Frequently Asked Questions About Bankruptcy

Q: What happens when I file?
A: When you file a bankruptcy with the court, the automatic stay goes into effect immediately and all collection activity against you must stop. This includes stopping foreclosures, garnishments, repossessions and creditors calling and harassing you. Before your case ends you will have to complete two credit counseling courses and attend what is called a 341 meeting with your attorney. When the bankruptcy is finally over, you will receive a discharge order issued by the court declaring that the debts are non-collectable.
Q: How long does it take to file for bankruptcy?
A: Your Bankruptcy case can be filed as quickly as the same day that you meet with an attorney.
Q: If I file for Chapter 7 bankruptcy do I have to give up my house, car and furniture?
A: Not typically. Generally, you may keep your house, car, and furniture as long as you remain current on them and there is not too much equity.
Q: If I file for Bankruptcy, will my credit be destroyed?
A: Before we file your bankruptcy petition, a 3-bureau credit report will be pulled. The report will show your current credit score as well as your anticipated score 12 months after bankruptcy is filed. Usually the predicted 12-month score is much higher than the pre-filing score. This is because most of your debts listed on the report will be eliminated and can be taken off your credit report shortly after your discharge is granted.
Q: How long does it take to rebuild my credit after filing bankruptcy?
A: Right after you file for bankruptcy, you can immediately start building your credit. In fact, clients are often offered credit cards shortly after they are discharged from their debts. One reason some lenders offer credit to people who have filed for bankruptcy is that they know that the person cannot receive another bankruptcy discharge for many years. With that in mind, these lenders often feel comfortable that they will have several years to collect on any new debts without the fear that the debtor can get out of future debts through the bankruptcy process.
Q: Can I eliminate IRS debt in bankruptcy?
A: It will not clear a federal tax lien that has already attached to your property. However, when no tax lien has been filed, income tax debt can be discharged and cleared from your record if some very specific requirements are met in either a Chapter 7 or Chapter 13 bankruptcy. Not only can bankruptcy clear IRS income tax debt, it can get rid of state and local tax debt as well.
Q: Can I get rid of parking tickets in bankruptcy?
A: Generally you can get rid of parking tickets in a Chapter 13 bankruptcy, but not Chapter 7. A Chapter 13 bankruptcy can also get your license reinstated, get your car out of the impound, or have a boot removed if these things happened as a result of unpaid parking tickets. You will still be required to pay the reinstatement fee, and moving violations are not included.
Q: How long will bankruptcy take?
A: A chapter 7 is normally open for 4-5 months. A chapter 13 is normally open for a minimum of 3 years and a maximum of 5 years.
Q: How long will bankruptcy stay on my credit report?
A: For a Chapter 7 up to 10 years and for a Chapter 13 up to 7 years.
Q: Didn’t the 2005 changes in bankruptcy law make it impossible to file for bankruptcy?
A: The Bankruptcy Bill that became law in 2005 actually made it easier to qualify for bankruptcy; however, more paperwork is required and more details are needed to file. Many people will qualify when represented by a competent attorney.
Q: What are the most common mistakes when filing?
A: Not showing up to the hearing and not listing all your assets and debts. Failure to show up to the hearing can result in your case being dismissed. Failure to disclose all your debts can be grounds for a dismissal and prosecution, and it can cause you to owe the debt after the bankruptcy is finalized. The best policy is to provide your attorney with the best, most accurate information possible.
Q: Is it possible for the court to not approve my chapter 7 or chapter 13?
A: Anything is possible. However, if everything is done correctly and all information is fully disclosed, there is a high probability that your case will be approved.
Q: Can I file jointly with my spouse?
A: Yes.
Q: Does my spouse have to file?
A: No.
Q: Will this affect my spouse’s credit?
A: No.
Q: Is my spouse responsible for my credit cards if he/she is an authorized user?
A: No.
Q: When would my spouse be liable for my credit cards?
A: If your spouse signed the original application or any addendum, then your spouse will likely be responsible for your credit cards.
Q: Will my cosigner be protected?
A: No, generally not. The only way to protect your cosigner is with a chapter 13 wherein the credit in question is paid 100% plus interest.