Bankruptcy FAQs
.........................................
Q. What happens to the credit cards that I do not have a balance on? For example, I have a store credit card that is currently open but I managed to pay the balance off. What happens to this card? Will it go on the bankruptcy and be closed like the other cards?
A. You don't need to list the ZERO balance card, but in almost all cases, the account will be closed after filing bankruptcy.
.........................................
Q. If I am an authorized user on someone else's credit card/account; will my filing bankruptcy affect them?
A. High possibility—discuss this with Mr. Nixson.
Q. Will that credit card/account show up on my credit report?
A. Yes
Q. Will I still be an authorized user on that credit card/account after filing bankruptcy?
A. This is unknown and depends on the individual creditor's policies.
.........................................
Q: Does a bankruptcy discharge eliminate all debts?
A: It depends on which type of bankruptcy is filed. Under Chapter 13, the only debts discharged are those included in the repayment plan. Additional exceptions may apply, depending on the case.
Under Chapter 7, although most debts are discharged, there are still exceptions:
• Most student loans
• Recent federal taxes
• Child support and spousal maintenance
• Government-imposed restitution, fines, or penalties resulting from criminal activity
• Debts from fraud, embezzlement, larceny, or breach of fiduciary duty
.........................................
Q: WHAT DOES DISCHARGE MEAN?
A: Your bankruptcy discharge is the light at the end of the tunnel when you file for bankruptcy.
A bankruptcy discharge (1) releases you from personal liability for certain specified types of debts. In other words, you are no longer legally required to pay any debts that are discharged. The discharge is (2) a permanent order prohibiting your creditors from taking any form of collection action on discharged debts, including legal action and communications with you, such as telephone calls, letters, and personal contacts.
.........................................
Q: WHAT IF YOU HAVE A LIEN AGAINST YOU?
A: Although you are not personally liable for discharged debts, a valid lien (i.e., a charge upon specific property to secure payment of a debt) that has not been avoided (i.e., made unenforceable) in the bankruptcy case will remain after the bankruptcy case. Therefore, a secured creditor may enforce the lien to recover the property secured by the lien.
.........................................
Q: WHAT CANNOT BE DISCHARGED IN BANKRUPTCY?
A: Not all debts are discharged. The debts discharged vary under each chapter of the Bankruptcy Code. Section 523(a) of the Code specifically excepts various categories of debts from the discharge granted. Therefore, the you must still repay those debts after bankruptcy. Congress has determined that these types of debts are not dischargeable for public policy reasons (based either on the nature of the debt or the fact that the debts were incurred due to improper behavior of the debtor, such as the debtor's drunken driving).
The most common types of nondischargeable debts are certain types of tax claims, debts not listed by the debtor on the lists and schedules, debts for spousal or child support or alimony, debts to governmental units for fines and penalties, debts for most government funded or guaranteed educational loans or benefit overpayments, debts for personal injury caused by the debtor's operation of a motor vehicle while intoxicated.
.........................................
EMPLOYER DISCRIMINATION
Q: May an employer terminate a debtor's employment solely because the person was a debtor or failed to pay a discharged debt?
A: The law provides express prohibitions against discriminatory treatment of debtors by both governmental units and private employers. A governmental unit or private employer may not discriminate against a person solely because the person was a debtor, was insolvent before or during the case, or has not paid a debt that was discharged in the case. The law prohibits the following forms of governmental discrimination: terminating an employee; discriminating with respect to hiring; or denying, revoking, suspending, or declining to renew a license, franchise, or similar privilege. A private employer may not discriminate with respect to employment if the discrimination is based solely upon the bankruptcy filing.
.........................................
Q: HOW DO I REBUILD MY CREDIT?
A: To get back to good credit, you need to get a credit card, a $1000 CD, and/or use one of our Faith-based credit repair associates.
1. Make a list of, at most, 10 local banks and then call each one, tell them that you have filed bankruptcy, received your discharge and would like to apply for new credit. Ask if they could qualify you for an unsecured credit card. If not, ask if they can give you a secured credit card in which you put $500 into a savings account and have a credit card with a $500 limit. (Most people get a couple credit card offers in the mail, however, you may have to pay $139.00 application fee to get a $300.00 credit card. If you cannot get a credit card from a local bank, a $300.00 credit card can get you something that you really need.)
Verify that the account will be reported to the credit agencies. The way to do this is to ask the company which credit agencies will report the credit line: Experian, Equifax and/or TransUnion. Then check your three credit reports two months later to verify.
Use it. Charge gasoline, or something you have to buy anyway, every month. Use the card (even if only for one purchase) and pay it down each month to $5—but keep a running balance of 5 dollars on the card at all times! THIS IS VERY IMPORTANT TO BUILDING YOUR CREDIT SCORE.
2. When you have saved up $1000, go to your bank and get a $1000 CD. Then borrow $1000 using the CD as collateral. Put the $1000 in a savings account and pay back the CD monthly using the savings.
3.Use one of our local, faith-based credit repair associates and you can have greatly improved credit in 6 months! Talk to them right after you are discharged!—they do FREE consultations: (1) you get educated about building your credit (2) you get a free credit evaluation with no obligation and (3) then you can decide when/if it would be the right time to use them to build your credit score.
Rising Point Solutions Credit Repair
Website
866-655-4411
Tell them the Nixson Law Firm sent you!
Upgrade My Credit Credit Repair
Website
888-586-2261
Tell them the Nixson Law Firm sent you!
.........................................
Q: WHAT IS THE IMPORTANCE OF REVIEWING YOUR CREDIT REPORT?
A: Reviewing your "after bankruptcy credit report" could save you hundreds of dollars, or even thousands, when you are ready to buy a car after bankruptcy.
Things to look for:
First, that a debt discharged in bankruptcy shows a zero balance. (The credit report may include an account that was discharged in bankruptcy--as well as the bankruptcy itself--as long as it reports a zero balance due to reflect the fact that the consumer is no longer liable for the discharged debt.)
Second, that a debt discharged in bankruptcy shows a "discharged in bankruptcy" status. (Similarly, a credit report may include delinquencies on debts discharged in bankruptcy, but must accurately note the status of the debt as "discharged")
Third, that the credit bureaus are staying on top of your creditors to make sure they send in the required updates--specifically updating past due accounts that are included in bankruptcy. (A credit reporting agency must employ reasonable procedures to keep its file current on past due accounts--e.g., by requiring its creditors to notify the credit bureau when a previously past due account has been paid or discharged in bankruptcy.)
In spite of the three aformentioned requirements by the Federal Trade Commission, probably half the people who are discharged in a chapter 7 bankruptcy still have errors on their credit report. The big problem in the past was credit agencies were putting "charge offs" meaning you owe the money but aren't paying instead of a "discharge", meaning you don't owe it any more.
The bankruptcy process is not over until the credit report is right.
.........................................
Q. I've heard horror stories of after declaring bankruptcy some banks will actually close your personal checking with them. For example, I have credit cards with Chase Bank as well as a personal checking account, will chase decide to close my checking account because of the bankruptcy?
A. They may decide to close your account if you are declaring on their debt. I recommend opening an account now at another bank.
.........................................
Q. What is the likelihood of them closing my cell account, they do a 6 month credit check.
A. In most cases (90%) they will not close an account in good standing.
.........................................
Q. Will my insurance premium go up because of filing bankruptcy?
A. They may go up if based on your credit score.
.........................................
Q. If I am going to keep my car, does this mean I list it but I still make the payments through out and after the bankruptcy process?
A. In Chapter 7, YES - On your secured debts - "If you want to keep it you have to pay for it". In Chapter 13 your car MAY be included in your Plan.
.........................................
Q. If I have a car that is paid for, do I list it in the bankruptcy?
A. Yes, you must list all of your assets in the bankruptcy.
.........................................
Q. How long does bankruptcy take?
A. Chapter 7 takes about four months to complete.
Chapter 13 takes
three to five years to complete depending on
the extent of your debts and your income
..........................................
Q. How long is my credit going to be affected by filing bankruptcy?
A. Chapter 7 - Ten years. Chapter 13 - Seven years, starting after your bankruptcy is discharged.
..........................................
Q. What will cause my bankruptcy to get dismissed/closed?
A. Answers:
1. Not paying your trustee payment (Ch13).
2. Not paying your trustee payment on time(Ch13).
3. Not submitting your automatic withdrawal information to the Trustee (ch13).
4. Not providing all the required documents to your attorney
that are requested by the attorney, Trustee or Court.
5. Not filing your tax returns if you are not current.
6. Not taking the required financial course before the deadline.
7. Not attending your 341 Creditor's Meting.
.........................................
Q. What does dismissed/closed mean?
A. You have to start over and have to spend more money. Not to be
confused with DISCHARGED - which means you're done.
.........................................
Top Ten Things Your Bankruptcy Attorney Hates To Hear
10. "I know I told you that I only expected a small tax refund, but my accountant says I'm getting back a large refund! Isn't that great?" No, its not. Your attorney can protect your property, but unexpected large cash sums are difficult to protect during a bankruptcy. Generally it is advisable to receive (and spend) your income tax refund prior to filing your bankruptcy case.
9. "Before I came to see you I paid a debt counselor a lot of money." Individuals can lose thousands in fraudulent debt counseling. While there are legitimate programs that can obtain positive results, many are just plain scams and end up making matters much worse for you and your family.
8. "I cashed out my retirement account and paid off my credit cards." Retirement accounts are generally assets that can be protected in a bankruptcy and beyond the reach of most creditors, while credit card debt is typically the easiest type to discharge.
7. "I paid off my car with my tax refund." Having too much equity in a vehicle will result in payments to the bankruptcy trustee. In other words you first paid for your car, and then you must pay the trustee for the non-exempt equity in the car. That means you pay TWICE for the same car!
6. "I repaid a loan to a family member before coming to see you." Payments to a family member prior to filing bankruptcy is a big mistakes. He or she may be forced to turn over the payment to pay your creditors. Of course you want to pay your family member, and you can certainly do so, but let a qualified professional help you do it the right way.
5. "I transferred my house/car/etc. to my mother to protect it." Another regrettable mistake. By trying to protect an asset without your attorney's help you could actually strip any protection it might otherwise be entitled to.
4. "I took out a payday loan after our consultation to pay for the bankruptcy." Incurring a debt with no intention to repay is not only non-dischargeable in bankruptcy, it could land you in criminal trouble!
3. "I went on a shopping spree with my credit cards before I came to see you." This seldom happens because most people have better common sense. As a general rule the shopper will be paying that money back to the credit card company.
2. "I just got my chapter 7 discharge and I found out my grandmother left me a large inheritance." This news is sad in many ways; not only is the loss of a loved one a tragic event, but the bankruptcy court may order you to turn over the inheritance.
1. "I didn't tell my attorney this, but..." The worst news of all! Always answer your attorney's questions honestly and completely. Hidden assets or transfers can prevent you from receiving a bankruptcy discharge and may result in federal criminal charges.
.........................................
Q. Can I get a car loan after bankruptcy? (If you have not done the credit repair listed above)
A. Getting car loans after bankruptcy is often thought to be impossible. Actually, that perception is wrong. You can get a loan--it's just more work. Make a list of 10 car sellers in your area. Call each one and tell them that you have a discharge notice from your bankruptcy and that you would like to know if they give car loans after a bankruptcy. Make sure you get a firm "yes" or "no" before applying. Also, get more information on buying a car after bankruptcy and apply for loans at http://www.carsdirect.com/auto-loans/how-to-get-a-car-loan-during-bankruptcy.
.........................................
|
