You can keep your house and car if you’re willing and able to pay for them. People who file bankruptcy generally never lose any property, even in a Chapter 7 bankruptcy, either because the property is exempt or because they pay the trustee for any nonexempt equity. It’s a myth that people who file bankruptcy lose all or even most of their property.
Anyone can file bankruptcy, regardless of income. The issue is not whether you can file bankruptcy but what type of bankruptcy you can file. If you make less than the state median income for your household you should be eligible for a Chapter 7. But even making more than the median income doesn’t mean you won’t qualify for a Chapter 7. It only means you have to pass a “means test” that considers how much income is available after expenses to pay unsecured creditors. Completing that means test requires a detailed review of income and expenses and the sample means tests you can find on the Internet often don’t provide accurate answers. It’s also possible to “pass” the means test and still not qualify for a Chapter 7 because of other issues like current income and expenses. That’s why it’s better to just commit to filing bankruptcy and let us advise you on what type best fits your situation.
From the time of filing to the receipt of a discharge in a Chapter 7 or confirmation of a Chapter 13 Plan takes about five months. Most of that time nothing much is happening except waiting for required time periods to pass. Most debtors are finished having to do anything within a month of filing.
It depends on how long ago you filed and what type of bankruptcy you filed. You can file Chapter 7 if you received a Chapter 7 discharge more than eight years ago. You can receive a discharge in a Chapter 13 bankruptcy if you received a Chapter 7 discharge more than four years ago or a Chapter 13 discharge more than two years ago. You can also file a Chapter 13 sooner than four years after a Chapter 7 if you’re not seeking a discharge of the debts. For example, sometimes it’s best to file Chapter 7 to discharge what debt you can and then file a Chapter 13 soon after to deal with nondischargeable taxes or a mortgage arrearage. This so-called Chapter 20 allows you to use both types of bankruptcy to deal with debts.
It might if you don’t have much debt, but for most people a Chapter 13 bankruptcy provides more benefit than using a debt settlement program. With a Chapter 13 bankruptcy you can’t be sued by your creditors while you’re making payments and the debt is frozen at the time you file because no further interest or late fees can be added to the debt. In addition, unless you’re able to settle with ALL of your creditors, you will have wasted the money you spent on the few who do settle while still having to file bankruptcy. Filing Chapter 13 bankruptcy also provides other advantages over debt settlement like:
- avoiding the tax consequences of debt forgiveness
- possibly “cramming down” loan values and interest rates on secured loans,
- possibly stripping off second mortgages and
- paying tax debts, mortgage defaults and student loans that no debt settlement program can resolve.
In a Chapter 13 bankruptcy, unsecured creditors who fail to file a proof of claim also have their debts discharged without any payment, unless the debt itself is not dischargeable.
No, absolutely not. Faith in God is a key part of the life of everyone at Nancy L. Thompson Law Office, P.C. so the issue of bankruptcy and religion is important to us. Obviously, people should repay their debts if they can, but it’s clear from the Bible that filing bankruptcy is an acceptable way to deal with burdensome financial problems. In Deuteronomy 15:1-2 creditors were instructed by God to grant release from debt to anyone who had borrowed money. It didn’t matter whether the lender was legitimately owed the money or whether the borrower had made mistakes. The debt was to be forgiven. Period.
Mandatory debt forgiveness had a two-fold purpose. It showed compassion and mercy to the poor, which is required to honor God, and it led to more economic stability for families and the community. Being weighed down by debt isn’t a productive way for any family to live and it often prevents people from doing the Lord’s work. Filing bankruptcy to relieve yourself of debt is neither sinful nor against God’s will. This is especially true when the cause of bankruptcy is almost always something beyond your control, like medical problems or loss of a job. In short, bankruptcy is a form of grace and people of faith should embrace bankruptcy as a way of extending grace to people who need it, just as God demanded that grace be shown to debtors in the book of Deuteronomy.
In general, debts for student loans, alimony and child support, recent tax obligations, criminal restitution and debts arising from a death or personal injury caused by operating a vehicle while intoxicated are not dischargeable. There are exceptions though so if you have these types of debts be sure to discuss them with us before filing.
For an uncontested personal Chapter 7 bankruptcy we generally charge a flat fee of $1300. This fee covers all costs related to filing bankruptcy, including the filing fee. It doesn’t include the required credit counseling courses but those cost less than $30 if you use the agencies I’ll suggest you use. Bankruptcies involving businesses, farms or very large numbers of creditors may require a larger retainer.
While creditor disputes are rare, if any disputes do occur after the bankruptcy with a creditor or trustee, clients will be billed hourly for services necessary to deal with the dispute. There may also be additional costs for filing amendments to the bankruptcy, filing for redemption on a vehicle or seeking reimbursement of garnished wages.
For a Chapter 13 bankruptcy we charge an hourly rate. A payment of $1300 is still needed before filing and any additional costs are paid through the Chapter 13 plan.
I’m happy to take payments after an initial retainer but all the fees must be paid in full before the bankruptcy can be filed. If you need a Chapter 11 or 12 bankruptcy, please call me to discuss the necessary retainer.
It’s impossible to say for sure. The only thing that can be said for certain is that the bankruptcy can remain on your credit reports for ten years (but generally comes off quicker in a Chapter 13 bankruptcy). Beyond that, every creditor will have its own policy about loaning to someone with a previous bankruptcy. Your future ability to obtain credit will depend in large part on the amount of your income, whether you’ve had any late payments or other credit problems since the bankruptcy was discharged, and how long it’s been since the bankruptcy was filed.
We ask clients to complete a questionnaire that collects information about property, expenses and creditors. We also ask for copies of paystubs or other income statements, tax returns, credit reports and other information that’s required when filing bankruptcy. Asking for these documents and questionnaire isn’t meant to be an unnecessary burden, but making sure all information is provided before filing saves everyone time and money.
The law allows debtors to “exempt” or keep certain property in bankruptcy. In Iowa, each debtor can exempt the property listed below. This isn’t a complete list so other property may be exempt also and you may be able to keep other property by paying its value to the trustee. In most cases debtors lose no property when they file bankruptcy.
- A homestead
- One vehicle with equity of $7000
- Household goods and clothing valued at $7000
- Most pension and retirement plans
- Jewelry valued at $2000
- Public assistance benefits like Social Security, the Earned Income Credit and unemployment benefits
- Farm equipment or tools of the trade valued at $10,000
- Whole life insurance cash value of $10,000
- Any other property valued at up to $1,000
Filing for bankruptcy will stop foreclosure proceedings. Once you file bankruptcy an “automatic stay” immediately goes into effect that stops debt collection, including foreclosure. For a long term solution you may need to file Chapter 13 bankruptcy to cure the mortgage default and start making the regular mortgage payments. If you’re facing foreclosure, DO NOT WAIT to contact our office.
Most of the time, debtors in bankruptcy aren’t required to appear in court before a judge. Debtors are only required to attend a “meeting of creditors,” where the trustee appointed to administer the case asks questions related to your case, especially about any property owned. It’s very rare for creditors to even show up for this meeting. Hearings before a judge generally only occur when there are disputes with creditors or the trustee and even then debtors are rarely required to attend. Only the debtor’s attorney needs to attend. If you’re required to be at a hearing we’ll be sure to let you know in advance.
It might. Filing bankruptcy is a matter of public record. Some newspapers may publish the names of people who file bankruptcy but it’s not something we have any control over. You won’t be alone though and you should remember that getting out of debt is more important than people knowing you took advantage of the opportunity to file bankruptcy.