Bankruptcy Frequently Asked Questions
Q: How do I stop creditor harassment?
A: Once you retain a bankruptcy attorney, you should inform the creditor that 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.
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.
Q: How does filing bankruptcy impact my medical and utility bills?
A: Medical and utility debts are dischargeable in both Chapter 7 and Chapter 13 bankruptcies. However, there are considerations, like:
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.
Q: Does filing bankruptcy impact student loan debt?
A: For the most part, no. Student loans are non-dischargeable with extremely limited exceptions.
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.
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 your debt. This means you’ll have to 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.
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 one to three years before your credit score begins to rise.
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, your 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.
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.
Q: If I file bankruptcy, does my spouse also have to file?
A: No, you can file jointly or individually. However, your spouse’s contributions to household expenses are considered when determining your qualification for Chapter 7 bankruptcy.