Frequently Asked Questions

• What is Chapter 13 bankruptcy?
• What is Chapter 7 bankruptcy?

What is Chapter 13 bankruptcy?

 Bankruptcy Questionnaire.pdf

Chapter 13 bankruptcy is a reorganization bankruptcy. This type of bankruptcy is for individuals who are behind on their secured debts such as a mortgage, vehicle payments or taxes. The back payments are lumped together and paid back over a period of three to five years.

However, the following CANNOT be included:

• Child Support and alimony
• Federally Guaranteed Student loans

If I file for Chapter 13, how much will my plan payments be?

Actually that is determined on a case by case basis. You and your attorney will put together a budget based on your household income and expenses. A payment will then be determined based on this information.

How long will I be in Chapter 13 bankruptcy?

You will be in Chapter 13 bankruptcy for a period of 36 to 60 months. The length of time is determined by various factors including how much you owe in back payments to your secured creditors and what your household income is.

Do I still have to make my mortgage and car payments?

Yes, if you want to keep the collateral, you will have to stay current on those payments after we file your case. This would include houses, cars, furniture, computers or storage buildings. If you get behind on these payments, the creditor will file a motion with the court to "lift the stay". This motion is asking the court for permission to repossess the item.

Will My Creditors Stop Calling Me?

Yes. By law, all actions against a debtor must cease once the documents are filed. Creditors cannot initiate or continue any lawsuits, wage garnishees, or telephone calls demanding payments.

Can I file for Chapter 13 bankruptcy if I have previously filed?

Yes, if it has been more than two years since you filed a previous Chapter 13 and received a discharge or four years since you filed and received a discharge in a Chapter 7. 

If you case was dismissed without prejudice, you may refile your Chapter 13 case at any time. However, there are restrictions on the impositions of the automatic bankruptcy stay.

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What is Chapter 7 bankruptcy?

Chapter 7 bankruptcy is a fresh financial start. You must be current on your secured debts (house, automobiles, etc.).  Most unsecured debt will be erased in a Chapter 7.

• What is Chapter 7 Bankruptcy?
• What About My Secured Debts?
• Will a Chapter 7 Bankruptcy Reduce My House or Car Payment?
• How Difficult is it to Qualify for a Chapter 7?
• Will My Creditors Stop Calling Me?
• What Debt is Erased in A Chapter 7?
• Can I file for Bankruptcy if I have Previously Filed?
• Will I Ever Get Credit Again?
• Can I Get Fired for Filing For Bankruptcy?

What is Chapter 7 Bankruptcy?

A Chapter 7 bankruptcy is available to anyone who financially qualifies. It does not involve any court-protected repayment plan and will legally eliminate your unsecured debts such as credit cards, medical bills, most judgments and garnishments, repossession debt and past utilities. The debt is eliminated through legal discharge in about four months.

What About My Secured Debts?

You will be required to continue making payments on your secured debts, such as house, car or furniture in order to keep the collateral securing the loan. Your agreement to keep these items is called a reaffirmation agreement.

Will a Chapter 7 Bankruptcy Reduce My House or Car Payment?

The answer to that is generally no. Some creditors will offer a favorable reaffirmation with reduced principal and interest on automobile reaffirmation depending on when the vehicle was purchased. We cannot modify the monthly payment on a home in Chapter 7 bankruptcy.

How Difficult is it to Qualify for a Chapter 7?

There has been much doom and gloom written about the bankruptcy means test under the new laws and how much more difficult it's going to be to file Chapter 7. It's true that there are more hoops to jump through under the new laws and it's true that the bankruptcy means test will result in some people having to file Chapter 13 instead of Chapter 7. However, for the vast majority of filers Chapter 7 is still available with very little extra effort. There is no means test if the debt is primarily business debt.

Will My Creditors Stop Calling Me?

Yes, they will! By law, all actions against a debtor must cease once the creditor has been given notice of a bankruptcy filing. Creditors cannot initiate or continue any lawsuits, wage garnishments or even telephone calls demanding payment.

What Debt is Erased in A Chapter 7?

Most unsecured debts are discharged in a bankruptcy with the exception of:

• Child support and alimony;
• Debts for personal injury or death caused by your drunk driving;
• Federally Guaranteed Student Loans;
• Income tax debt;
• Purchases or cash advances within the 90-day presumption period.

Unsecured debt is defined as a loan without collateral attached (e.g. real property; car; furniture) such as credit cards, medical bills, payday loans and signature loans.

Can I file for Bankruptcy if I have Previously Filed?

A person can file Chapter 7 again if it has been more than eight years since he or she filed the previous Chapter 7 bankruptcy or six years since a previous Chapter 13 with a discharge.

Will I Ever Get Credit Again?

Yes! A number of banks now offer "secured" credit cards where a debtor puts up a certain amount of money (as little as $200) in an account at the bank to guarantee payment. Usually the credit limit is equal to the security given and is increased as the debtor proves his or her ability to pay the debt. Two years after a bankruptcy discharge, debtors are eligible for mortgage loans on terms as good as those of others, with the same financial profile, who have not filed bankruptcy. The size of your down payment and the stability of your income will be much more important than the fact you filed bankruptcy in the past. The fact you filed bankruptcy stays on your credit report for ten years. It becomes less significant the further in the past the bankruptcy is. The truth is that you are probably a better credit risk after bankruptcy than before.

Can I Get Fired for Filing For Bankruptcy?

No. U.S.C. Sec. 525 prohibits any employer from discriminating against you because you filed bankruptcy.

<< Back to Bankruptcy

We are a debt relief agency. Our debt relief lawyers help people file for bankruptcy under the United States Bankruptcy Code. If you need debt relief, our lawyers are ready to help.

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