Bankruptcy Frequently Asked Questions (FAQ’s)
What is the difference between chapter 7 bankruptcy and chapter 13 bankruptcy?
In a nutshell, chapter 13 is a payment plan bankruptcy where you typically pay off a small portion of your debt over either three or five years with the remaining debt (with some exceptions) wiped out at the end of the three or five year payment plan. Whereas chapter 7 bankruptcy wipes out all of your debt, with some exceptions, without any payment plan requirement, the process taking approximately three to four months from the date your case is filed, assuming no complications arise. There are income limitations for chapter 7 filers (unless the debt is primarily non-consumer debt) and you may lose assets in chapter 7, although this happens very infrequently. No assets can be taken in chapter 13 bankruptcy.
Am I protected from my creditors once I file bankruptcy?
An order called the “Automatic Stay” is issued as soon as your bankruptcy case is filed, protecting you from most creditor actions including contacting you to attempt to collect the debt. However, there are some exceptions which we are happy to discuss during your free consultation.
Does bankruptcy wipe out all of my debt?
It wipes out most, but not all debts. There are certain exceptions. The most common exceptions are certain types of tax debts, child and spousal support, most student loans, fines and certain debts owed to the government, and debts incurred by fraud.
Does bankruptcy wipe out student loans?
Not usually, unless you can prove you have an “undue hardship” or your student loan is not the type of student loan intended to be protected from being wiped out in bankruptcy. Our bankruptcy attorney, Lindsay Torgerson, is one, if not the only, bankruptcy attorney in the Northern Bay Area to successfully litigate a private student loan owed to a for-profit university without proving an undue hardship to completely wipe out the debt. The case was appealed in the United States Bankruptcy Court’s Ninth Circuit Bankruptcy Appellate Panel and was upheld, setting important case precedent throughout the western United States. This case is a published opinion now used by many others to wipe out student loans.
Am I going to lose my car if I file bankruptcy?
It depends how valuable (or how much equity) you have in the car. There are “exemption” laws available to you to use to protect your assets up to certain value limitations. This is a complex area which our bankruptcy attorney, Lindsay Torgerson, will address in detail with you during your free consultation.
Am I going to lose my house if I file bankruptcy?
It depends how valuable (or how much equity) you have in the house. There are “exemption” laws available to you to use to protect your assets up to certain value limitations. This is a complex area which our bankruptcy attorney, Lindsay Torgerson, will address in detail with you during your free consultation.
Can I keep any credit cards if I file bankruptcy?
It is very unlikely that any of your credit cards or unsecured lines of credit will remain open once you file bankruptcy, even if they carry no balance and have always been in good standing. Wine Country Family Law & Bankruptcy Office recommends our clients get a secured credit card after their case is over. Please note: in most cases, your debit card should not be affected.
Do I have to include all of my debts in my bankruptcy?
Yes. You must disclose all of your debts, even those which don’t get wiped out. If it has a balance, it must be listed. Before deciding to pay off a debt of $600 or more, be sure to discuss it with us first! This is especially important to discuss first if it is a debt owed to a relative or other person you have a close relationship with.
Can I file bankruptcy without my spouse-husband-wife?
Yes. There are certainly circumstances where our attorney might recommend only one spouse files bankruptcy. However, please realize even if your spouse does not file bankruptcy with you, it will be next to impossible to file bankruptcy without your spouse finding out!
How long does bankruptcy stay on my credit report?
Chapter 7 bankruptcy typically remains on your credit report for ten years. Chapter 13 bankruptcy usually remains on your credit report for seven years after the case is filed.
How long until I can buy a house—get a mortgage–after bankruptcy?
Some of our chapter 7 clients reported they were able to obtain a mortgage loan three to four years after their bankruptcy. We’ve had chapter 13 clients obtain mortgage loans during their chapter 13 bankruptcy case. However, there are many variables involved. We suggest that you consult with a mortgage broker if you have questions about this. We would be happy to refer you to mortgage brokers, if requested.
How long until I can buy a car—get a car loan–after bankruptcy?
Our chapter 7 clients reported they were able to obtain a car loan about one year after their bankruptcy. Several of our chapter 13 clients obtained car loans during their chapter 13 case. However, there are many variables involved. We suggest you consult with an auto loan finance company/lending institution if you have questions about this.
What are the income qualifications for chapter 7 bankruptcy?
It depends on your household size/number of your dependents. Typically, chapter 7 bankruptcy qualification is based on your gross income received during the last six months prior to filing. If your income is under the California median income level for your household size, you qualify for filing chapter 7. If your income is over the median income level, then you must pass the “Means Test” calculation in order to file chapter 7 bankruptcy. This is a very complex issue which will be discussed in detail during your free consultation.
Will my employer or landlord find out if I file bankruptcy?
Bankruptcy is a matter of public record. If somebody really wants to know, they can find out by going to the courthouse or perhaps by conducting some on-line research or other investigative work. However, it is not typically published in newspapers, as foreclosures are. The bankruptcy laws do not require your employer or landlord to receive notification about your bankruptcy filing unless you owe them money or you have an executory (performance still due) contract or unexpired lease with them.
Should I put my house or car into somebody else’s name before I file bankruptcy?
No! This would likely be a fraudulent transfer and may cause major issues!
How will my co-signer be affected if I file bankruptcy?
Your bankruptcy should not be reported on your co-signer’s credit report. It is you filing bankruptcy—not your co-signer!
Your co-signer will remain legally obligated on the debt. Typically, once you file chapter 7 bankruptcy, the creditor will pursue your co-signer for payment if payments are not being received. However, if you file chapter 13 bankruptcy, your co-signer may have some protection from creditors by the “Automatic Stay” order imposed. There are some complex exceptions which are best discussed during your free consultation.
How much does it cost to file bankruptcy?
The court filing fee is currently $335 for chapter 7 and $310 for chapter 13. Check the bankruptcy court’s website for up-to-date filing fee information and filing fee waiver information. We are happy to provide you with a quote for our services at the conclusion of your free consultation, assuming we have sufficient information to assess your potential matter. Our previous clients report that they found our fees very reasonable and that we provided good value for their money. (See our reviews). We offer flexible payment plans for our clients. Beware of “teaser” rates or “bait and switch” fee quotes you may find on-line! You won’t find those with us!
How long does it take to file bankruptcy?
This is largely dependent on you! It depends how long you take to provide us with the information we will need in order to properly prepare your case for filing. Most of our clients take at least a couple of weeks to gather all of the necessary information for us. Once we receive all of your information, we strive to file the case within approximately two weeks. However, this depends on the complexities involved in your matter, as well as our current caseload. We offer rush filing services, if necessary, for a small additional fee.