Bankruptcy Questions & Answers
What about my bank account?
You may have noticed that money was not on the list of things that you are allowed to keep in a bankruptcy. It's not practical to expect you to not have a dime when you file, and in fact no one expects you to be that way, however, you should be careful not to let us file your case if you have a lot of checks outstanding or a substantial check, like a rent or mortgage payment outstanding. If such a check takes a week or so to clear, someone looking at your bank account might think you have quite a bit of money. It is common for trustees to ask to see your bank statements for a couple of months before you filed. Keep this in mind as the time to file your case approaches.
If you owe money to a financial institution and file a bankruptcy, they have the legal right to set off your debt by emptying your bank account. For a number of reasons banks do not usually do this, however, credit unions DO. You should assume that if you have money in a credit union account; and owe them money and you file a bankruptcy, they will set off your account.
Another problem with having accounts at a credit union is that the usually write their paperwork in such a way that all loans are tied together. For Example: if you have a car loan and a visa card with the same credit union. They will expect that you reaffirm both or surrender the vehicle. Once again, keep this in mind and ask if you have questions.
What about a personal injury claim?
These are not on the list of things you can take through a bankruptcy. If you have a claim that might be brought in to court against anyone, you must disclose it. Possibly the trustee will want to assert the claim, more than likely he or she will just leave the claim for you to either assert or drop after the case. This is called abandoning the claim. If the claim is abandoned back to you, you can keep anything you might eventually recover.
Does my spouse have to file?
The answer is not necessarily. Nevada is a community property state. When you file bankruptcy you subject all your community property to a trustee even if your spouse does not file. Therefore, out of fairness, the law provides that all community debt is covered by your bankruptcy discharge. Community debt is roughly all debt you incurred while you were married. Thus your spouse may not need to file in order to be covered by your bankruptcy. Creditors often are not used to our legal system in this regard and will continue to try to get your spouse to pay on the debt. While this will not work if they take you to court, most people don't want to have to put up with collection calls. As a result, our preference is to have both spouses file unless there is a serious objection. The problem is that there are only about seven (7) community property states.
I can keep everything and pay for nothing?
As pointed out before, you keep most items you now own, however, if you exceed equity limitations for exempt property. You may have to turn over the property to your trustee in bankruptcy. You can also redeem the property by paying the amount of equity over what is allowed to the trustee over a period of time. If you are buying a secured merchandise, or a home, you will have to pay for it or give it back.
A homestead protects you from a judgement not the mortgage.
You should file a Homestead to protect the interest in your home from attack.
The filing of a bankruptcy petition and homestead recording will temporarily halt a foreclosure action filed by a lender, but you must ultimately continue payments or lose your home. A homestead will not permanently stop a foreclosure proceeding nor will it allow you to keep your home without you paying for it.
Everyone will know I went bankrupt.
Although all of your creditors must by law be notified of your bankruptcy filing, there is a good chance most of the people that you deal with will never know you filed. It will show on your credit for 10 years but will not "destroy" your credit totally. Most secured lenders are not concerned about a bankruptcy more than 2 years old. If possible, pay off one credit card holder so that you will not need to list that card in the bankruptcy. You can then use it and pay it off to help restore your credit. The key is to make the bankruptcy look like an isolated incident.
If I allow my vehicle to be repossessed, am I responsible for any "DEFICIENCY" when the dealer finally sells it.
Categorically NO! Car dealers seem to be the worst offenders in this area. If you decide you do not want to continue making payments on your vehicle and the lender "takes it back", you are not responsible for any deficiency if you file bankruptcy. Although most car dealers are fully aware that you are not responsible for paying this deficiency, just be aware that when you file a bankruptcy they may still try to collect it from you. DO NOT PAY ANY SUCH DEMAND! Bring a copy of the letter to this office and we will deal with the offending creditor.
If I continue to pay on my credit card, the company will not take it away and I will be able to continue to use it.
The answer is maybe. If you have a good payment history with a creditor, you may be able to keep the card. Sears, Discover and Citibank all will consider a request to continue paying and keep the card. We need to know about this so we can write them before they set the machinery in motion to cancel the card. Other creditors will not consider such a request. Texaco, American Express and Optima DonŐt want your money, they want the card if you file.
What debts might not be discharged in bankruptcy?
Certain debts are not dischargeable in bankruptcy. These include child support, taxes less than 3 years old, 941 taxes, student loans, debts for a variety of misconduct such as fraud, drunk driving, breach of trust, and obtaining credit using false financial statements. We seldom have problems getting debts discharged, however, if you have a concern please let us know. The Court or a creditor occasionally question conduct and debts incurred in the months prior to a bankruptcy. There is a famous case where an individual went to see a bankruptcy attorney in the fall and by spring he had maxed all his cards and had been to Hawaii and Aspen, Colorado. Needless to say the Court refused to grant the order discharging debts for this person. It is important not to run debts immediately prior to filing. If you have incurred any significant charges in recent months, let us know. We may want to delay filing.
Another problem:
Transferring property to supposedly avoid loosing it: The Court can analyze transactions made to family member for up to a year before filing. We may have to delay your filing if this has happened.
What do I do if I keep getting notices from creditors?
It is common for you to still receive notices from creditors after you have filed. These should end in the 40 to 60 days as it often takes this long for creditors to get the facts of your bankruptcy in their computers. If you are still getting notices after this time. then you should take the notice that you received and a copy of your Notice of Bankruptcy that was mailed to you when you filed and mail these back to the creditor together. If a creditor files legal action against you or attempts to repossess property, we need to know immediately so that we can straighten it out. It often happens that a creditor will forget to tell a collection agency that someone has filed. Just return their notices with the notice of bankruptcy and they will stop the calls and mailings.
Can utility and phone companies cut me off?
The bankruptcy code treats these kinds of creditors specially. They cannot disconnect you or refuse to do business with you because you have filed. They CAN and most likely will demand that you post a deposit equal to 2 months of anticipated service. They will usually give you a reasonable time to come up with the deposit.
How is Chapter 13 different from Chapter 7?
A chapter 13 costs quite a bit more than a chapter 7. In addition to the other documents that must be filed, a plan must be filed within 15 days. The plan will commit you to making payments to the Court for a MINIMUM of three (3) years. If you have a home mortgage or a car loan, you must be able to resume making your monthly payments the next time they come due, after filing. The plan will resolve how delinquent payments will be cured. You will have to make your Court payments to the Trustee starting 30 days after you file. You also must continue to pay or resume normal mortgage and car payments within 30 days of filing.
Secured debt for car loans, mobile homes, homes and other consumer debt will be affected in several ways. First the principle due in such loans will be reduced to the value of the collateral pledged for the loan. Secondly, high interest rate loans will have the rate reduced to a market rate. You may need to get appraisals for the property so we can prove the amount you will have to pay. As in chapter 7, you can decide to surrender any collateral which will result in the cancellation of the debt if and when you complete your plan payments. If you owe non-dischargeable taxes, we will have to create a plan that pays the IRS in full over the life of the plan. This can be as long as 5 years.
Other tax obligations will disappear when the plan is completed. Chapter13 can also be used to resolve debts that would not be dischargeable in chapter 7. Any delinquent child support or spousal support has to be paid. Only about half of all Chapter 13 plans succeed. This is because people often over estimate how much they can pay each month.
GIVE SERIOUS CONSIDERATION TO THIS BEFORE YOU FILE A CHAPTER 13.
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