Frequently Asked Questions
How long does chapter 7 take?
It takes approximately 120 days (4 months) from the date that a case is filed with the court until the court enters a final order concluding the case. However, preparing to file with the court can take anywhere from a few weeks to several months, and this is generally directed by the client and how quickly they can produce the necessary documents and information.
I will do everything within my ability to ensure that your case moves along as quickly as possible. I have developed a tried and true method of obtaining documents and information in an orderly manner.
How long does chapter 13 take?
It takes approximately 180 days (6 months) from the date that the case is filed with the court until the date that a payment plan is confirmed by the court. However, the payment plan may extend from 3 to 5 years, depending on the case.
I will do everything within my ability to ensure that your case moves along as quickly as possible.
How much does it cost to file bankruptcy?
Costs and fees will vary depending upon a number of factors. However, some fees are the same across the board, and those are as follows
Chapter 7 Fees and Costs
Filing Fee $335
Credit Counseling and Financial Management Courses $25
Judgment and Title Searches (optional) $50+
Chapter 13 Fees and Costs
Filing Fee $310
Credit Counseling and Financial Management Courses $25
Judgment and Title Searches (optional) $50+
Legal fees are very case specific, and I encourage people to call for a free consultation if they have interest in filing bankruptcy and want to know what it will cost. Also, every client has different needs and goals, and in some cases extraordinary events may occur, all of can increase fees.
I always do my best to take all relevant factors into consideration when determining the ultimate fee that I ask a client to pay. Payment plans are also available. If you would like to know how much your case will cost, please call for a consultation.
Can I keep my car?
Yes, as long as: (1) you are current on your payments; (2) you remain current on your payments; and (3) your equity does not exceed $3,775 (In some cases, you can increase this number by as much as $13,100). Equity is the difference between the blue book value of the car and the total balance due on the loan/note.
However, if you would prefer to surrender the car in bankruptcy, you may do so and will be relieved of the debt entirely.
I am very well versed in the federal exemption law that will protect your car or motorcycle. I’ve never had a client lose a vehicle that they didn’t want to surrender.
Can I keep my house?
Yes, as long as: (1) you are current on your mortgage payments; (2) you remain current on your mortgage payments; and (3) your equity does not exceed $23,675 (In some cases, you can increase this number by as much as $1,250). Equity is the difference between the fair market value of the property and the total balance due on the mortgage(s).
However, if you would prefer to surrender the home in bankruptcy, you may do so and will be relieved of the debt entirely.
Bankruptcy is also a useful tool if a sheriff’s sale is looming close. The bankruptcy filing will delay the sale for several months usually, which will give you time to prepare and move out in a more orderly fashion.
I am very well versed in the federal exemption law that will protect your home. I am also familiar with the mortgage modification and loss mitigation process, which can be used to save the home in some cases.
How will bankruptcy affect my credit?
Like the answer to many questions, here the answer is ‘it depends.’ In some cases, a client’s credit score was so low before filing (e.g., 450) that their credit score increased after filing (I’ve seen an increase of as much as 150 points, virtually overnight).
However, the bankruptcy will be on your credit report and remain for 7-10 years. Further, even though your debts may have been eliminated by bankruptcy, prior reports of those debts that appear on your credit report will remain on your credit report for the legally permitted time. This is because a credit report is a historical document and while bankruptcy can work miracles for some people, it can’t change history.
Will bankruptcy have any effect on my employment?
In most cases it probably won’t affect your ability to obtain or keep employment. However, there are exceptions, particularly in the financial services industry and also in certain government jobs where security clearance is required. If you are concerned about your ability to obtain employment in a particular filed or industry in the future, the best advice is to talk to a trusted person in that industry.
Can I keep my tax refund?
In most cases, yes. However, if you are expecting a refund you should tell your attorney so that the proper steps can be taken to ensure that you keep it.
I am very well versed in the federal exemption law that will protect your tax refund.
In Chapter 13, how much will my payment plan be?
There are a variety of factors that have to be taken into account when determining your payment plan. Both the amount and length of the plan will depend on: (1) your disposable income; (2) the amount of equity you have in any assets you own; and (3) the type and amount of debts you owe to your creditors.
In some cases, the plan payment is very low, e.g., $100 per month. In other cases, it can be much higher. The length of the plan payment is usually no less than 3 years, but no more than 5 years.
I will do my absolute best to propose and confirm the lowest and shortest plan possible. In most cases I have handled, only 10% of debts had to be repaid. If you’d like to know what your payment plan would look like, please call for a consultation.
Does my spouse have to file too?
Although there are many reasons why married couples may benefit from filing jointly, there are sometimes good reasons for only one spouse to file. Filing individually (without your spouse) is completely permissible under the law and choice is entirely yours.
I will personally counsel you on this issue and will help you make a decision that is right for you and your spouse.
I’m current on all of my payments. Should I still file for bankruptcy?
You do not have to be in default of your obligations or in collection to qualify for bankruptcy. However, in many cases, debts are so overwhelming that it is unlikely or impossible for you to continue making payments and still put food on the table. In those cases, I recommend bankruptcy.
Or, if you’re only making minimum payments on your debts, the truth is you’re not going to pay them off in this lifetime. Stop throwing good money after bad. In these cases, I recommend bankruptcy.
Also, if you have suffered a hardship recently and you know that you will soon be unable to pay your debts, you should consider filing bankruptcy soon. For example, loss of employment, death of a spouse, illness or disability (your or your spouse), divorce, or any other event that reduces your household income can happen without warning. In these cases, you will want to preserve as much of your remaining income as possible. Don’t throw it away on debts that can be eliminated.
Procrastinating often leads to lawsuits, judgments, wage garnishment, repossession, foreclosure and other involuntary collection. Being proactive can help to avoid the surprise and embarrassment of repossession and other forcible collection. The sooner you file, the more options you will have.
I will assess your entire financial condition and help you determine if bankruptcy is right for you, and if so, whether you should file chapter 7 or chapter 13.
Will I have to go to Court?
In the overwhelming majority of cases, no. However, everyone who files for bankruptcy is required to personally appear at the “341(a) Meeting of Creditors.” The meeting does not take place in a courtroom and there is no judge or jury. While the name suggests that creditors will be present, rarely have I seen an appearance by a creditor. The court appoints a trustee to act on behalf of the creditors, thereby making their attendance at the meeting unnecessary and uneconomical.
I will keep you informed every step of the way to ensure there are no surprise appearances. I will also prepare you for your meeting and attend with you.
What will happen with my foreclosure?
The moment that you file bankruptcy the federal law requires that most all collection activity stop immediately and automatically. This includes lawsuits, repossessions, wage garnishments and foreclosures (sheriff’s sale, too). However, this is only temporary in most cases. If you wish to keep your home and avoid foreclosure permanently, additional steps will need to be taken. Generally, I recommend that my clients participate in the Loss Mitigation Program, which is a court monitored program that permits us to work with your lender to seek modification and other foreclosure alternatives.
I will take the time to listen to your concerns and goals and will counsel you to make the right decision. If you want to keep your home, I will work with you and your lender to give you a chance at modification. If you decide to surrender your home, I will work with you and your lender to buy you as much time as possible to prepare to move out in an orderly way.
Do I make too much money to file for bankruptcy?
I’ve never met a client who made too much to file bankruptcy. The truth is, there is a bankruptcy option for everyone, no matter what your income bracket is.
I will assess your entire financial condition and advise which bankruptcy option is best for you, keeping in mind your goals and risk tolerance.
Will all of my debts be eliminated?
Whether you file chapter 7 or chapter 13, there are some debts that bankruptcy will not eliminate. The most common debts that you can eliminate include credit cards, medical bills, personal loans, utility bills, and if you surrender the property, car loans, mortgages and rent.
The most common debts that you cannot eliminate include student loans, (most) taxes, domestic support obligations (alimony/child support) and if you want to keep the property, car loans, mortgages and rent.
I will review all of your debts and will advise if any of your debts are incapable of being eliminated.
If I’ve filed bankruptcy in the past, can I file again?
The bankruptcy law allows for multiple bankruptcy filings. Depending on the specifics of your previous case, you may be able to file again in as little as 2 years.
If you need to file bankruptcy again, I can verify your past filing and advise you of your next eligibility date.
Should I try debt consolidation/settlement first?
I am always worried when I hear a client tell me that they are going to try debt consolidation or settlement. My experience has been that most of these agencies are not honest with their clients; not honest about fees and costs, not honest about their services, and not honest about the potential results and consequences.
Debt consolidation can also be risky because unlike with bankruptcy, most creditors do require that you default on your payments for 2-4 months before they will discuss settlement. However, during this time, the debt can be sold or sent to a collection attorney for immediate action.
Debt consolidation does not protect you from lawsuits, judgments or repossessions. Also, debt consolidation requires that your creditors voluntarily cooperate with the process, which often leaves you making large monthly payments toward only a portion of your debts.
If you are uncertain about filing bankruptcy, I will walk you through all the options and will thoroughly explain all the potential risks and benefits of each option.
How will I know if I am eligible for bankruptcy?
Eligibility primarily generally depends on income and assets. In most cases I can determine your eligibility with just a few questions. Please call for a consultation if you would like a free assessment.
Will I have to file Chapter 7 or Chapter 13?
Whether you file chapter 7 or chapter 13 will primarily depend on your income and assets. However, your individual goals may also dictate which chapter you file. For example, even if you are eligible for chapter 7, chapter 13 would be a better option if you are in default of your home mortgage and wish to keep the home.
I will assess your entire financial condition and, taking your goals into account, help you determine which chapter is best for you.
Are payment plans available for me to pay the court costs and legal fees?
Yes. With chapter 7 however, all payments have to be made before your case is filed. As long as there is no urgent need to file bankruptcy (such as a sheriff’s sale), I will work with you on a payment plan ranging from 2-4 months. I can also set up automatic payments from your bank account to help you stay on track.
In chapter 13 some of the fees have to be paid up front, which can also be paid through a payment plan personalized for you. However, the bulk of the fees can be paid later through your bankruptcy payment plan.
Will I be able to buy a house again/in the future?
Bankruptcy, alone, will not determine whether you will be qualified for a mortgage in the future. Lenders look at a variety of factors in determining whether to make a loan, and a history of bankruptcy is only one of them. Also, many people have such substantial debt that in some cases bankruptcy has improved their credit, which may make them more eligible than they were before. In my experience, lenders will consider you for a mortgage in as little as 2 years after your bankruptcy case.
However, there are many things you can do to help improve your credit more quickly after bankruptcy. I take the time with every client to counsel them on how to rebuild credit and provide all the necessary tools for getting back on track. Some of these tools include responsible use of credit, budgeting, expense reduction and credit report clean-up.
How does mortgage modification work?
If your monthly mortgage payment is too high for you to afford, you can submit an application, with supporting documents (proofs) that allows your mortgage lender to determine if some of the terms of your mortgage loan can be changes so that your monthly payment is reduced.
Every lender has its own application documents and process and it is of utmost importance that the application is filled out correctly and all required supporting documents provided together, at once. Without a complete application, the lender is unable to make a decision and will often result in denial of your application.
However, if the application is complete, the lender may be able to extend the term of your loan, reduce the interest rate, or make other changes that will result in a reduced monthly payment. In many cases the lender will also amortize the arrears, which is a fancy way of saying that if you have missed payments recently, they will temporarily forgive you (and postpone payment until you sell or refinance).
The process is very difficult for most people because of the complexity of the forms and the magnitude of documents that must be provided. I will work with you to ensure that the forms are filled out correctly and all supporting documents submitted in a timely manner.
What’s the difference between mortgage modification and the loss mitigation program?
The difference between mortgage modification and loss mitigation is the involvement of the federal court. The court has established rules and procedures to ensure that the homeowner receives a full and fair opportunity to present their case for mortgage modification. If the mortgage lender does not act in good faith, the court can sanction them and will continue to delay foreclosure/sheriff’s sale until they comply with the rules.
In my experience, the banks are not really interested in helping people keep their homes. They (or their representatives) often ‘go through the motions’ but are disinterested and ill-equipped to review a homeowner’s application fairly. The banks all too often play confusing games that result in denial of an application without cause.
I am a registered user of the federal court’s DMM Portal which captures and monitors all communications and documents to ensure that everyone is on their best behavior.