Law Offices Of Rex J Roldan PC FAQs

A Chapter 7 bankruptcy, also known as a “fresh start” bankruptcy, is for individuals and married couples who have mostly unsecured debt, such as credit card bills, medical bills, and unpaid utility bills. It’s a legal process that is relatively short in duration, i.e., three to four months. In this case, the debtors don't make any payments to creditors. A Chapter 7 case is concluded upon receipt of a discharge granted by the Bankruptcy Court. The discharge releases debtors from personal liability for most debts and prevents creditors of those debts from taking any actions to collect those debts from the debtor.

Generally, debtors are able to keep their personal belongings whose market values fall below a certain amount. These values are known as “exemptions.” Further, in most cases, as long as debtors continue to pay and remain current on their secured debts, such as mortgages and car loans, they can keep those items from being taken away or repossessed. One has to qualify for a Chapter 7 case, however. For one, your income level cannot be above a certain threshold level as determined by the state or region you live in. Second, any equity in real estate you own and reside in cannot be above the residential exemption. Finally, you cannot have received a previous bankruptcy discharge within eight years from your current one. For more information about Chapter 7 bankruptcy, contact our experienced bankruptcy lawyers.

Generally, a Chapter 13 case is for people who either don't qualify to file a Chapter 7 case or require certain protections to a debtor that a Chapter 7 case cannot offer. Qualified bankruptcy lawyers can help with filing for Chapter 13.

In a Chapter 13 case, the debtor formulates a plan where they make monthly payments to a Trustee for a period of three to five years. These payments are distributed to creditors by the Trustee, and any debt left after the plan is completed is discharged. For example, if a debtor is facing foreclosure of their home and/or repossession of their car due to non-payment, the debtor can propose a plan to pay to the mortgage company and/or the car loan company the amount(s) they're behind. By the end of the plan, the debtor would be current on the mortgage and/or car loan.

The automatic stay is one of the more powerful protections granted to the debtor upon the filing of a bankruptcy case. It goes into effect immediately and prevents creditors from continuing any actions to collect debts from the debtor.

For example, the automatic stay can stop a mortgage company from proceeding with the foreclosure of a debtor’s home. It can prevent a car loan company from repossessing a debtor’s vehicle even though the debtor is behind on payments. It will stop harassing phone calls, garnishment of wages, and lawsuits brought by creditors. Learn more about automatic stay by getting in touch with our bankruptcy lawyers.

In order to prepare your bankruptcy petition, you must provide your bankruptcy lawyers with income information from the past six months from all household members even though you might be the only one filing. According to Legal Jobs, 97% of bankruptcies are filed by individuals.

You should also provide statements from all bank accounts from the past six months, your last two filed income tax returns, and your most current bills, i.e., credit card, mortgage loan, and car loan statements, medical and utility bills, lawsuit documents, and any other proof of debt. Depending on your particular situation, you may need to bring your bankruptcy lawyers proof of other financial assets, such as brokerage account statements, life insurance policies, and savings bonds.

Many bankruptcy lawyers will inform you that most debts can be discharged in bankruptcy. However, some debts, such as student loans, unpaid income taxes, court fines, alimony, child support, and personal liability debts resulting from injuries caused by intoxication cannot be discharged.

The short answer is yes. If you intend to file, bankruptcy lawyers recommend the following:

(1) Stop paying your unsecured debts, such as credit cards and personal loans. Reducing the amounts you owe on these debts will not make a difference to the Bankruptcy Court nor have a favorable effect on your credit score.

(2) DO NOT take on new debt. Do not go out and max out on your credit cards! Do not charge for expensive trips or luxury items (like new TVs, computers, cars, and jewelry). You could face serious penalties if you are found to have charged significant expenses knowing that you were going to file for bankruptcy.

(3) DO NOT transfer titles to homes, cars, or valuable items in an effort to lower the value of your possessions or shield these items from creditors or the bankruptcy trustee.

(4) DO NOT pay debts you might owe to family members or friends. Choosing to pay friends or relatives before filing for bankruptcy on your other debt is known as a preference. Such actions could cause you and your friends or relatives significant legal problems.

(5) Be honest. Being truthful and complete in your filing will not only allow your attorney to help you navigate the complexities of bankruptcy but it'll also make the process smoother and make a somewhat unpleasant experience less stressful.