SIMPLE ANSWERS TO QUESTIONS ABOUT BANKRUPTCY: Q: Will creditors still be able to call me or threaten me? A:
No. The instant you file a Bankruptcy Petition there is an automatic stop to all creditor collection activity. This means that they are not allowed to call you, are not allowed to repossess your car, and are not allowed to have a Sheriff or Constable Sale to collect a judgment. Even the I.R.S. has to stop while you are in bankruptcy .
If, for example, a mortgage company or car loan company wants to foreclose or repossess, they can only do so after going to court and getting permission from the Bankruptcy Court. We have some clients who tried to work things out with their creditors, but came to us instead in order to stop the harassing phone calls once and for all. Q: Will I lose any of my personal belongings in a Chapter 7 “Fresh Start” bankruptcy? A:
Probably not. If you bought something on credit, such as a mortgage on your home, a car, or jewelry, the creditor is entitled to repossess the collateral if you don’t want to pay for it (but not always). If you are either current or can get current on your mortgage or other loan, you can “reaffirm” the debt and can keep the house, car, or jewelry. Otherwise, your legal exemptions allow 97% of people in bankruptcy to keep all of their possessions. Even if you put up your possessions as collateral for a new loan, the creditor’s lien can be removed, and you can keep all of your stuff. Judgment liens can also be removed by bankruptcy. You will also be able to keep any pension you may have under any circumstances. Q: My vehicle was just repossessed. Can I get it back? A:
Yes, but. You have to file for bankruptcy immediately. You will still have to pay for the vehicle, if you want to keep it. If you file a Chapter 7 Bankruptcy, you will have to get caught up within 30 days. If you want to keep the vehicle but can’t get caught up within 30 days, and if to you the vehicle is worth the additional legal fees, you can get caught up over a three to five year period in a Chapter 13. We will explain your options with you and help you decide what is best for you. Q: I still owe on a vehicle that was repossessed. Will bankruptcy help me? A:
Yes. The key difference in bankruptcy is between debts that have collateral and debts that don’t have collateral. After the lender repossesses a vehicle, you no longer have their collateral.The amount you still owe is no different than credit card or other debt without any collateral. Bankruptcy will make it go away forever. Q: I don’t have any credit card debt, but I owe doctor and hospital bills. Will bankruptcy help me? A:
Yes. Debts for medical bills are no different than credit card or other debt without any collateral. Q: I lost my driver's license because I didn’t pay a judgment. Will bankruptcy help me? A:
Probably. Unless the judgment was for an accident while Driving Under the Influence, judgments for motor vehicle accidents are no different than credit card or other debt without any collateral. Q: I like my doctor (or dentist, mother, brother, or friend). Can I still pay them even though I filed bankruptcy? A:
Yes. Although you will no legal obligation to pay your doctor (or loans from relatives or friends), you can pay them if you want to. It’s up to you. Q: I have tried to negotiate with my credit cards, and I would like to pay them something, but they just aren’t reasonable. Will bankruptcy help me?A:
Yes. If you have a good job and make more than the average income for a household of your size, you may not qualify for a Chapter 7, but will instead be able to do a Chapter 13 “Debt Repayment Plan” Bankruptcy. Chapter 13 Debt Repayment Plans are explained in more detail in later Questions and Answers, but basically you pay only as much as you can afford to pay, and the credit card companies have very little to say about it. And if you qualify for a Chapter 7 Bankruptcy, you will not have to pay the credit cards anything.