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Common Bankruptcy Questions
Q: Guilt: Is this my fault? Should I be allowed to just get rid of my debts, which after all are all my fault?
A. YES! Usually something unexpected pushed you over, such as the loss of a job or an illness. Sometimes just irresponsible buying. Or, the debts mounted up slowly. People live with optimism,”I’ll get that raise”, or a new job, or in between jobs you live off credit. Well, you have to eat.
By creating the bankruptcy laws, society recognized that it does little good to society as a whole to have people saddled with debt, unable to buy cars, houses and clothes once they have passed a bad time and started a new life. Bankruptcy is not only condoned by society, it is recognized as good for the common welfare. Remember, once you are not paying on the credit cards you are again purchasing, an paying sales tax, income tax and helping sustain and create jobs.
Q: Partial payments on credit cards: Should I just keep making the partial payments, hoping for “something” to come along to pay off the cards?
A: NO! It probably will not happen. Stop the payments now, consider getting rid of all the debt, and starting fresh.
Q: Credit rating: Damaged credit by filing?
A: Well, how is your credit now? After a bankruptcy you can start fresh. Without filing your debts linger for years. Bankruptcy is explainable to a creditor. Lots of credit cards you owe on are not explainable. Usually after about seven years the bankruptcy comes off your credit report. Unpaid debts may stay for much longer.
A clean slate may be better than lingering debts.
Q: Will bankruptcy affect my job?
A: Federal laws prevent discrimination for filing bankruptcy, most employers will never know unless you talk about it. Prospective employers may find out, so you will probably be better off disclosing it if asked, then give a good reason why.
Q: Will I lose property, like my clothes or furniture?
A: No. Clothes and furniture, along with many other items, are completely or mostly “exempt’ from collection by the creditors. Your attorney can answer the questions on individual items.
Q: Will I be able to buy a house or car ever again?
A: Probably yes. Credit is usually available, it may just cost a bit more, in terms of interest rate or fees. So what? Pay a bit more in cost of credit, but that is more than offset by the amount of debt you wipe out in a bankruptcy.
Q: Does my spouse have to file, too?
A: Not necessarily. This is a complicated question, but, generally, if your spouse did not co-sign on the debts, the spouse is not liable and does not need to file. For example, if the debts were incurred before marriage, or after separation. Sometimes, even if married, a spouse will have his/her own credit cards and bankruptcy can be filed on those individually. In community property states, such as California, a creditor can theoretically go after the spouse anyway, but it seems they never do.
Q: Will I lose my house?
A: If you keep up the payments in the house, it will not be foreclosed. If your “equity” (the difference between your mortgages and the house value) is under certain limits, the trustee will not take your house. Generally, you can keep between $45,000 and $150,000 in equity, depending upon your situation (one person, two people, over 65, disabled).
Q: Can I not list some debts and continue to pay them?
A: You must list all your debts, but you can continue to pay some if you like, such as a mortgage or car payment.
Q: How long does the process take?
A: About 4-5 months. Your petition can be filed within days of delivering us the necessary documents and fees.
Q: Can I keep my business going?
A; Yes, and you are allowed to keep a substantial amount of business property.
Q: Doesn’t the new law make me pay some of my debts?
A: NO! The new law has a “means test” they call it. Generally, if your income vs. expenses are over certain limits, depending on where you live and the size of your family, you may have to file a chapter 13 and pay into the court for up to five years. The limits are fairly high, about $70,000 per year for a single person. Most people still qualify for a chapter 7, which wipes out most of your debt (debts such as taxes, student loans and child support are generally not subject to bankruptcy).
Q: What are the steps I need to take to get the process going?
A: Contact us. Call or e mail. Gather all your bills, your latest tax return, two latest paychecks if you are employed, two latest checking account statements from personal and business accounts. Take the first credit counseling course, get the certificate. Done.
For more information see: http://www.caeb.uscourts.gov/faq/faq.asp
Contact for More Information or to set up a consultation:
Mike Tracy Law Firm
(916) 435-9090
info@placerlegal.com
We will be glad to meet with you in the comfort of your own home.