CA BANKRUPTCY - FREQUENTLY ASKED QUESTIONS
WHAT IS BANKRUPTCY?
The filing of a Chapter 7 Bankruptcy is designed to result in a discharge of most the debts you have listed on your bankruptcy schedules.
HOW LONG DOES BANKRUPTCY STAY ON MY CREDIT REPORT?
10 years.
WHAT IS A SECURED DEBT?
Secured debts are those for which you promised collateral if you cannot pay. An example would be a house or automobile.
WHAT IS AN UNSECURED DEBT?
Unsecured debt is any debt for which you haven’t pledged collateral. Most debts are unsecured, including bank credit cards, medical, legal bills and store revolving charge accounts. Most unsecured debts are simply cancelled by bankruptcy.
WHAT HAPPENS ON A CAR REPOSESSION?
The creditor will generally sell your car at an auction and stick you with the deficiency balance. For example: You owe $20,000.00 on the car and the creditor sells your car for $8,000.00. There is a $12,000.00 deficiency balance which you are responsible for. A Chapter 7 bankruptcy discharges deficiency balances.
CAN I DISCHARGE BACK TAXES?
Generally not. Most taxes are not dischargeable unless they are more than three years old from the date of filing your tax return.
CAN I DISCHARGE THE MORTGAGE ON MY HOUSE?
No. A mortgage is treated as a “secured debt”. Secured debts are those for which you promise collateral if you cannot pay.
CAN I DISCHARGE FAMILY/CHILD SUPPORT OBLIGATIONS?
No. The law does not allow this.
CAN I TRANSFER MY PROPERTY INTO ANOTHER’S NAME TO PROTECT IT?
No. If the bankruptcy Trustee or your creditors learn of this, they may obtain a court order demanding that the holder of the property turn it over to satisfy your debts. Also, you can be denied the use of the bankruptcy laws for this type of behavior.
CAN I PAY DEBTS OWED TO MY FRIENDS OR RELATIVES BEFORE I FILE?
Bankruptcy laws prohibit “preferential transfers.” Any preexisting debt repaid within 90 days of filing may be “set aside.” If the creditor was an “insider” (one with a close relationship to you), the person who receives the preferential transfer will have to give it back to the bankruptcy Trustee. The bankruptcy code states “set aside period” is one full year.
CAN I DISCHARGE A STUDENT LOAN?
No. Some former students were abusing the student loan programs. It became fashionable to borrow thousands of dollars for expensive educational programs and then immediately after graduation, declare bankruptcy.
MUST MY SPOUSE JOIN ME IN THE BANKRUPTCY?
No. However it is usually better if he or she does. The same documents are used for joint filing and there are no additional filing fees. Furthermore, your property exemption limits may be higher when both husband and wife are both filing.
CAN I REPAY MY CREDITORS LATER WHEN I AM BETTER ABLE TO?
Yes. You may repay anyone you want after bankruptcy. However, payments made after a discharge are a “gift.” You are not obligated to pay back debts that have been discharged in bankruptcy.
WILL MY CREDITORS STOP CALLING?
Once the creditor is notified that you are filing for bankruptcy protection, the creditor must stop all actions to collect the debt. If a creditor continues to harass you or try to collect on the debt, they may be liable for court sanctions and attorney fees.
WHO NOTIFIES MY CREDTORS?
When a bankruptcy is filed in the federal court, we submit a matrix list of all your creditors. The court notifies all your creditors via mail.
DO MY CREDITORS ATTEND THE HEARING?
Rarely do they appear.
WILL I EVER QUALIFY FOR CREDIT AGAIN?
Most creditors will want to know why you had to use the bankruptcy privilege in the past. Some may be more liberal in extending you credit because you have relieved yourself of the obligation of repaying other creditors who would otherwise be competing for your dollars.
HOW DO I STOP SOMEONE FROM GARNISHING MY PAYCHECK?
One solution is filing a Chapter 7 bankruptcy. After obtaining a filed copy from the court, the Sheriff's department as well as your payroll department are notified of the filing. This will cease all garnishments immediately.
HOW MAY I REESTABLISH CREDIT AFTER BANKRUPTCY?
Start a credit history. Save money and then borrow against it. You may be able to obtain a secured visa or apply for a high interest auto loan.
CAN I LOSE MY JOB FOR FILING BANKRUPTCY?
The bankruptcy laws prohibit governmental agencies from taking any action against you for using this privilege. Private employers are normally more concerned with your job performance than your financial status.
HOW OFTEN CAN I FILE BANKRUPTCY?
You may file a Chapter 7 bankruptcy every 8 years. You may file a Chapter 13 repayment plan as often as you like, so long as the court approves the plan.
WHAT HAPPENS WITH CO-SIGNERS?
Co-Signers normally do not enjoy the protection of the bankruptcy. In Chapter 7, there is no protection for the co-signer. The creditor my seek permission from the court to recover from the co-signers.
DO BOTH MY SPOUSE AND I HAVE TO ATTEND THE COURT HEARING?
Yes, if you are filing a “Joint” case.
