Bankruptcy – Frequently Asked Questions
As the economy heats up, as the increase in consumer credit spikes across the board with record increases in revolving debt, automobile debt, and student loan debt, the stress levels among individual debt consumers is increasing. Many people are exploring a variety of solutions to resolving their financial problems. Among the alternatives is bankruptcy, which is probably the one about which people have the most questions. Bankruptcy can be the result of unexpected circumstances including loss of employment, divorce, and medical expenses among others. Sometimes it’s just being overwhelmed by mounting monthly bills. With over 27-years of experience in consumer bankruptcy, I can help answer many of the frequently asked questions, including these:
FAQ No. 1: Does filing for bankruptcy protection stop creditors from calling me or contacting me directly?
Answer – Yes, immediately upon your filing a bankruptcy Petition in the bankruptcy court your creditors are prohibited from contacting you. They may only contact your bankruptcy lawyer, and they cannot contact you at home, at work, or by cell phone.
FAQ No. 2: If I file for bankruptcy protection can I keep my home, car or other treasured possessions?
Answer – There are multiple exemptions for different types of property. Bankruptcy is designed to give debtors a fresh start. Part of the fresh start is being able to eliminate burdensome debt without losing everything you own. The Florida constitution provides for an unlimited homestead exemption from creditors, so you get to keep your house so long as you stay current with your monthly mortgage payments. With cars, if the vehicle has no equity, the trustee will not take it. If there is a loan on the car, you can keep it by continuing to make the monthly payments. If you owe on the car but don’t want to keep it, you can surrender the car back to the creditor and discharge any remaining deficiency balance due after the surrender.
FAQ No. 3: What is a Discharge?
Answer – If a debt is discharged in bankruptcy, you no longer have an obligation to pay the debt, and the creditor may not make any attempt to compel you to repay the discharged debt. However, not all debts are discharged in a bankruptcy. For example, child and spousal support, most student loans and priority income taxes, among some others, cannot be discharged by your filing bankruptcy.
FAQ No. 4: Can I buy a house after filing bankruptcy?
Answer – Bankruptcy does not ruin your chances of buying your dream house. Most mortgage lenders, however, require you to wait two to four years after you received your bankruptcy Discharge and demonstrated a good credit history in the meantime. A chapter 7 filing will stay on your credit report for ten years, and a chapter 13 will remain there for seven years, but it doesn’t mean you cannot get credit during that period. In time you will be able to secure credit, get mortgage loans, and rebuild your credit profile. Filing for bankruptcy is a fresh start, an opportunity to get your life back on track, not derail it.
FAQ No. 5: May I choose which assets to keep out of my bankruptcy case?
Answer – Bankruptcy requires “full disclosure” made “under penalty of perjury.” You must disclose all of your assets, all of your income, and all of your other financial and asset information. And, no, you cannot move assets to a friend’s house to keep them stored away from view. One thing I know from representing the “other side” for so many years, is that bankruptcy trustees have a way of finding out the truth. Bankruptcy is a court proceeding and honesty is always the best policy in court proceedings.
FAQ No. 6: I’m married. Do we both have to file the bankruptcy case together just because we’re married?
Answer – Married people may file joint cases together, and it often benefits them to do so. However, you can file an individual bankruptcy case on your own, without your spouse, but you must disclose all of your spouse’s income and expenses to determine the true nature of your combined income and expenses. Also, all joint assets must be disclosed, for which multiple bankruptcy exemptions may act to protect.
You should understand the bankruptcy process before making your decision whether to file a bankruptcy case. The information above may assist in answering some of your questions. However, no amount of general information can take the place of a one on one consultation. Therefore, we welcome you to call today at 813-308-9045 to schedule a free office consultation for answers to your specific circumstances.
