Sacramento Bankruptcy FAQ’s

In a chapter 7 case, you can keep all property which the law says is “exempt” from the claims of creditors. California exemptions provides list of the exemptions available for California. In determining whether property is exempt, you must keep a few things in mind. The value of property is not the amount you paid for it, but what it is worth now. Especially for furniture and cars, this may be a lot less than what you paid or what it would cost to buy a replacement. You also only need to look at your equity in property. This means that you count your exemptions against the full value minus any money that you owe on mortgages or liens. For example, if you own a $50,000 house with a $40,000 mortgage, you count your exemptions against the $10,000 which is your equity if you sell it. While your exemptions allow you to keep property even in a chapter 7 case, your exemptions do not make any difference to the right of a mortgage holder or car loan creditor to take the property to cover the debt if you are behind. In a chapter 13 case, you can keep all of your property if your plan meets the requirements of the bankruptcy law. In most cases you will have to pay the mortgages or liens as you would if you didn’t file bankruptcy.

In most cases you will not lose your home or car during your bankruptcy case as long as your equity in the property is fully exempt. Even if your property is not fully exempt, you will be able to keep it, if you pay its non-exempt value to creditors in chapter 13. However, some of your creditors may have a “security interest” in your home, automobile or other personal property. This means that you gave that creditor a mortgage on the home or put your other property up as collateral for the debt. Bankruptcy does not make these security interests go away. If you don’t make your payments on that debt, the creditor may be able to take and sell the home or the property, during or after the bankruptcy case. There are several ways that you can keep collateral or mortgaged property after you file bankruptcy. You can agree to keep making your payments on the debt until it is paid in full. Or you can pay the creditor the amount that the property you want to keep is worth. In some cases involving fraud or other improper conduct by the creditor, you may be able to challenge the debt. If you put up your household goods as collateral for a loan (other than a loan to purchase the goods), you can usually keep your property without making any more payments on that debt.

Yes. Many people believe they cannot own anything for a period of time after filing for bankruptcy. This is not true. You can keep your exempt property and anything you obtain after the bankruptcy is filed. However, if you receive an inheritance, a property settlement, or life insurance benefits within 180 days after your bankruptcy, that money or property may have to be paid to your creditors if the property or money is not exempt. You can also keep any property covered by California bankruptcy exemptions through the bankruptcy.

Yes, with some exceptions. Bankruptcy will not normally wipe out: (1) money owed for child support or alimony, fines, and some taxes;(2) debts not listed on your bankruptcy petition;(3) loans you got by knowingly giving false information to a creditor, who reasonably relied on it in making you the loan;(4) debts resulting from “willful and malicious” harm;(5) student loans owed to a school or government body, except if:– the court decides that payment would be an undue hardship;(6) mortgages and other liens which are not paid in the bankruptcy case (but bankruptcy will wipe out your obligation to pay any additional money if the property is sold by the creditor).

In most bankruptcy cases, you only have to go to a proceeding called the “meeting of creditors” to meet with the bankruptcy trustee and any creditor who chooses to come. Most of the time, this meeting will be a short and simple procedure where you are asked a few questions about your bankruptcy forms and your financial situation. Occasionally, if complications arise, or if you choose to dispute a debt, you may have to appear before a judge at a hearing. If you need to go to court, you will receive notice of the court date and time from the court and/or from your attorney.

There is no clear answer to this question. Unfortunately, if you are behind on your bills, your credit may already be bad. Bankruptcy will probably not make things any worse. The fact that you’ve filed a bankruptcy can appear on your credit record for ten years. But since bankruptcy wipes out your old debts, you are likely to be in a better position to pay your current bills, and you may be able to get new credit.

Yes, there are several options available. While technically not a credit card you could use a bank or debit card to perform activities for which you normally would use a credit card. You also may be able to keep the credit card you already have if the creditor grants approval. If these options do not work you can get secured credit card which is backed by your own bank account.

Public utilities, such as the electric company, cannot refuse or cut off service because you have filed for bankruptcy. However, the utility can require a deposit for future service and you do have to pay bills which arise after bankruptcy is filed.

No. 11 U.S.C. sec. 525 prohibits governmental units and private employers from discriminating against you because you filed a bankruptcy petition or because you failed to pay a dischargeable debt.

If you lost your license solely because you couldn’t pay court-ordered damages caused in an accident, bankruptcy will allow you to get your license back.

If someone has co-signed a loan with you and you file for bankruptcy, the co-signer may have to pay your debt.

Yes, but your spouse will still be liable for any joint debts. If you file together you will be able to double your exemptions. In some cases where only one spouse has debts, or one spouse has debts that are not dischargeable then it might be advisable to have only one spouse file. If the spouses have joint debts, the fact that one spouse discharged the debt may show on the other spouses credit report.

Yes. The automatic stay prevents bill collectors from taking any action to collect debts.

Once a creditor or bill collector becomes aware of a filing for bankruptcy protection, it must immediately stop all collection efforts. After you file the bankruptcy petition, the court mails a notice to all the creditors listed in your bankruptcy schedules. This usually takes a couple of weeks. Creditors will also stop calling if you inform them that you filed the bankruptcy petition, and supply them with your case number. In some cases, you or your attorney should contact the creditor immediately upon filing the bankruptcy petition, especially if a law suit is pending. If a creditor continues to use collection tactics once informed of the bankruptcy they may be liable for court sanctions and attorney fees for this conduct.

Law code 28 USC Section 1408 states that the case should be filed where the debtor has lived “for the one hundred and eighty days immediately preceding such commencement, or for a longer portion of such one-hundred-and-eighty-day period.” This means that the case should be filed in the bankruptcy district in which the debtor has lived for the greatest portion of the last six months.

Alimony, maintenance, and/or support are protected from discharge. Divorce decrees and separation agreements are covered by 11 U.S.C. Section 523(a)(15). This section states that these debts are not dischargeable unless:(A) the debtor does not have the ability to pay such debt from income or property of the debtor not reasonably necessary to be expended for the maintenance or support of the debtor or a dependent of the debtor and, if the debtor is engaged in a business, for the payment of expenditures necessary for the continuation, preservation, and operation of such business; or(B) discharging such debt would result in a benefit to the debtor that outweighs the detrimental consequences to a spouse, former spouse, or child of the debtor.

How often can I file for bankruptcy?

You can file for Chapter 7 bankruptcy again after eight years has passed from the date of your last filing. A Chapter 13 bankruptcy can be filed four years after filing for a Chapter 7 or two years from discharge of a previous Chapter 13.

What different types of Bankruptcy should I consider?

Is California Chapter 7 (Straight Bankruptcy) Right for Me?

In a bankruptcy case under chapter 7, you file a petition asking the court to discharge your debts. The basic idea in a chapter 7 bankruptcy is to wipe out (discharge) your debts in exchange for your giving up property, except for “exempt” property which the law allows you to keep. In most cases, all of your property will be exempt. But property which is not exempt is sold, with the money distributed to creditors. If you want to keep property like a home or a car and are behind on the payments on a mortgage or car loan, a chapter 7 case probably will not be the right choice for you. That is because chapter 7 bankruptcy does not eliminate the right of mortgage holders or car loan creditors to take your property to cover your debt.

Is California Chapter 13 Bankruptcy (Restructuring) Right for Me?

In a chapter 13 case you file a “plan” showing how you will pay off some of your past-due and current debts over three to five years. The most important thing about a chapter 13 case is that it will allow you to keep valuable property–especially your home and car–which might otherwise be lost, if you can make the payments which the bankruptcy law requires to be made to your creditors. In most cases, these payments will be at least as much as your regular monthly payments on your mortgage or car loan, with some extra payment to get caught up on the amount you have fallen behind. You should consider filing a chapter 13 plan if you:(1) own your home and are in danger of losing it because of money problems; (2) are behind on debt payments, but can catch up if given some time; (3) have valuable property which is not exempt, but you can afford to pay creditors from your income over time; or (4) would like to strip off your second mortgage on your primary residence.You will need to have enough income in chapter 13 to pay for your necessities and to keep up with the required payments as they come due.  We help you figure this out and write the plan to get it approved by the bankruptcy court.

Can’t I file for bankruptcy on my own?

Yes, you can, but there are serious risks you take if you do so.  Not knowing the appropriate bankruptcy laws, you stand to file the wrong type of bankruptcy or leave out something important that could leave you still owing large amounts of debt or lengthy delays.  It is always best to have a qualified bankruptcy attorney representing you to obtain the best results.

Who qualifies for bankruptcy?

Most individuals who have overwhelming debt and limited resources will qualify for bankruptcy.  However, you still must qualify for any type of bankruptcy by following the appropriate bankruptcy laws.  A Chapter 7 filing requires a means test be taken to determine if your income level and amount of assets fits into this category.  A Chapter 13 filing requires that you have steady income in order to repay your debts with a repayment plan.

Which debt solution is best for me?

StoneCrest Law Firm will meet with you to discuss your particular financial scene and determine what the best solution would be based on your goals and legal options.  You may qualify for bankruptcy or other forms of debt relief.

What protections does bankruptcy provide?

Both forms of bankruptcy provide you with a discharge, or legal release, of your debt once the case has been successfully completed. Once you receive the discharge information from the bankruptcy court, creditors are left with no legal reason to contact you or pursue debts listed in your bankruptcy documents. An “automatic stay” goes into effect when a person or business files for bankruptcy protection. The “automatic stay” stops creditors from trying to collect any debt from you. It puts an immediate stop to creditor phone calls, collection letters, wage garnishments, lawsuits, bank levies and other forms of harassment, intimidation and scare tactics used by creditors. You cannot file for Chapter 7 Bankruptcy if you obtained a discharge of your debts in a Chapter 7 case within the previous eight years, or a Chapter 13 Bankruptcy case within the previous six years. If you are a disabled veteran and incurred your debt while on active military duty, or if your debts primarily come from the operation of a business, you will automatically qualify for Chapter 7 bankruptcy.

What is the “Means Test”?

When you file bankruptcy you must undergo a Means Test. The test is used to determine if you have enough disposable income to pay some or all of your outstanding debt under a Chapter 13 repayment plan. The repayment plan lasts from three to five years. The first step in the means test is to determine the median income level for your area. If your average income over the past 6 months is less than the median income for your area, you are automatically eligible for Chapter 7. If your income is more than the median income for your area, then you must continue the means test. A qualified bankruptcy attorney can guide you through this process and help you decide which type of bankruptcy best fits your current financial situation.

How long will bankruptcy remain on my credit report?

A bankruptcy can remain on your credit report for ten years.

What does “secured” or “unsecured” debt mean?

A “secured debt” is one that has an item of value listed as a guarantee that you will pay the debt. Common secured debts include mortgages, car loans, motorcycle loans, etc. An “unsecured” debt is one that holds no claim to a real asset. Theses debts include credit cards and signature loans.

What happens if I file bankruptcy and discover an additional creditor debt after filing?

Your bankruptcy attorney can amend your case to include any additional debts you may find after the case is filed.

What happens when one spouse files without the other spouse?

Financial problems can cause a rift in even the strongest marriage. Before you file bankruptcy without your spouse, have them speak to your attorney about what will happen. The spouse who doesn’t file may be held responsible for some the debts.

Will I lose my Social Security payments if I file?

No. Your Social Security payments will not be lost.

Will I lose my personal property if I file bankruptcy?

There are federal, state and local exemptions that allow you to keep a certain amount of personal property when you file bankruptcy. Your attorney will explain how these exemptions apply to people who file bankruptcy in your state.

Can I pick which debts to put in the bankruptcy?

Yes and No. You must include all of your debts in the bankruptcy filing. If you choose to file a Chapter 7 case and want to keep a car or house that you still owe money on, you can choose to reaffirm the debt and continue to make payments. Reaffirming the debt, will essentially take it out of the bankruptcy.

When will my debt be discharged?

In most cases, a Chapter 7 bankruptcy discharge is received 60 days after the 341 meeting, or first meeting of creditors. In Chapter 13, your discharge will be sent to you once you have completed all the payments under the Chapter 13 plan.Chapter 7 is the type of bankruptcy that is most often filed. It allows a person to discharge their qualifying debts completely in an abbreviated time frame. Some debts are not eligible for discharge under the new bankruptcy rules, such as child support, alimony and student loans. An attorney can explain which debts are and are not dischargeable.

Chapter 13 consolidates your outstanding debt into a payment plan that you can afford. It allows you to rearrange your finances and repay all or a portion of your debt in order for you to get back on firm financial footing. Persons filing for Chapter 13 bankruptcy must have sufficient disposable income to fund a repayment plan, not have more than $1,010,650 in secured debt (e.g. mortgage, car loans or loans with some form of collateral) and not have more than $336,000 in unsecured debt (e.g. credit card debt, medical bills, utility bills and legal bills).

What protections does bankruptcy provide?

Both forms of bankruptcy provide you with a discharge, or legal release, of your debt once the case has been successfully completed. Once you receive the discharge information from the bankruptcy court, creditors are left with no legal reason to contact you or pursue debts listed in your bankruptcy documents.
An “automatic stay” goes into effect when a person or business files for bankruptcy protection. The “automatic stay” stops creditors from trying to collect any debt from you. It puts an immediate stop to creditor phone calls, collection letters, wage garnishments, lawsuits, bank levies and other forms of harassment, intimidation and scare tactics used by creditors.

You cannot file for Chapter 7 Bankruptcy if you obtained a discharge of your debts in a Chapter 7 case within the previous eight years, or a Chapter 13 Bankruptcy case within the previous six years. If you are a disabled veteran and incurred your debt while on active military duty, or if your debts primarily come from the operation of a business, you will automatically qualify for Chapter 7 bankruptcy.

What is the “Means Test”?

When you file bankruptcy you must undergo a Means Test. The test is used to determine if you have enough disposable income to pay some or all of your outstanding debt under a Chapter 13 repayment plan. The repayment plan lasts from three to five years. The first step in the means test is to determine the median income level for your area. If your average income over the past 6 months is less than the median income for your area, you are automatically eligible for Chapter 7. If your income is more than the median income for your area, then you must continue the means test. A qualified bankruptcy attorney can guide you through this process and help you decide which type of bankruptcy best fits your current financial situation.

What does “secured” or “unsecured” debt mean?

A “secured debt” is one that has an item of value listed as a guarantee that you will pay the debt. Common secured debts include mortgages, car loans, motorcycle loans, etc. An “unsecured” debt is one that holds no claim to a real asset. Theses debts include credit cards and signature loans.

What happens if I file bankruptcy and discover an additional creditor debt after filing?

Your bankruptcy attorney can amend your case to include any additional debts you may find after the case is filed.

What happens when one spouse files without the other spouse?

Financial problems can cause a rift in even the strongest marriage. Before you file bankruptcy without your spouse, have them speak to your attorney about what will happen. The spouse who doesn’t file may be held responsible for some the debts.

Will I lose my Social Security payments if I file?

No. Your Social Security payments will not be lost.

Can I pick which debts to put in the bankruptcy?

Yes and No. You must include all of your debts in the bankruptcy filing. If you choose to file a Chapter 7 case and want to keep a car or house that you still owe money on, you can choose to reaffirm the debt and continue to make payments. Reaffirming the debt, will essentially take it out of the bankruptcy.

When will my debt be discharged?

In most cases, a Chapter 7 bankruptcy discharge is received 60 days after the 341 meeting, or first meeting of creditors. In Chapter 13, your discharge will be sent to you once you have completed all the payments under the Chapter 13 plan.

Sacramento Bankruptcy

We are experienced Sacramento Bankruptcy Attorneys. We have helped thousands of individuals and businesses get the relief they need from their creditors through the use bankruptcy by filing a Ch. 7, Ch. 13, credit card debt negotiation or debt settlement and have successfully dealt with adversary proceedings brought by difficult creditors.  Our bankruptcy attorneys have achieved proven results and can give you the great legal advice and strategy needed to get you the results you want.  Contact us today to schedule your complimentary attorney consultation by clicking HERE or by calling 916-999-1376. We look forward to helping you with all of your Sacramento bankruptcy needs.