Over the years of handling bankruptcy cases, we find that we get asked the same questions frequently. This post is to provide basic information on some of the most common questions we are asked.
Please understand that this information is general and may or may not apply to your specific case. It is therefore important to consider discussing your particular circumstances with an attorney who possesses the knowledge, skill, and experience to evaluate your financial situation. They will communicate the details of your case with you.
We look forward to the opportunity to speak with you about how bankruptcy can give you a fresh start.
Does Filing For Bankruptcy Ruin My Credit Forever?
No. While filing for bankruptcy does affect your credit, depending on what chapter of bankruptcy you file, it will only stay on your credit for a certain amount of time.
For instance, if you file for Chapter 7 bankruptcy, it stays on your credit for ten years. If you file for Chapter 13 bankruptcy, however, it stays on your credit for seven years.
Will I Lose My Car?
Not necessarily. There are different options when it comes to vehicles when filing for bankruptcy. The typical options are:
- You keep your car and keep paying the same amount of money each month.
- You keep the car and reduce your monthly payments.
- You surrender the car because it isn’t in your best financial interest to keep it.
Depending on what chapter you file, these options will be handled differently.
What If My Car Has Equity In It? Will I Lose My Car?
Not necessarily. If there is equity in your vehicle, there are few different factors that need to be considered. These factors include:
- What chapter of bankruptcy you are filing
- What exemptions are available to you
- Whether you want to keep the car
When filing for bankruptcy, you have to disclose everything you own, the value, and any liens that may encumber the property. If there is equity in personal property, you then have to see what exemptions are available to protect these items.
If there is still leftover equity after applying exemptions, the equity will be handled differently depending on what chapter of bankruptcy you filed. If you filed for Chapter 7 bankruptcy, you can buy back the equity from the trustee, or you can surrender the property for the trustee to sell at auction. If you filed for Chapter 13 bankruptcy, the amount of equity you have has to be paid back to your creditors throughout your case.
Will I Lose My House?
No. If you own your home and have lived in Florida for at least two years, you will be able to protect your home with Florida’s homestead exemption. Applying this exemption keeps the trustee from selling your home to pay back your creditors.
Our law firm can see if any exemptions apply to your case and whether your home is protected.
Does the Court Take Everything I Own?
No. The court does not want to take your personal stuff. Depending on what chapter you file and the value of the personal property you own, the assets will be handled on a case-by-case basis.
The majority of the time, when someone files for bankruptcy, they don’t lose any personal property. However, if there are any fact-specific issues, this will be worked out with the creditor or trustee throughout the case.
Will I Ever Qualify For a Mortgage After Filing For Bankruptcy?
Yes. Many people qualify for loans and purchase homes after a bankruptcy filing. How quickly you are able to purchase a home and qualify for a loan is up to the discretion of the lender.
Once I File For Bankruptcy, Will the Creditors Stop Calling?
Yes. This is a great benefit of filing for bankruptcy – you don’t have to be afraid to answer the phone anymore (well, except for robocalls!)
Once you file for bankruptcy, the automatic stay goes in place immediately. The court mails a notice to each creditor, which will take a little bit of time before the notices are actually received and processed.
Creditors should not make contact with the debtor after bankruptcy is filed, or it’s considered a violation of the automatic stay. Be sure to keep your attorney informed if the creditor contact continues for an unreasonable amount of time after the case is filed.
Should I Withdraw All the Money In My Bank Accounts Before Filing For Bankruptcy?
No. You should never make big changes before filing for bankruptcy unless advised by an attorney. There is no purpose in taking out money from a bank account.
Either way, it is required to be reported to the court in your paperwork. Keeping funds in a bank account makes it easier for your attorney to manage your case. Similarly, you should not give away personal property to relatives and friends in an effort to protect this property from creditors.
Will I Lose My Retirement Funds When I File For Bankruptcy?
No. Retirement funds are completely exempt when using Florida’s mandates. This means that by applying the appropriate exemption, the retirement funds are protected, and you will not be forced to pay your creditors with those funds.
Can I Discharge IRS Debt?
Possibly. It depends on when the tax debt was assessed/when the tax return was filed. The details are very important when analyzing whether your IRS debt is dischargeable.
You can speak with an attorney to learn more about whether your IRS debt is dischargeable or not.
Can I Keep a Few Credit Cards When Filing For Bankruptcy?
No. A debtor cannot pick and choose what debts they want to declare bankruptcy on. You must list all debts and everyone you owe money to.
All unsecured debts will be discharged, and you will have the ability to elect what your intentions are with secured debts, such as a car loan or mortgage.
Does My Spouse Have to File Bankruptcy With Me?
Not necessarily. Just because a couple is legally married does not mean that they both have to file. If the debts are only in one of the spouses’ names, they can be the only one to file.
However, the non-filing spouse is required to provide their proof of income for the case, unless the couple is separated and living under separate households. Additionally, there are times when it may be better for both spouses to file to get the full benefits of bankruptcy and discharge of debts.
Will Filing Bankruptcy Stop a Lawsuit?
Yes. The automatic stay stops all collection activity against a debtor, including a lawsuit. Once the bankruptcy case is filed, it is best practice to notify the state court about the filing.
This way, the court is fully aware of the automatic stay in place, and they will take the proper steps to stop the state court lawsuit in its tracks.
Is Filing Bankruptcy a State Court Case?
No. A bankruptcy filing is a federal procedure. You will file in a district court, typically dependent upon where you live.
You will not be filing your case in county court.
Does Everyone Qualify For Chapter 7 Bankruptcy?
Not everyone is eligible for Chapter 7 bankruptcy. A Chapter 7 debtor has to qualify based on their income and household size. If the debtor is under the median income for their household size in their state, then they automatically qualify for Chapter 7 bankruptcy.
If the debtor is above the median income for their household size, they can then complete the “means test.” The means test is a series of calculations that considers:
- The debtor’s income within the last six months
- The debtor’s expenses in the six months before the filing date
- Some IRS standard allowed expenses
Only certain expenses are factored into this test. It is imperative to consider legal representation when filing for bankruptcy. You can contact Bogin, Munns & Munns regarding the means test and qualifying for Chapter 7 bankruptcy.
My HOA Is Suing Me, are They Allowed to Foreclose On My House?
Yes. In Florida, your homeowner’s association (HOA) has a lot of power and does have the ability to file a foreclosure lawsuit against you if you’re behind on HOA payments. Filing for bankruptcy will stop this lawsuit, but you will still be liable for past-due HOA fees.
A lot of the time, filing for Chapter 13 bankruptcy can help you catch up on late HOA fees. Since Chapter 13 bankruptcy is a repayment plan, you can catch up on the fees you are behind on. You could be given three to five years to pay back this money.
You may also be ineligible to wipe out the past-due HOA fees entirely if your home does not have equity in it.
Do I Have to Pay All Of the Credit Cards Back If I File a Chapter 13?
You won’t necessarily have to pay back your credit card debt just because you are filing for Chapter 13 bankruptcy. Most of the time, the unsecured creditors (credit cards, medical bills, personal loans, etc.) get little to nothing throughout the life of the plan.
There are a few different factors that go into analyzing how much a debtor is required to pay back to the unsecured debts. Every case is different, but it can be based on how much non-exempt equity you have in your personal assets, or how much money you have left over each month.
Contact Bogin, Munns & Munns to see if Chapter 13 bankruptcy is right for you.
Do I Have to Go to Court and See a Judge When I File For Bankruptcy?
Not likely. After filing for bankruptcy, a debtor’s contact with the court is very limited if you’ve filed with an attorney. There is a required meeting of creditors, where the trustee assigned to your case conducts a quick meeting to ask you questions.
Creditors are also afforded the opportunity to show up and ask questions as well. Other than that, any other interaction with the court is case-specific.
In Chapter 13 bankruptcy, there are other occasions when a judge is involved in the case, but if you are represented by an attorney, you only need to attend court if they advise you to do so.
When Will All of the Debts Go Away?
A debtor officially is discharged from their obligation to the debt once the discharge order is signed by the judge.