1.Q: Why is it legal to file Bankruptcy?
A: The United States Congress recognized a long time ago that even well-intentioned people could from time to time run into serious financial problems which may prevent them from paying back their debts. In a lot of cases, Bankruptcy is occasioned by events such as job loss, sickness, disability or other unexpected events. In some cases, it may simply be the result of poor financial planning. Businesses sometimes fail. Regardless of the reason (unless there was dishonesty or fraud involved in getting into debt), federal law says that everyone deserves a second chance. By giving you a chance to start fresh, you become a more productive member of society. This is good for you and good for society as a whole.
2.Q: How long does Bankruptcy stay on my credit report?
A: All negative information such as late payments, collection and legal actions, stay on your record for 7 years. Credit bureaus will report a Chapter 7 Bankruptcy for 10 years, a Chapter 13 for 7 years. However, the fact that Bankruptcy stays on your record for several years does not mean that you cannot rebuild credit while it is on your record.
For example, if you need to buy or lease a new vehicle after bankruptcy, you should have no problem doing provided that you have received a discharge from the court. The interest rate may be high in the beginning until you have proven creditworthiness. After several months or a few years of paying, you may be able to refinance your car loan at a lower interest rate.
When it comes to buying a home, most banks require that your Bankruptcy be at least 2-3 years old. From experience, we see that most people in debt cannot even save the money for a down payment to be able to buy a home. By getting out of debt first, saving money to achieve their dream of home ownership becomes possible.
3.Q: When will creditors and bill collectors stop calling me?
A: When you file either Chapter 7 or Chapter 13, something called the “automatic stay” goes into effect. The automatic stay prohibits all creditors from taking any action to collect unless the Bankruptcy Court gives them permission to do so.
4.Q: Will I lose any assets or property if I file for Bankruptcy?
A: You will not lose any assets or property in Chapter 13. In Chapter 7, most property and other assets are exempt, including your home. Even if certain assets are not exempt, however, it may still make sense to file Chapter 7 if the benefit of a Bankruptcy discharge outweighs the risk of losing assets. Otherwise, filing for Chapter 7 may not be a good option. However, bear in mind that most Chapter 7 cases are “no asset” cases. “No asset” cases are cases where there are either no assets at all or where the assets are so insignificant in value to the trustee that they are not worth administering. Thus, most of the time, you lose nothing by filing for Chapter 7 but your debts.
Before filing for Chapter 7, we explain to you what exemptions you are entitled to claim. In more than 90% of our cases, our clients keep everything that they own (home, other real property, auto, retirement plans, etc.) and lose nothing. How the exemptions work will be thoroughly explained to you when you come in for your consultation. In certain cases, non-exempt assets may be turned into exempt assets as allowed by law prior to filing. This is called “pre-petition planning.” If necessary, we may delay the filing of your case while helping you plan your financial affairs so that you receive the most benefit allowed by law when case is filed.
5.Q: I am married. Does my spouse need to file with me?
A: Not necessarily. In community property states such as California, however, where the debts of one spouse are also the debts of the other spouse if such debts were acquired during marriage, it may be advisable to file together to obtain a complete discharge of debts. In certain cases, however, it may not be necessary. Again, it is important for us to do a complete evaluation of your situation before we can advise you as to what we believe is best for your situation. Remember, however, that your spouse is not legally required to file if he or she does not want to. Whatever your reasons may be, you have the right to file by yourself if you so choose.
6.Q: Who will know that I filed?
A: Although your Bankruptcy documents are a matter of public record, no one will know but your creditors that you filed. Of course, if someone was to search Court records, they could get information on your case. However, only your creditors will receive a notice from the Court when your case is filed. Your employer, for example, is not notified unless your employer is also one of your creditors.
7.Q: How much do you charge for representing someone in Chapter 7 or Chapter 13? Will I be able to afford your fees?
A: Our fees are reasonable and vary from case to case. We will quote you a fee at your initial consultation. In determining the fees to be charged, we take into account the complexity of your case and the amount of time we anticipate to spend in providing the services that you need. In Chapter 13, we may agree to include some of the attorney fees in your Chapter 13 Plan (thus significantly reducing up-front costs) and apply to the Court for payment. Once you sign a retainer agreement, you can immediately refer all creditor calls to our office even before the case is filed. In every case, we try to work with you the best way we can to make debt relief affordable.
8.Q: Why do I need an attorney to file? Can’t I just represent myself?
A: Hiring an attorney to represent you in a Bankruptcy proceeding is not mandatory. However, remember that there is no substitute for the knowledge and experience of a professional. Under the new Bankruptcy laws (which became effective in October 2005), laws and procedures have become even more complex and confusing to many. Mistakes could be costly especially if assets are involved. They could lead to loss of property, certain debts not being discharged or denial of the relief you are seeking. Keep in mind also that even if you acted as your own attorney, the trustee, creditors and the judge would be holding you to the same standard as they would hold an attorney. Thus, ignorance of the law or court procedures will not excuse any mistakes you make. Mistakes are often irreversible and can have devastating consequences. When you hire an attorney, you have a knowledgeable and experienced professional by your side, working to help you obtain a successful outcome at the least cost and inconvenience to you.
If you have any questions or would like to schedule a FREE initial consultation with one of our experienced attorneys, please Contact Us online or call at (408)627-4898 today!