QUESTIONS & ANSWERS

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ABankruptcies can remain on credit reports anywhere from 7 up to 10 years.

ANo, not all debts can be discharged through the bankruptcy process. Debts that cannot be discharged vary depending on the type of bankruptcy filed. In most cases debts that cannot be discharged include but are not limited to:

• Debts that were not included in your initial list of debts owed in your bankruptcy petition
• Debts that occur after your bankruptcy case was filed
• Tax debt incurred to local and federal tax agencies within the last three years
• Debts owed for alimony or support of a child/spouse
• Debts caused by DUI/DWI that result in an injured person
• Student loans (some exceptions may apply if an individual qualifies for a hardship discharge)

AOnce you have filed your bankruptcy petition, you will be instructed to attend a creditors’ meeting; conducted by the trustee or staff attorney appointed to your case.

In this meeting some of the questions they will ask you include:

• Whether you listed all of your debts and assets in your bankruptcy petition
• Questions related to your current income and expenses
• Whether you transferred, sold, or gave away any property worth $1,000.00 – $5,000.00 or more in the last four years
• How your financial situation occurred

If they feel you are not answering truthfully, your bankruptcy case may be petitioned to be dismissed or worse, you could be subject to prosecution for lying under oath. Any creditors may attend the creditors’ meeting and question you about your assets or other question relevant to your bankruptcy filing.

Typically, hiring a lawyer makes the creditors’ meeting far less stressful because you will have an attorney present representing you there as well as the assurance that your bankruptcy petition was filed properly and accurately.

AIn many circumstances, the answer is No. Your ability to keep your home depends on a lot of varying factors. In fact, bankruptcy is often one of the primary ways individuals can stay in their homes permanently.

Some factors that play into this determination are:

• Whether or not you are current on your loan and if your home is in foreclosure
• The Type of bankruptcy you are filing
• The amount, if any, of equity you have in your home
• Your ability to keep tendering ongoing mortgage payments to your lender
• The state you live in

AIn most cases, if it was suspended as the result of an unpaid judgment, the answer is Yes.

If your license was suspended as a result of an unpaid judgment, filing for bankruptcy will require the DMV to release your license back to you once your receive your discharge since you will no longer owe the underlying debt associated with the Judgment.

To get your license reinstated, either have your attorney or the bankruptcy court clerk send a certified copy of the bankruptcy discharge to the DMV Mandatory Actions Unit.

AYou may be able to get your car back after it was repossessed even if you file bankruptcy after the repossession occurred.

Both Chapter 11 and Chapter 13 bankruptcy allow you to cure missed payments on vehicles that are either leased or refinanced.

They also may allow you to keep the vehicle and pay back only what the car is actually worth even if the total debt owed on the vehicle is far more than the value of the vehicle.

AIn most cases the answer is yes. The exact mechanism for how keeping and/or paying back the debt associated with the vehicle works will depend on the type of bankruptcy petition you file.

Keeping your car in a Chapter 7 case:

In a Chapter 7 case, you can either (1) redeem, (2) reaffirm, or (3) surrender a vehicle you are financing. If you own the car free and clear, you will likely be able to keep the car and the bankruptcy usually will have no impact on your vehicle at all.

Redeeming the car means that you pay a one-time lump sum to the lender of either the current fair market value of what the car is worth or what you still owe on the car and then you will own it free and clear. Although this is not always an affordable option for everyone, it is possible to get redemption financing to keep the car through this option.

If the car is worth far less than what you owe on the car, and you really want to keep the car, this may be an attractive option for you.

Reaffirming the debt on the car means that you are entering into a new contract with the lender of the vehicle that will survive the bankruptcy discharge.  If you choose this option, the effect is as if you never filed for bankruptcy protection with respect to that particular lender. You will still owe the full amount of debt on that vehicle, but the lender cannot repossess the vehicle unless you fall behind on payments.

Surrendering the vehicle means that you voluntarily let the lender repossess the vehicle in exchange for a discharge of the debt associated with the vehicle. In many cases, a vehicle is worth far less than an individual owns on the car.

In those circumstances, some individuals would rather get rid of the car and not risk being sued by the lender if the car is later repossessed and sold at auction for less than the car is actually worth.

Keeping your car in a Chapter 11 or 13 case:

Both Chapter 13 and Chapter 11 bankruptcy allow you to cure missed payments on cars that are either leased or refinanced over a period of 3 to 5 years or longer.

You may also have the option of keeping the vehicle and paying back only what the car is actually worth even if the total debt owed on the vehicle is far more than the value of the vehicle.

ATypically yes. When an individual or corporation files for bankruptcy protection, an automatic stay usually goes into effect which typically prevents all forms of collection activity.

This includes prevention of wage garnishment, collection letters, and even phone calls that are placed in an attempt to collect a debt.

The automatic stay also typically stops a lawsuit from progressing immediately.

While it is possible that lenders, under some circumstances, can seek relief from the automatic stay to continue collection activity, under most circumstances, most debt collection stops permanently once an individual receives their bankruptcy discharge.

Under some circumstances, a creditor can also file a lawsuit called an adversary proceeding within a bankruptcy case in order for a bankruptcy judge to make a determination that a particular debt should not be discharged. The standards for a creditor to win on such a lawsuit are typically high but often include cases of alleged fraud.

Additionally, some debts are automatically held to be nondischargeable under the Bankruptcy Code such as certain tax debts owed to government agencies or domestic support obligations such as child support or spousal support.

Under those cases, collection activity may resume either during the course of a bankruptcy after an individual receives their discharge or once the creditor obtains relief from the automatic stay.

ASecured debt is any debt that is tied to a piece of property that an individual or business typically owns or leases such as real estate, automobiles, equipment, and even accounts receivables. The most common example is a home mortgage.

Unsecured debt is any debt that is not protected or linked to any property such as credit card debt, personal lines of credit, or debts owed to friends or family.

AIn most instances, you can convert a bankruptcy case one time to any other chapter you’re eligible for. Your request to convert does not always have to be difficult, it can sometimes be a simple one-sentence document. While the process may be relatively simple in some circumstances, we recommend speaking to a bankruptcy attorney first before attempting to convert your bankruptcy.

For example: Switching from Chapter 13 to Chapter 7 may affect which assets creditors can seize.

AWe recommend compiling a list of current debts as well as a list of your assets and liabilities. You may also need to take a short credit counseling course in addition to paying a court filing fee.