Frequently Asked Questions
+Will purchasing a home or obtaining new credit after a bankruptcy be impossible?
Not true. Each lender varies in their business practices. Most consumers will find that their credit score will actually increase right after a bankruptcy so they may be able to qualify for credit cards and car loans right away at a higher interest rate. Creditors and lenders usually look at a consumer’s most recent credit history more than the past. The length of time since the bankruptcy was discharged is usually taken into consideration by most lenders. Lenders will also use other factors when determining a credit application such as length of time in current employment, income, debt to income ratio, etc. Be careful and don’t get trapped by new credit because there are guidelines on how often you can file a bankruptcy. A bankruptcy is a great way to allow you to press a restart button; however, it is up to you to manage your finances after the bankruptcy is over. Make sure that you are able to afford your payments now and if something were to happen to your income in the future before you make any new purchases on credit.
+Am I a bad person if I file a bankruptcy?
Not true. Bankruptcy is a tool that helps good people who are going through rough times to receive relief. Many people have to file a bankruptcy because they lost income in this tough economy, had an unexpected medical illness and not enough or no insurance, gone through a divorce or did not plan for unexpected changes in their future earnings. Bankruptcy is a great way for people to push a restart button, wipe out their financial problems and stress, and concentrate on their marriage, families, job, etc.
+Can I only file a bankruptcy once?
Not true. You can file as many bankruptcies as you like; however, you are limited by how often you can receive a discharge. You can only receive a discharge in a chapter 7 bankruptcy every 8 years. You can receive a discharge in a chapter 13 every 2 years assuming you pay 100% of your plan. If you received a previous discharge in a chapter 7 and would like to file a chapter 13, you have to wait 6 years before you can receive a discharge. If you filed a previous chapter 13 and would like to file a chapter 7, you need to wait 4 years before you can receive a discharge. There is no waiting period if you previous bankruptcy was dismissed.
+Am I going to be able to keep all of my property?
Depends. A chapter 7 bankruptcy is a liquidation bankruptcy. The bankruptcy trustee takes over the assets of the debtor’s estate, reduces them to cash, and makes distributions to the creditors. Debtors have the right to retain certain exempt property. Florida has very liberal property exemptions. Most property in a chapter 7 bankruptcy is exempt allowing the debtor to keep most, if not all of their property. A chapter 13 often allows a debtor to keep valuable assets and to remain in possession of the estate property that would not be exempt in a chapter 7.
+Am I allowed to keep my car because it is how I get to work?
Depends. There is no law that says a bankruptcy trustee must allow you to keep one car in order to get to work. If you have a car that is paid off or if you have excess equity in a car you are making payments on that is not exempt, the trustee can either make you buy back the equity or turn over the car. The trustee’s use NADA value and you can check the value of your car at www.nadaguides.com. You take the value of your car, minus the amount you still owe on it, and that amount is considered the equity. If the amount you owe is higher than that value of the car, then you do not have any equity and will not owe anything other than your car payments to keep your car. If you do have excess equity, do not be afraid of losing your car, call my office to set up your free consultation so that I can explain to you the effect bankruptcy will have on the equity in your car.
+Am I going to turn over all of my property to someone else while I am in bankruptcy?
Not true. The bankruptcy petition asks you to list any property that has been transferred out of your name within 2 years of filing your bankruptcy petition. It is a federal crime to falsify information on your bankruptcy petition or to lie under penalty of perjury. It is illegal to transfer all of your property out of your name so that none of it is subject to your bankruptcy. If you have real or personal property you are concerned about, my office can guide you on the best solution for your individual situation. As a general rule, prospective bankruptcy filers should not transfer any non-exempt assets from their bankruptcy estate to parents, friends or other family members.
+Can I keep my car, house and boat without having to pay off the loans once I file for bankruptcy?
Not true. A car, house and boat are examples of secured property. The amount that you owe on these loans is dischargeable debt; however, some creditors may have a valid lien upon certain property to protect their interest. A valid lien that has not been avoided in your bankruptcy will remain after the bankruptcy case is over. Therefore, a secured creditor may enforce the lien to recover the property. Most secured creditors will allow you to keep the secured property if you are current on your payments after the discharge. Some secured creditors may require you to sign a reaffirmation agreement in order to keep the secured property. A reaffirmation agreement is signed during the bankruptcy process and if approved by the judge, it will make the debtor legally liable for the reaffirmed amount after the bankruptcy is over.
+If I am married, my spouse and I have to file the bankruptcy together?
Not true. You can be married and file a bankruptcy separate from your spouse. Your spouse does not have to be involved; however, your spouse’s income will have to be listed and included when running the means test calculation. The means test determines if an individual financially qualifies for relief under chapter 7. If the debtor’s income or household income is in excess of the threshold, the debtor may not qualify for a chapter 7. If you do not pass the means test for a chapter 7, do not worry, there is still a chapter 13 bankruptcy that may be right for your situation.
+Can a debtor choose which debt they want to include in the bankruptcy and what debt they would like to keep?
Not true. If you owe any institution or any person money, they must be listed in your bankruptcy petition. All debts must be listed. You cannot pick and choose who to include and who to leave out. You must list everything you own and everybody you owe money to in your bankruptcy petition.
+Can I pay my family members and friends back the money I owe them and leave them out of the bankruptcy?
Not true. Unfortunately, a debtor can not treat the family and friends they owe money to any different from their other creditors. These payments would be considered “preferential payments” and the bankruptcy trustee could try to recoup the money from the family and friend as recipients of fraudulent transfers.
+Filing a bankruptcy hurts my credit report for 10 years?
Not true. Bankruptcy stays on your credit report for 7 – 10 years. Although your bankruptcy stays on your credit report, you can start to rebuild your credit right after your bankruptcy is discharged. Making timely payments on reaffirmed property that you retain after your bankruptcy is a great way to start rebuilding your credit. You most likely will be able to get credit right after your bankruptcy is discharged. Be careful for the credit card offers that will come flooding in. You don’t want to get trapped by high interest rates.
+Is it hard to file a bankruptcy?
Not true. Bankruptcy is public record; however, it is not published in the newspaper. Most of the time people are not going to go looking unless you are a prominent official in society or a politician. Many doctors, lawyers, teachers, firefighters, police officers, business professionals, CEO’s, accountants, dentists, etc. have filed a bankruptcy. The only people that will know about your bankruptcy are the people that you tell and those who have access to the bankruptcy court system. A current or potential employer may run a credit report; however, the bankruptcy code prohibits discrimination against an individual who has filed a bankruptcy.
+Can I get rid of back taxes in a bankruptcy?
Not true. Having a skilled attorney who knows what they are doing and how to do it efficiently makes your bankruptcy filing very smooth and easy. You are required to fill out a questionnaire, provide your last 60 days paystubs, provide your last 60 days bank statements for all accounts, provide your last 3 years of tax returns and take a credit counseling class which can be done online or over the phone before you can file a bankruptcy petition. Bankruptcy filings are done electronically which minimizes the amount of paperwork. Our office makes sure to answer any question you have every step of the way.
+Can creditors still harass you and come after you for money after your bankruptcy?
Depends. You can get rid of income tax that is more than three years old by filing a bankruptcy; however, there are several qualifications that have to be met in order for taxes to be discharged. Sales taxes cannot be discharged by filing a bankruptcy.
+Can creditors still harass you and come after you for money after your bankruptcy?
Not true. When a bankruptcy is filed, the court puts you and all of your property under the protection of the automatic stay. Creditors are not allowed to collect a debt by any means such as calling you, billing you, sending you emails or letters etc., while you are under the protection of the automatic stay. Once you receive a discharge, it is against the bankruptcy code for creditors to attempt to collect debt that has been discharged in a bankruptcy.