Bankruptcy Frequently Asked Questions

Q: How do I stop creditor harassment?

A: Once you retain a bankruptcy attorney, you should inform the creditor you are represented by an attorney, provide them his/her name and contact information, and tell them that all future correspondence should go through your attorney. You can also send the creditor a letter requiring that all future communication occur via mail.

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Q: Can I stop wage garnishment?

A: Most wage garnishment stops as soon as a bankruptcy is filed and the creditor has been notified. Any money garnished post-bankruptcy filing will be returned. However, some garnishments such as child support may not be stopped by filing bankruptcy.

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Q: How does filing bankruptcy impact medical and utility bills?

A: Medical and utility debts are dischargeable in both Chapter 7 and Chapter 13 bankruptcies. Considerations:

• If you have a doctor as a creditor whom you wish to retain for future medical treatments, you may choose to pay their balance prior to filing bankruptcy in order to keep them as your doctor.
• Utility companies cannot deny you services after filing bankruptcy, but they may require a large security deposit to begin or to continue to use their services.

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Q: Does filing bankruptcy impact student loan debt?

A: For the most part, no. Student loans are non-dischargeable with extremely limited exceptions.

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Q: What happens to my credit card debt during bankruptcy?

A: Credit card debt is dischargeable for both Chapter 7 and Chapter 13 bankruptcies. In order to obtain a new credit during the bankruptcy plan payment period of a Chapter 13, you may need to get the Court's permission if the credit amount exceeds a certain level. Otherwise, it's up to the individual creditor to determine if they will issue you new credit.

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Q: How do I save my home from foreclosure?

A: If you are current on your house payments, you may want to file a Chapter 7 bankruptcy in which you can reaffirm this debt - meaning you sign an agreement stating you will continue to make payments.

If you are behind in your house payments, you may file a Chapter 13 bankruptcy. After the bankruptcy is filed, an "automatic stay" on court actions such as foreclosures and sheriff's sales is put in place. This means that the court actions or the sheriff sale may not go forward without a further Order of the Court. A Chapter 13 bankruptcy may stop a sheriff sale on the same day that the sale is to occur. The Chapter 13 bankruptcy will allow you to catch up on your house payments over the life of the bankruptcy.

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Q: How long before I can get a new mortgage?

A: In order to obtain a new mortgage during the bankruptcy plan payment period of a Chapter 13, you may need to get permission from the Bankruptcy Court. Otherwise it's up to the individual creditor to determine if they will fund your mortgage. Rebuilding credit depends on you, but generally it will take at least 1-3 years before your credit score begins to rise.

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Q: How can I prevent my car from being repossessed?

A: Similar to saving your home, if you are not behind in payments, you may choose to file a Chapter 7 bankruptcy and reaffirm, or commit to continue paying, this debt. If you are behind in your payments, Chapter 13 bankruptcy may be the best option in order for you to keep your car. The Chapter 13 will allow you to catch up on past payments over the life of the bankruptcy.

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Q: Can I buy a new car after bankruptcy?

A: Yes. Chapter 13 bankruptcies may require a letter of permission from the trustee. Otherwise it is the decision of the individual creditor as to whether to issue you a loan.

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Q: If I file bankruptcy, does my spouse also have to file?

A: No, you can file jointly or individually. However spouses' contributions to household expenses are considered when determining qualification for Chapter 7 bankruptcy and determining monthly payments in a Chapter 13 bankruptcy. If there are any joint debts in both your spouses' and your name, the debts will fully transfer to your spouse, and will not be discharged in your individual bankruptcy.

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Q: What documents are needed for a consultation or trustee meeting?

A: There are no required documents for a free bankruptcy consultation with Kainrath Law Firm, but the following documents help to quickly begin the process:

1. Two years most recent tax returns with supporting documents including the W2s
2. Credit report
3. Three recent bank statements for all bank accounts
4. Six months most recent paystubs
5. Legal description of house
6. Most recent credit card statements for all credit cards
7. Car loan(s)
8. Mortgage loan(s)
9. Domestic support obligation order (child support)
10. Spouses paystubs

For the meeting with the trustee (creditor meeting) you must present your social security card and a picture ID.

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Q: How do I get a copy of my credit report?

A: There are three major credit reporting agencies in the U.S. and each provides one free credit report a year. Visit www.annualcreditreport.com for more information and to access your free credit report.

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Q: How long does a bankruptcy stay on my credit report?

A: A Chapter 7 bankruptcy will stay on your credit report 10 years and a Chapter 13 bankruptcy will say on your credit report 7 years.

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Q: How long before my debts are discharged?

A: It varies, but generally a in a Chapter 7 bankruptcy, your debts will be discharged in 4-6 months. In a Chapter 13 bankruptcy, there is an automatic stay from collecting the debts immediately, but they will not be discharged for 3-5 years until the payment plan is completed.

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Q: Do I have to appear before a personal bankruptcy judge?

A: In general, no, but you will be required to attend a 341 creditor meeting with the trustee. Creditors are also allowed to attend this meeting and pose questions on debts and assets. If there are any unresolved issues with your bankruptcy petition then you may have appear before a bankruptcy Judge, but this is an exception.

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Q: Once I file bankruptcy, can I change my mind?

A: Only a bankruptcy judge will decide if a bankruptcy can be dismissed. Even if you get the case dismissed, your credit report will still show that you filed. If your bankruptcy is dismissed, you may be time-barred from filing again for a certain period.

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Q: Can I file bankruptcy without telling family, friends, and work?

A: Yes. You do not need to tell anyone that you filed. But if someone is a joint debt holder with you, they will be notified through the bankruptcy process. Also, bankruptcies are public records and are available to general access.

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Q: I filed bankruptcy before, can I file again?

A: You can only get a Chapter 7 discharge if a previous Chapter 7 case was filed more than 8 years ago.

If you received a Chapter 13 discharge within the previous 6 years, the Chapter 13 plan has to meet certain repayment requirements to permit a Chapter 7 case earlier than 6 years from the filing of the prior case.

You can file a Chapter 13 case after a Chapter 7 without any statutory time restrictions. However, you can only get a discharge in that Chapter 13 case if the previous Chapter 7 case was filed more than 4 years ago; if the previous case was also a Chapter 13, two years must elapse between filings.

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Q: I am going through a divorce. How will this affect my bankruptcy or my potential bankruptcy?

A: Knowing when to file bankruptcy while going through a divorce is critical. Each person's situation is unique and needs to be analyzed by a competent attorney to make sure that you file at the right time. Many family law attorneys are unfamiliar with bankruptcy and may not be in a position to offer good advice on how bankruptcy impacts your divorce. Likewise, many bankruptcy attorneys are not familiar with family law and also may not be in a good position to offer advice as to the impact of bankruptcy on divorce.

Kainrath Law Firm practices in both bankruptcy and family law and is experienced in representing those who find themselves in the unfortunate position of needing to file bankruptcy and divorce. We will guide you through both processes and will make sure that you file each in the proper order.

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Q: I owe my ex-spouse money from our divorce. Can these debts be discharged in bankruptcy?

A: It depends on the type of debts owed to your ex-spouse. In general both property settlement debts and domestic support obligation debts (child support and spousal maintenance) are not dischargeable in a Chapter 7 bankruptcy. However, certain property settlement debts may be dischargeable in a Chapter 13 bankruptcy. Because Kainrath Law Firm practices in both bankruptcy and family law we can assist in determining what divorce debts may be dischargeable in bankruptcy. We also have experience in reopening divorce cases to get a determination of whether a debt should be classified as a property settlement debt or domestic support obligation.

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Q: Will bankruptcy help me get my driver’s license reinstated?

A: If you owe money as a result of an automobile accident where you did not have insurance it’s likely that your driver’s license may be suspended. The Bureau of Motor Vehicles typically requires that the money owed from the judgment be paid before your license can be reinstated. Kainrath Law Firm can assist people in getting their driver's license reinstated. Filing Chapter 7 or Chapter 13 bankruptcy may allow you to discharge the judgment against you so that you can reinstate your license without having to pay for the accident. Only judgments from accidents caused by negligence may be discharged under bankruptcy. Accidents caused by driving under the influence of drugs or alcohol are not eligible.

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