Answers to Your Most Frequently Asked Questions
You're probably full of questions right now—and that's okay, because we have answers! Check out some of the questions we hear the most about bankruptcy, divorce, and child custody from clients just like you.
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Can I sell or refinance my home in after filing a Chapter 7 bankruptcy?
When you file a chapter 7 bankruptcy, everything you own becomes part of what is called "the bankruptcy estate". The Chapter 7 trustee, who is appointed by the court to review your case, controls the bankruptcy estate. Until the trustee releases his or her interest in an asset, you may not do anything with the asset. This includes selling an asset or borrowing money against the asset such as refinancing a house. There are two ways that the trustee can release the interest in an asset. One is by formally abandoning their interest in the asset. This can be done at the Meeting of Creditors or later through the court. The trustee may also issue a no asset report. This tells the Court and everyone else involved in the case that the trustee has reviewed the case and does not believe that there is anything the trustee wants to take to recover money for the asset. Until the trustee has taken one of these actions, you may not sell anything you own or refinance a loan.
For more information on the trustee's role in a Chapter 7 bankruptcy, read my article on the role of a Chapter 7 trustee.
If you are considering filing a Chapter 7 bankruptcy, do not attempt to do this on your own. Contact me or call me today at 757-276-6555 to schedule a free consultation on how bankruptcy can help you.
How does bankruptcy affect my credit?
A Chapter 7 Bankruptcy will remain on your credit report for up to 10 years. However, you can immediately begin re-establishing your credit after your case is filed. Due to the fact that you are wiping out your debts and cannot file again for 4 to 8 years, credit companies want to be first in line to extend credit to you again. By not filing Bankruptcy, your credit report may show negative information for 7 years from the time you become current. By filing a Chapter 7 bankruptcy, negative reporting stops immediately. This allows you to begin re-establishing credit faster by keeping house, auto or other payments current. One of the best ways to rebuild your credit is by making payments on Student loans.
If you have filed a Chapter 7 bankruptcy, you should check your credit report after your case is discharged to insure that everything has been corrected on the credit report. After that you should check your credit report once a year to make sure that you are getting positive reporting. Normally you should have your credit score over 620 (acceptable credit) within one year after your discharge and you may be able to get your score over 700 within two years after your bankruptcy.
What kinds of debts does Bankruptcy eliminate?
There are some debts that cannot be eliminated or discharged in bankruptcy. For example, child support and spousal support obligations cannot be eliminated nor can arrears on those payments be discharged. Taxes for the most recent three tax years cannot be discharged. Student loans cannot be discharged except under extreme circumstances.
If you have liens on real estate or a vehicle, you will have to deal with those liens. If you have purchased furniture and financed it, you may also need to deal with that debt to keep the furniture.
You should discuss your specific debts with an experienced bankruptcy attorney before you attempt to file a bankruptcy to make sure that you know what debts will not be discharged.
Contact Hampton Roads Legal Services at 757-320-2010 to schedule a free consultation with our experienced attorney!
Do I have to list all my creditors in a Chapter 7 bankruptcy?
Yes. You must list all creditors when you file a Chapter 7 bankruptcy. There are no exceptions. You must list everyone that you owe money to including taxes and student loans. However if you have a $0 balance on an account, you don't owe that creditor money and they don't have to be listed. If you no longer owe an individual or company money, they are not a creditor. Our office will assist you in obtaining a credit report so that you are certain to list all your creditors. It is important that you review your credit report carefully and list any additional creditors that do not appear on the credit report. There are many companies that do not report to credit reporting agencies, such as medical providers, taxes and pay day loans.
In a Chapter 7 bankruptcy, if you leave off a creditor, like a medical bill, they will still be included in your bankruptcy. However, since they did not receive notification of the bankruptcy, they may still try to collect from you. It is very important to list everyone that you think you owe money to so that you don't have problems later with a creditor trying to collect because they were not notified about your bankruptcy.
Can you stop my home foreclosure?
Yes! In a Chapter 13 Bankruptcy case, we can stop the foreclosure by proposing a plan whereby you bring your mortgage current over time while continuing to make the regular monthly mortgage payment. You will have to resume making your regular monthly payments after your case is filed. You must have the ability to make those regular monthly payments, pay your basic living expenses, and make a payment to the Court to bring your mortgage current. Your payment plan to the court will go from three to five years, depending on your income and other debts.
In a Chapter 7 Bankruptcy case, if you are not current on your payments, the Bankruptcy will postpone the foreclosure until your case is discharged or until your creditor/mortgage holder files a motion for, and is granted, "relief from stay." Your mortgage company may be willing to do a loan modification after you file a Chapter 7 bankruptcy. However, if you file a Chapter 7 bankruptcy when you are behind on mortgage payments, you may not be able to keep your house.
If you are concerned about losing your home, please contact us as soon as possible. Foreclosure deadlines are not something to take lightly. Once your home is foreclosed, there is very little we can do to help you. Read our testimonials to see other clients who's homes have been saved at the last minute, and be sure to request one of Attorney Pfeiffer's books to guide you through the process. Again, it is very important that you contact a reputable attorney about your foreclosure before it is too late.
Call us at 757-276-6555 to schedule your free consultation!
Can you remove a lien on real estate in a Chapter 13 bankruptcy?
There are three basic types of liens on real estate. There is a mortgage lien where you have borrowed money and pledged the house as collateral for the loan. This may be the loan to purchase the house or a refinance of the original mortgage. It also includes home equity loans or lines of credit and second mortgages. You may also have a mortgage lien if you have borrowed money for home improvements. The second type of lien on real estate is a judgment lien. This is where someone you owe money to has filed a lawsuit against you and obtained a judgment. The creditor can then record the judgment as a lien against your real estate. The third type of lien is a tax lien. This can be established by state law or by recording the lien in the public records. If you owe real estate taxes, the city or county that you owe the taxes to has a lien under state law against the real estate. If you owe money to the IRS or the state taxing authority, they can file a lien against all of your property, including your real estate.
If your property is worth less than is owed on the first mortgage, there are ways to remove the subsequent liens in a Chapter 13 bankruptcy. How and when these liens can be removed depends on the type of lien. If you have a second mortgage or home equity lien of credit, judgments or tax liens, you need to meet with an experienced bankruptcy attorney to discuss what can be done in your situation.
Will all of my debts be forgiven if I file a Chapter 7 bankruptcy?
Many people mistakenly believe that filing a Chapter 7 bankruptcy will “wipe the slate clean" and free them of all their debts, but that is not necessarily true. There are some debts that will still be owed after a Chapter 7 bankruptcy. Even if you file, you will still need to pay your child and spousal support and any arrears on the support (late fees, etc), most back taxes, student loans, debts that you agreed to pay in a Separation Agreement or were ordered to pay in a Divorce Decree or criminal fines or restitution payments. In addition, a creditor may seek to have a debt declared non-dischargeable in your bankruptcy under certain circumstances. If you are not clear on which debts will and will not be discharged, speak with an attorney or reputable credit counselor before filing.
If you have debts that may not be discharged, you may have other options. Contact us or call us today at 757-276-6555 to schedule a free no obligation consultation. We will discuss your debts with you and advise you of the best course of action for you based on the debts you have.
What should I know about the bankruptcy hearing?
After your bankruptcy is filed with the Court, a date and time for the Meeting of Creditors, commonly called the 341 hearing, will be set. You must appear at this hearing. If you file a joint case with your spouse, you both must attend. Failing to show up or properly prepare for your hearing will not buy you more time. If you are not present at the time of your hearing, your case will be dismissed, and you will have to either re-file at a future date or seek the Court's permission to have your case reinstated.
If you have filed your case without the assistance of a bankruptcy attorney, you will receive information about documents that must be provided to the trustee assigned to your case before your hearing. You must provide all the requested documents well in advance of your hearing. If you fail to provide the required documents, you will either have to attend a second hearing or your case could be dismissed. If you are represented by an attorney, they will normally have collected these documents or notified you of any additional documents that are required.
You must go through security to enter the Federal Building in Norfolk. If your hearing is there, it is very important to arrive at least 30 minutes before the hearing time to allow sufficient time to get through security. You must bring a valid government-issued photo ID to enter the Federal Building. If your hearing is in Newport News, you do not have to go through security to enter the hearing room.
You must also provide a photo ID at the hearing and proof of your social security number. Valid documents to prove your social security number are: Original Social Security Card, Medicaid or Medicare card with your full Social Security Number on it, a W2 or 1099 or a tax transcript from the IRS. A copy of your tax return is not acceptable. Be sure that that the document you want to use has your full Social Security Number on it. Many documents only list the last four of your number.
If you have any questions about your hearing, make sure to contact the paralegal assigned to your case. If you have tried to file without an attorney and you are struggling with how to handle your case, please call our office and ask about your options, and be sure to read Attorney Pfeiffer's book on the subject of filing without an attorney! You can request a copy in the link to the left of this page. Give our office a call at 757-276-6555 if you have any additional questions!