Frequently Asked Questions

Strictly speaking, no, there is no requirement that a married spouse must also file for bankruptcy. However, the spouse may want to file for bankruptcy if the spouse is also liable on certain joint debts.

Mostly “Yes”. The bankruptcy discharge is personal; this means that it “wipes out” your obligation to pay debts (except non-dischargeable debts). Also, if someone else owes on the debt, then the creditor can still collect from that other person. In that sense, the debt still exists even after the bankruptcy filing. However, if you are the only person obligated on the debt and you receive a discharge, the debt is effectively wiped out (it technically still exists, but the creditor cannot collect on it).

In the case where a creditor is secured, which means they have a lien on property (such as your house), the bankruptcy discharge will not wipe out the lien. This means the creditor can foreclose on the property to satisfy the debt if the debt is not paid according to the agreement with the creditor.

The fact is that most individuals or married couples who qualify for and then file Chapter 7 bankruptcy do have income from working.  Although there are limits to the amount of household income an individual or married couple can earn and still qualify for Chapter 7 bankruptcy, statistically most candidates for bankruptcy do qualify for Chapter 7 bankruptcy.  Each person’s situation is different and the income test used to determine who may qualify for Chapter 7 bankruptcy should be performed by a qualified and experienced bankruptcy attorney.

It is true that there are qualification criteria for each type of bankruptcy, Chapter 7 or Chapter 13.  However, the fact is that most individuals or married couples who need bankruptcy relief can and do qualify for bankruptcy relief, either Chapter 7 or Chapter 13 bankruptcy.  The analysis necessary to determine eligibility for Chapter 7 or Chapter 13 bankruptcy is complicated and depends on each individual or married couple’s situation.  You should consult with an experienced Kinkade & Associates bankruptcy attorney regarding your situation and which bankruptcy is right and available for you.

The potential benefits of bankruptcy depend on a person or married couple’s circumstances.  Filing Chapter 7 or Chapter 13 bankruptcy stops most lawsuits and most other types of creditor collection activities including most garnishments (there are limited exceptions such as on-going child support and court fines) and repossessions of your property.  Chapter 13 bankruptcy permits those who are eligible for Chapter 13 bankruptcy to propose a reorganization and repayment plan that can stop and prevent home foreclosure, cancel sheriff’s sales of real estate, possibly eliminate second mortgages, reduce auto installment payments and provide a way to repay other debt such as taxes and student loans.

Unfortunately, no.  Bankruptcy filing is a part of the public record and as such may and probably will appear in the newspaper.

Yes, Chapter 13 bankruptcy may be an option to stop home foreclosures and permit a homeowner to catch up missed mortgage payments over time.  Filing a Chapter 13 bankruptcy stops a scheduled Sheriff’s sale.

Almost immediately.  Although there are many factors to consider in meeting your goal of rebuilding your financial life, most individuals and married couples who choose to file bankruptcy can begin rebuilding their financial life after the bankruptcy is discharged and troublesome debt is discharged.

One of the potential benefits of Chapter 13 bankruptcy is that it is possible to propose a repayment plan that will protect a vehicle from repossession.  Generally speaking, this benefit is not available when a Chapter 7 bankruptcy is filed.  It is therefore usually advisable that payments on vehicles should be current at the time a Chapter 7 bankruptcy is filed.

Your opportunity for debt relief begins with a phone call to set an appointment with one of our experienced debt relief attorneys.  Please give us a call or contact us by email by filing out the contact form on this page. 

A:    The short answer is “Yes,” but . . .

Explanation:  It may be tempting to save the expense of hiring an attorney to prepare your bankruptcy and represent through the bankruptcy process.  But should you?  For reasons explained below the answer is a very big “NO!” Without question, and without exception, considering bankruptcy is a serious undertaking.  The decision to file bankruptcy, and if so the decision regarding the type of bankruptcy that will meet your needs and circumstances, can have serious long-term effects on your financial future.  Bankruptcy is a complicated area of law. The average person, regardless of their experience and education cannot possibly know enough about bankruptcy law to make decisions about their best options in bankruptcy and thereafter properly and correctly prepare the paperwork the bankruptcy court requires.  The average person cannot know what is necessary to protect their assets and their financial future.   The bankruptcy code, essentially the law governing filing bankruptcy, is over a thousand pages.  Certainly not every page applies to every person but how will you know which applies to you?   How will you know what steps you must take or how the paperwork must be prepared to protect your assets?  How will you know what you must do after you file bankruptcy to eliminate or manage your debt while retaining and protecting your home, your car and/or your personal possessions?  Filing bankruptcy and the outcome of doing so is simply too important to your financial future to undertake it without an attorney.

A:    The short answer is “Yes” as to personal liability for a mortgage loan, but the mortgage company or bank debt remains a lien on the real estate.

Explanation:  A typical loan for the purchase or refinancing of real estate has two components; a promissory note signed by the borrower(s) and a mortgage, which essentially is a consensual pledge of the real estate as collateral for the loan which places a lien on the real estate in favor of the mortgage lender.  Filing bankruptcy, either Chapter 7 or Chapter 13, can provide for a discharge of the personal liability component.  This may permit a person or couple who files a bankruptcy to surrender the home to the lender and eliminate personal liability for the debt.  A bankruptcy filing does not require a person or couple to surrender real estate.  In most cases an option exists to keep the home and continue to pay the mortgage payments.  This may require the execution of a reaffirmation agreement with the mortgage lender.  A reaffirmation agreement executed during a pending bankruptcy, once filed with the bankruptcy court, will preserve and maintain personal liability. If real estate is surrendered to a lender as part of a bankruptcy filing the lender is free to proceed in foreclosure once a bankruptcy is concluded, or prior thereto with the permission of the bankruptcy court.  Once a bankruptcy discharge is entered the foreclosure is against the real estate only, known as “In-Rem” foreclosure, as the discharge in bankruptcy has eliminated personal liability for the debt and prevents the mortgage lender from collecting debt from you.

Yes.

Explanation:  When a bankruptcy is filed, either chapter 7 or chapter 13, an automatic “stay” is placed on creditor collection activities.  This means that once a bankruptcy is filed creditor collections efforts and tactics, including foreclosure (and wage garnishment, court hearings, lawsuits, phone calls, letters and other forms of creditor harassment) must stop.  There are significant differences in how long this protection can last in Chapter 7 versus Chapter 13.

The short answer is that Bankruptcy eliminates most, but not all debt.

`     Explanation: There are some types of debt that cannot be discharged in bankruptcy  including most student loans, most tax debt, alimony, child support, debts arising out of a divorce, court fines such as speeding tickets, debts that were a result of auto accidents involving intoxication, debts that are a result of criminal activity and debts incurred through fraud.  Secured debt, such as debt that is tied to a car, home, furniture, appliances or other collateral must be paid if you want to keep the property that is tied to the debt.

There is no minimum amount of debt required to file Chapter 7 bankruptcy.

Explanation: Although there is no minimum amount required whether or not bankruptcy is an option for you depends on all of your facts and circumstances.  An experienced Kinkade & Associates debt relief attorney will give you information about your options for debt relief after meeting with you for a no-charge strategy session, including potential options for debt relief through bankruptcy.

The short answer is that there are two types of bankruptcy, Chapter 7 and Chapter 13.

Explanation:  There are important differences between Chapter 7 and Chapter13 bankruptcy.  A person or family’s unique situation will often determine whether Chapter 7 or Chapter 13 is best.  One size does not fit all!

CHAPTER 7 BANKRUPTCY:  Chapter 7 bankruptcy is filed primarily by individuals, married couples (who meet qualification criteria) or small businesses (who cease business) to eliminate debt and achieve a “fresh start.”  When a Chapter 7 bankruptcy is filed you are granted an automatic “stay” on creditor collection.  This means that once a Chapter 7 bankruptcy is filed creditor collections efforts and tactics, including wage garnishment, court hearings, lawsuits, phone calls, letters and other forms of creditor harassment must stop.  If a creditor fails to stop collection efforts after being notified of the filing of a Chapter 7 bankruptcy that creditor may be subject to punishment.  Once the bankruptcy process is concluded most debts are “discharged,” which means eliminated.  Individuals or married couples or receive a discharge in Chapter 7 bankruptcy are no longer legally liable for discharged debts.  Creditors whose debts are discharged cannot legally collect on those debts and in fact may not make any effort to collect on a discharged debt.  A Chapter 7 bankruptcy discharge erects a barrier to any further collection efforts.  As stated above, there are some types of debt that cannot be discharged in bankruptcy including most student loans, most tax debt, alimony, child support, debts arising out of a divorce, court fines such as speeding tickets, debts that were a result of auto accidents involving intoxication, debts that are a result of criminal activity and debts incurred through fraud.  Secured debt, such as debt that is tied to a car, home, furniture, appliances or other collateral must be paid if you want to keep the property that is tied to the debt.

CHAPTER 13 BANKRUPTCY:  Chapter 13 bankruptcy is a court supervised
reorganization and repayment plan that permits individuals and married couples who have a steady and reliable source of income to propose a Plan to their creditors to repay some or all of their debt over time, usually a three-to-five-year period.  A Chapter 13 bankruptcy requires a monthly payment. The amount of the monthly payment depends upon the household income and expenses as well as the type and amount of debt that needs to be paid through the repayment plan.  Chapter 13 may permit you to propose a plan to cure defaults on car loans, home mortgages, student loans and child support.  Filing a Chapter 13 bankruptcy can stop a Sheriff’s sale of real estate, rescue a home from foreclosure and permit repayment of the missed mortgage payments over time.  You may be able to eliminate second mortgages and combine payments on cars and other secured debt into one affordable monthly payment.  Depending on a person or married couples’ circumstances it is possible that some debt (unsecured debt) can be eliminated without a substantial amount of that debt being repaid.  Like a Chapter 7 bankruptcy, filing a Chapter 13 bankruptcy stops wage garnishments as well as other collection activities.  In the end, for most Chapter 13 bankruptcy candidates, a discharge eliminates unsecured debts not paid during the term of the Chapter 13 bankruptcy.

The short answer is, there may be, depending on your circumstances.  For instance, debt settlement may be an alternative to bankruptcy depending on a number of factors.  Debt Settlement is discussed in more detail below.

DEBT SETTLEMENT – A POTENTIAL ALTERNATIVE TO BANKRUPTCY :   At Kinkade & Associates we are frequently asked by clients if there are any alternatives to filing bankruptcy.  Under the right circumstances settling debt may be an option.  Debt Settlement is a fairly straight forward concept.  Your creditors would like for you to pay your debts in full.  However, if you can’t pay your debts in full your creditors would generally prefer to have some money rather than nothing.  When possible, we talk with your creditors on your behalf attempt to negotiate settlement with them.  Since we are bankruptcy attorneys, creditors recognize that the vast majority of the people we represent do in fact file bankruptcy.  Under the right circumstances we may be able to talk with your creditors about settling your debt.  If the negotiation is successful your creditor will agree to accept the negotiated lump-sum, a sum that is less than the full amount of the debt you owe. Generally, our average settlement is between 45 – 60% of the debt owed. However, please keep in mind however that this is only an average and actual results vary from person to person and creditors depending on the circumstances.  At times a higher percentage is required, especially if a lawsuit has been filed.  Debt settlement is not right for everyone.  There can be challenges in raising the money to offer lump sums to your creditors.  There is important additional information that you need to know regarding the potential option of debt settlement, including potential income tax implications and possible tax liability for forgiven debt.  If you have any questions, please refer to our web site information page or schedule a no-charge strategy session with an experienced Kinkade & Associates attorney.

The short answer is that a significant amount of equity in personal property can be protected in Chapter 7 bankruptcy.

Explanation:  This is one of the most frequently expressed concerns expressed by individuals or married couples considering Chapter 7 bankruptcy.  The facts are that most individuals or married couples who are eligible for Chapter 7 bankruptcy can keep their home, their vehicles, their furniture, their retirement accounts and their other possessions.  Every person or married couple who files Chapter 7 bankruptcy is entitled to keep property worth up to a certain amount that is set by law.  The vast majority of individuals and married couples who file Chapter 7 bankruptcy keep everything they own.  It is very important to keep in mind that there are limits to the value of property you can keep in a Chapter 7 bankruptcy and not all types of personal property and other assets are protected in a Chapter 7 bankruptcy.  You must consult a knowledgeable bankruptcy attorney to learn the details of what types of assets can be protected and the limits of that protection.  If you have property that you cannot protect in Chapter 7 then in that case, you may be eligible to consider a Chapter 13 bankruptcy.

You will be able to rebuild your credit after bankruptcy.

Explanation:  The fact is that most individuals and married couples who receive a Chapter 7 bankruptcy discharge are able to re-establish their credit worthiness in a relatively short period of time.  Each individual or married couples’ situation is unique.  Often, what folks do after a bankruptcy is more important than the fact that a bankruptcy was filed.  In other words, there is hope.

Ten years from discharge.  However, for most who file bankruptcy the impact lessens with respect to re-establishing credit and rebuilding credit for a much more limited period, generally two to four years.

There are of course many factors’ lenders consider when evaluating someone or a couple for a mortgage loan.  However, generally, if someone who files bankruptcy follows a few simple steps, and all other factors permit them to qualify, the period of time a bankruptcy impacts eligibility for a mortgage is 2 to 3 years.

Yes

Explanation:  The fact is that most individuals or married couples who qualify for and then file Chapter 7 bankruptcy do have income from working.  Although there are limits to the amount of household income an individual or married couple can earn and still qualify for Chapter 7 bankruptcy, statistically most candidates for bankruptcy do qualify for Chapter 7 bankruptcy.  Each person’s situation is different, and the income test used to determine who may qualify for Chapter 7 bankruptcy should be performed by a qualified and experienced bankruptcy attorney.