer will not know you filed a bankruptcy petition.
67. Can I lose my job if I file bankruptcy?
No. The law prohibits both private and government employers from firing you or discriminating against you because you filed for bankruptcy protection.
68. Will filing bankruptcy affect my immigration status?
No. You do not need to worry about this issue as your immigration status is not affected in any way by filing bankruptcy.
69. Do I have to file income tax returns while I’m in bankruptcy?
Yes.
70. Will I lose my tax refund if I file bankruptcy?
Maybe, but it is unlikely even though the trustee probably would have the right to take it.
71. Can I keep my credit cards after I file Bankruptcy?
You should stop using your credit cards as soon as you decide to file Chapter 7 bankruptcy, as the credit card company may seek to avoid the discharge of those new charges based on fraud. Once you file bankruptcy, you are not allowed to use any credit card without first receiving permission from the credit card company. This is done through a reaffirmation agreement which the credit card company may or may not offer to you. Without executing a reaffirmation agreement, you will not be allowed to incur any further charges on your credit cards.
72. What does a bankruptcy discharge mean?
A “discharge” is a court order stating that you no longer owe the debts discharged. This order typically is the last action in your bankruptcy proceeding where your debts are officially eliminated. However, if your creditor is secured by collateral such as your house or vehicle, the creditor can still repossess or foreclose on the collateral even though you personally are not liable for the debt. For example, your vehicle finance company may be able to repossess your car but it will not be able to sue you for any deficiency if your car is worth less than the balance owed on your car loan.
A discharge only applies to debts that existed at the time you filed bankruptcy, and you can only receive a chapter 7 bankruptcy discharge once every eight years. Different rules may apply involving chapter 13 bankruptcies.
73. Will bankruptcy eliminate all of my debts?
Often yes, but not always. Almost all debts can be discharged, but some cannot, such as most student loans, child and spousal support, criminal fines and restitution, many taxes, personal injuries caused by drunk driving, and damages caused by willful or malicious misconduct such as fraud.
74. Are payday loans dischargeable?
Yes.
75. Can bankruptcy eliminate my community debt that still exists after my divorce?
Usually your community debts can be discharged. However, you may still owe the money to your spouse if he or she pays the debt.
76. Is spousal or child support dischargeable?
Generally no. Spousal support and child support payments usually are not dischargeable. Also, some additional related obligations may not be discharged if the court finds the detriment to the spouse outweighs the benefit of discharging the debt if the debtor has the ability to pay these obligations.
77. Will bankruptcy eliminate my past due income tax obligation?
Generally, income taxes over three years old can be discharged. There are a few qualifications you will need to meet in order to have income taxes discharged, but most debtors are able to satisfy these requirements. However, if you filed false income tax returns the discharge does not apply.
78. Are student loans dischargeable in bankruptcy?
Usually not. Student loans are rarely discharged, but may be dischargeable if the debtor is able to prove to the court that it would be an undue hardship to repay the loans or if the loan was not made under a program funded in any way by the government or is not guaranteed by the government.
79. How will bankruptcy affect a debt that I co-signed?
You will not have to pay the debt if it is otherwise a dischargeable debt, but your will still be obligated to pay all of the debt.
80. What if I forget to list all of my creditors in the bankruptcy filing?
You can amend your bankruptcy schedules at any time during your bankruptcy to add creditors you forgot or did not know existed. However, you are supposed to list all or your creditors when you file, so if you intentionally omit a creditor, you may lose your bankruptcy discharge and be sanctioned for perjury.
81. Will the fact that I filed bankruptcy appear on my credit report?
Yes. The bankruptcy will be on your credit report for 10 years and no one can legally remove it from your record before then, so you should not pay anyone who claims they can “clean” this notation from your credit report.
82. Will filing bankruptcy ruin my credit?
Your credit is probably already ruined if you are seeking bankruptcy protection. Regardless, the fact that you filed bankruptcy will appear on your credit report for 10 years. However, many credit card companies often offer a new credit card to debtors right after they receive their bankruptcy discharge, because they feel that you will be better able to pay your new debts after your old debts have been wiped out and also you will not be able to discharge the new debt through another bankruptcy filing for eight years. Most individuals are able to rebuild their credit within a couple of years.
83. Will filing bankruptcy hurt my spouse’s credit?
Usually no. Generally a spouse’s credit is not affected by the other spouse filing bankruptcy unless some of the debts listed on the bankruptcy schedule are joint debts.
84. Can I obtain new credit after bankruptcy?
Yes.
85. How can I re-establish my credit after filing bankruptcy?
Often, credit card companies may offer you a credit card soon after your bankruptcy discharge. The credit limit is usually low, but it is a start. You may also try to obtain a secured credit card or use a co-signer. It is a good idea to get 2 to 3 credit cards after your bankruptcy and then pay off the balance each month.
86. How long does it take to rebuild credit after bankruptcy?
It generally takes about two years to substantially rebuild your credit.
87. What is included in my a credit report?
Credit reporting companies (credit bureaus) collect information about you mainly from other creditors, such as credit card companies, and from other sources such as court filings and county records, and then sell this information to others.
Your credit report typically includes your social security number, employment history, aliases you have used, addresses where you lived, marriages and divorces, and a list or your current and past creditors with your payment history and the original and current amount of credit or loan balance you have with each creditor, and whether an account has been turned over for collection or is disputed.
88. How can I get a copy of my credit report?
You can order your report from one or more of the three major credit reporting companies: Equifax, TransUnion and Experian. The federal Fair Credit Reporting Act (FCRA) entitles you to one free copy of your credit report if: 1) you have been denied credit within 60 days of being denied credit due to information on your credit report; 2) you are unemployed and are looking for work; 3) you are on public assistance; or 4) you think there are errors in your report due to fraud. If you do not qualify to receive a free credit report, you can order one for $8.50 from one of these three credit bureaus:
Equifax 800-685-1111
800-685-1111 P.O. Box 740241
Atlanta, GA 30374
Trans Union 800-888-4213
800-888-4213 P.O. Box 1000
Chester, PA 19022
Experian 888-397-3742
888-397-3742 P.O. Box 2104
Allen, TX 75013-2104
89. What can I do if there are mistakes in my credit report?
You or your attorney can contact the credit bureau and ask that it investigate entries you feel are incorrect. If the credit bureau confirms that it is incorrect, or the entity providing the disputed information cannot verify it, or if the bureau feels it is not worth its time and cost to investigate, then the credit bureau must remove the item from you credit report.
90. Can I file bankruptcy again if I already filed bankruptcy before?
It depends on whether the bankruptcy cases are a Chapter 7 or Chapter 13 and the time between the filings. You can only receive a Chapter 7 discharge once every eight (8) years. However, you can file a Chapter 13 bankruptcy four (4) years after you filed a Chapter 7 bankruptcy or two (2) years after filing a prior Chapter 13 bankruptcy. The time period to file a Chapter 7 bankruptcy after filing a Chapter 13 will depend on the number of your claims that have been paid.
91. Are there alternatives to bankruptcy?
Yes. You or your attorney can try to negotiate a loan modification, loan extensions, a workout, or other compromise with your creditors. We will be glad to help you evaluate your options. Call (949) 450-8500 today for your free consultation.
92. Where can I find more information about bankruptcy?
If you have more questions, we would be happy to hear from you. Call us at 949 - 450 - 8500
Orange County Bankruptcy FAQs - Hallstrom, Klein & Ward LLP
Serving Villa Park, Huntington Beach, Westminster, Laguna Beach, Rancho Santa Margarita
Hallstrom, Klein & Ward LLP are dedicated legal professionals who have helped many individuals find a way out of their financial troubles. To help potential bankruptcy OC filers learn more about their options and bankruptcy
process, they have compiled a list of FAQs. However, please
remember that every situation is unique, which is why you
should contact a skilled Orange County bankruptcy lawyer by
calling 949- 450- 8500 for a FREE consultation.
