Frequently Asked Questions

Question: What is Bankruptcy?

Answer: Bankruptcy is a legal process by which you can eliminate all or part of your debts and obtain a fresh start for and your family.  Your legal right to exercise this type of debt relief stems from the United States Constitution, specifically article 1, Section 8, Clause 4, which authorizes Congress to enact "Uniform Laws on the subject of Bankruptcies throughout the United States.”  It was our founding fathers’ intention that in this country we maintain a system of bankruptcy laws to give you debt relief when you need it most.  Once you complete the process (generally 3 months in a Chapter 7, or 3-5 years in a Chapter 13), the Court will discharge (eliminate) all of your debts that are dischargeable, which means they can be eliminated.

Question: Can I File Bankruptcy? 

Answer: Whether or not you can file depends upon your unique circumstances.  There are many factors that need to be carefully considered by an experienced lawyer.   In general, if you pass the Means Test you can file a Chapter 7 bankruptcy and eliminate all of your debt that can be discharged (eliminated) under the law.  Sometimes it may appear as though you do not pass the Means Test, however with the help an experienced lawyer you may find that you can actually pass the Means Test or find an exception to it.  If you cannot pass the Means Test, you can still file under Chapter 13, assuming you are within the applicable debt limits for filing under this Chapter.

Question: Will Bankruptcy Get Rid of My Credit Card Debt?

Answer: In most cases, bankruptcy will get rid of all of your credit card debt.  If you qualify to file Chapter 7, you can obtain a discharge and eliminate credit card debt in as little as 3 months after you file.   If you file under Chapter 13, you can still get rid of your credit card debt, however depending upon your disposable monthly income the Court may require you to repay a percentage of your credit card debt under a Court approved repayment plan over a 3-5 year repayment period.  The percentage of your credit card debt that you repay under your Court approved repayment plan can be as little as 0% or as high as 100%, or anywhere in between.  Once you complete your repayment plan, the rest of your credit card debt will be discharged (eliminated).

Question: Will Bankruptcy Stop My Foreclosure?

Answer: If your home is in foreclosure, filing bankruptcy will stop foreclosure of your home dead in its tracks.  By filing under Chapter 13, you can propose a repayment plan that repays all of your missed mortgage payments and back property taxes over a 3-5 year period.  Assuming you propose a plan that is acceptable to the Court and that you can propose and perform under a feasible repayment plan, filing Chapter 13 can permanently stop your home foreclosure.  What is more, depending upon the value of your home, you may be able to erase your second mortgage through the lienstripping process, a process by which your 2nd mortgage of home equity loan is completely eliminated and stripped (removed) from the title to your home.

Question: Will Bankruptcy Stop Harassing Phone Calls?

Answer: Harassing phone calls by creditors and debt collectors is a very real and persistent problem in the United States.  The Fair Debt Collection Practices Act specifically prohibits harassing phone calls by debt collectors.  Unfortunately, the penalties imposed by this law are not severe enough to deter aggressive debt collectors who calculate that they will make more money in the long run if they continue harassing you with their abusive phone calls and are forced to pay a fine from time to time if they are sued for their illegal conduct.  Bankruptcy Law provides harsh penalties against creditors who continue to call you after you file bankruptcy and creditors and debt collectors know this.  The moment you file your case, your filing will stop harassing phone calls for good.  Once you file, the harassing phone calls will end forever.

Question: Can I Keep My Car If I File Bankruptcy?

Answer: Most people who file bankruptcy do keep their car.   But there is more.  When you file bankruptcy, you may be able to rebuild your car loan through negotiating a Reaffirmation Agreement with more favorable terms or repurchasing your car for its current value through the redemption process.  If you don’t have the money to repurchase your car, there are companies, both institutional lenders and private lenders, that will give you a redemption loan to repurchase your car.  If the redemption loan carries better terms than your current car loan, then you can complete the redemption process and end up owing your current car with a new car loan and a lower monthly payment.

Question: Can I Keep My Home If I File Bankruptcy?

Answer: Most homeowners are able to keep their home when they file bankruptcy.  So long as you do not have too much equity in your home, chances are you can file bankruptcy and keep your home.  If your equity in your home exceeds the allowable limit as determined by your applicable exemptions, and more specifically the homestead exemption, then you would not want to file bankruptcy.  If you were to file at time when your equity in your home exceeds your homestead exemption, your home could be sold and the excess proceeds (above and beyond the homestead exemption) would be used to repay your creditors.  If you are behind on your monthly mortgage payments, you will have to file a Chapter 13 case and repay your missed mortgage payments over time (3-5 years) under a Court approved repayment plan.  If you are on time on your mortgage payments, you can file under either Chapter 7 or Chapter 13, depending on which Chapter is more suitable to your needs and goals.

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