Frequently Asked Bankruptcy Questions

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Can I Still File Bankruptcy?

Despite the media hype in 2005 and the rumors now going around, the truth is the vast majority of people, who could file bankruptcy prior to the law changing in October, 2005, can still file today. Most people that qualified to discharge their debts in a Chapter 7 bankruptcy case under the old law, still can. There are only a few that may not be able to file a Chapter 7. They include people who have filed a previous Chapter 7 in the past 8 years. Also, if your household income is above the state median for your household size, there are additional criteria to meet in order to file Chapter 7. Some people not eligible for Chapter 7 are able to obtain relief under Chapter 13.

Are My Debts Still Dischargeable?

The myth that the right to file bankruptcy somehow ended is false. This propaganda has been advanced by some collectors in the credit card industry to make consumers believe that bankruptcy relief is no longer available, or at least will no longer help them. The truth is most debts are still dischargeable in bankruptcy. A Chapter 7 bankruptcy can still “wipe out” most unsecured debt. Examples of debts that can be discharged include credit card debt, medical bills, debts owed on repossessed or surrendered vehicles, and many payday loans. Most bills, even those in collection, can still be discharged. On the other hand there have always been some debts that can not be “wiped out” in a Chapter 7 bankruptcy. Nondischargable debts like IRS taxes, student loans, and child support can sometimes be included in a Chapter 13 repayment plan.

What Were The Recent Changes In Bankruptcy Law?

Federal bankruptcy law changed in October, 2005. The new law has many significant changes. Filing bankruptcy has become more complicated. More documents are now required. There are more “traps” or possible errors that people filing bankruptcy must avoid. Missing a deadline, not fulfilling a legal requirement, failing to submit documents on time, dishonesty or omissions can result in case dismissal. Of particular importance to everyone who files now is the new pre-filing credit counseling requirement. This new counseling requirement is fairly easy to fulfill by either telephone or internet and must be completed before filing bankruptcy. Despite all of the recent changes in the law, for the vast majority of people filing today the new law will not significantly affect the final outcome of their case. Most people will be able to obtain the same results today that they could have received previously.

How Can I Get A Copy Of My Credit Report?

Everyone can obtain a free copy of their credit report from each of the three credit bureaus once per year. Go to AnnualCreditReport.com to obtain your free copies. This web site will ask you for your personal information. Then select which report you want first: Experian, Equifax, or TransUnion. You will be directed to a section of your selected credit bureau’s web site and asked several additional questions to verify your identity. The questions are based on information contained in your credit report. If answered correctly, you will be able to view and print out your report. You can decline any additional services, such as obtaining your credit score, which costs money. The credit reports themselves are absolutely free. Once you have your first report, return and repeat with another credit bureau. If you are stuck and can’t get a bureau’s report, try another one. If you do not have access to the internet you may call toll free 1-877-332-8228 and your reports will be mailed to you. It is wise to review all three of your credit reports once each year. If you catch errors on your reports there are links to correction procedures.

How Can A Lawyer Help?

Federal bankruptcy laws are complicated and unfamiliar to most people. Few lawyers are knowledgeable about bankruptcy law and its many recent changes. Be sure and choose an experienced consumer bankruptcy attorney who will spend time with you to learn about your particular financial situation and then explain to you whether and how a bankruptcy could work for you. A good attorney will not only thoroughly explain the bankruptcy process, but will also tell you exactly how each debt you have will be treated; let you know whether everything you own will be protected; and answer all of your questions. Working with an experienced consumer bankruptcy attorney will help you steer clear of potentially negative outcomes. Picking an attorney you trust and feel comfortable working with will ensure the best possible result and provide you with peace of mind.

What are the advantages and disadvantages of a Chapter 7 Bankruptcy?

Chapter 7 is the most common type of bankruptcy. It is the quickest and often the least expensive way to handle insurmountable debt. Many people with debt problems qualify to file under Chapter 7. Chapter 7 bankruptcy can “wipe out” credit card debt, medical bills, and debts from repossessed and surrendered vehicles among others. The greatest advantage of Chapter 7 is that you receive a fresh start. The stress of an otherwise impossible financial situation ends. The disadvantages of Chapter 7 include that your bankruptcy will appear on your credit report for up to ten years. The bankruptcy will affect your credit score although its negative effect will diminish over time. Each person should weight the advantages and disadvantages for themselves after obtaining information about what a bankruptcy would look like given their particular situation. Though it should always be a last option, most people struggling with debt report feeling a huge sense of relief when they decide to file bankruptcy.

What are the advantages and disadvantages of a Chapter 13 Bankruptcy?

The advantage of Chapter 13 Bankruptcy is that your creditors are stopped from all collection activity to give you time to catch up slowly month by month by paying an affordable amount in an organized way. While in a Chapter 13 repayment plan you are protected from all collection activities including garnishment, repossession, and foreclosure. Embarrassing calls from collectors stop… The disadvantage of filing Chapter 13 is that your credit is negatively affected. Also, while in a Chapter 13 repayment plan you need court permission to incur new debts, such as replacing a car, or refinancing a home. For many people the advantages of filing greatly outweigh the disadvantages. Having a workable plan to protect your home, vehicles, retirement savings, and other assets while you tackle your financial problems in an organized manner brings much needed peace of mind. It feels good to propose a “best efforts” repayment plan and have a financially feasible solution to otherwise insurmountable problems.

How Do I Protect My Home And Assets?

The best way to protect your home and assets is to make all payments on time with good income, as well as have adequate savings, and full insurance to cover unanticipated problems. Unfortunately, real life doesn’t go so perfectly – we are only human. Sometimes, despite our best efforts, things go awry. If you find yourself with insurmountable debt and the sense that you are sinking even though you are doing everything you can, then filing Chapter 13 bankruptcy is a good option for you to consider. Of great concern to most people is protecting their home and the things they have worked hard for. Most Chapter 13 bankruptcy repayment plans allow people to keep everything they own. Working closely with an experienced consumer bankruptcy attorney, you will propose a financially feasible repayment plan acceptable to the court. The Chapter 13 petition and plan will list all of your assets, all of your debts, and show how each debt is to be handled. While in Chapter 13 you are protected from all collection activities including garnishment, repossession, and foreclosure – thus giving you the time you need to resolve your financial problems.

How Does Home Foreclosure Work?

In Washington State home foreclosure is a two-step process. When your mortgage becomes 3 months late you are likely to receive a Notice of Default which requires you to catch up on your mortgage payments within 30 days. If you are unable to bring the mortgage current in 30 days then a Notice of Foreclosure is served on you. This second step sets an auction date for the sale of the home in 3 months. The mortgage company will not accept partial payment, and the past due amount (which grows each month), plus fees and costs, must be paid in full in order to save the home. Mortgage companies offer workout plans, but many people’s applications are ultimately denied. Refinancing or selling a home is difficult to complete while foreclosure is pending. Fortunately a Chapter 13 repayment plan can stop a foreclosure and allow a homeowner time to catch up. Chapter 13 can provide complete protection from home foreclosure. If you qualify, you can save your home through Chapter 13.

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