Get Answers from a Bankruptcy Lawyer in Torrance
The following statements should not be regarded as legal advice. Always
consult a competent attorney in good standing before making decisions about legal matters.
What is bankruptcy?
Bankruptcy is a federal court process by which a person or business legally declares
an inability or impairment of ability to pay its
creditors and may eliminate or reduce their debts. It allows individuals to keep
their homes, cars, businesses, bank accounts, or other assets as long
as certain requirements are met. Also, it allows businesses to reorganize
under court supervision to in order to keep operating while reducing debt
significantly. The 3 main chapters of bankruptcy are 7, 11 and 13.
How long does bankruptcy stay on my credit report?
Bankruptcy can stay on your credit record for
up to 10 years, depending on the time of bankruptcy. Credit bureaus will usually report a
Chapter 13 bankruptcy, as well as collection, late payments, and legal actions, for up to 10
years. They will report a
Chapter 7 bankruptcy for up to 10 years.
It is important to note that you can still try to rebuild your credit during
this time. You may still be able to do things like buy a car or a house,
as long as your bankruptcy has been discharged. The interest rates may
be much higher until several months of making consistent payments.
Will I ever have credit again?
Eventually, once your debt has been discharged, your debt-to-income ratio
will improve, substantially. Banks, credit card companies and other lending
institutions will then consider you a better risk. If you monitor your
credit reports after the bankruptcy, you will soon be able to reestablish credit.
Is it still possible to discharge credit cards with the new bankruptcy laws?
YES! President Bush signed a bill which significantly changed the bankruptcy
law which went into effect on October 17, 2005. Although the bankruptcy
law was changed, it did not eliminate Chapter 7 nor did it make credit
card debt not dischargeable.
When will creditors and bill collectors stop calling me?
Once you hire a bankruptcy lawyer, all creditor calls will then be directed
to your legal representative. In addition, once you actually file for
bankruptcy, an "automatic stay" will go into effect; this prohibits
any creditor from trying to contact you or taking any other action to
collect until the bankruptcy court lets them.
Will I lose my house, car or other assets?
The kind and amount of assets an individual can keep through bankruptcy
varies from state to state depending on their exemption laws. In California,
the exemption laws generally allow you to keep:
- Your home
- Your car
- Your personal belongings
The most commonly used exemption is the "homestead exemption."
This is not something you need to have filed prior to filing bankruptcy,
but which you can claim through the bankruptcy process. For singles the
amount is $50,000, married couples or head of households it is $75,000
and $150,000 for those 65 or older.
The homestead exemption is only necessary to keep property that has equity.
Equity is the amount you have after you subtract all mortgages and secured
loans against the house FROM the current market value of the house. Thus,
it is possible to keep multiple homes, even businesses if these "assets"
have no equity. You can still lose your house through
foreclosure if you do NOT make the mortgage and home equity line of credit payments
regardless of whether you file bankruptcy or not.
Before you file, we will explain the exemptions that apply to you and how
to keep the most assets possible. In the majority of our Chapter 7 cases,
our clients keep their house, cars, bank accounts, retirement accounts,
and life insurance policies.
During your free case evaluation, we will walk you through the entire process
and start pre-petition planning. This will allow us to get all of your
financial affairs in order so you are best positioned to file for bankruptcy.
The exemption laws only apply to Chapter 7, as in Chapter 13, you do not
lose any assets or property.
When should I file for Chapter 7?
When you file for bankruptcy, you will have to decide what chapter to file.
There are two main chapters for consumers: Chapter 13 and Chapter 7. While
in a Chapter 13 bankruptcy, there is no risk of losing your assets, you
will still have to pay back all your debt. Chapter 7 bankruptcy completely
absolves you of any responsibility, so we will have to decide if a bankruptcy
discharge outweighs the risk of losing certain assets.
Usually a Chapter 7 cases will involve those who don't have many assets,
so they won't lose anything by filling.
Can I keep my paychecks and my earnings?
garnishment of your check due to a judgment by a creditor must stop immediately after
the bankruptcy has been filed. Also, money collected by the Sheriff Department
but not yet sent must be returned.
Can I keep my retirement accounts and life insurance policies?
Yes, generally speaking. Usually, you can exempt retirement accounts and
life insurance policies with cash value. You can keep the life insurance
policies, without cash value since they are not assets, as long as you
make premium payments.
Can I keep using my bank accounts?
Yes, generally speaking. Bankruptcy, itself, does not require you to close
your bank accounts. If you have had no bounced checks or other banking
problems that required your bank to close your account, you can continue
to use them after you file bankruptcy.
Can I get rid of all my debts?
Most types of debts can be discharged. But as with most legal rules, there
are exceptions. Some of the most common are recently charged credit cards,
child support payments and spouse's debts where the spouse did not
file bankruptcy with you. You cannot get rid of secured debts, such as
mortgages and car loans unless you give up that item.
Does my spouse need to file with me?
Because California is a community property state, we usually advise that
both spouses file for bankruptcy. That way, you can both obtain a complete
discharge. Keep in mind, however, that both spouses are not legally required to file.
Before making a decision, talk to one of our bankruptcy attorneys about
your case. We can do a complete evaluation to see if your spouse should file.
Are my co-signers at risk due to my bankruptcy?
Co-signers can be protected in some bankruptcies. Generally, in a Chapter
13 bankruptcy, a co-signer is not at risk from collections if the following
conditions are met:
- The debt must be a consumer debt
- The debt cannot be incurred in the ordinary course of business
- The co-signer cannot benefit from the proceeds of the debt, and
- The debtor complies with the Chapter 13 bankruptcy payment agreement
Again, failure to complete the requirements of your Chapter 13 repayment
plan gives creditors the legal right to pursue your co-signers.
Also, if you file a Chapter 7 bankruptcy, creditors are still able to pursue
co-signers and apply all the same collect efforts as they would with the debtor.
It is very important to choose a qualified
bankruptcy lawyer to handle your case, especially, when third-party co-signers are involved.
How long does the bankruptcy take?
The entire process takes a minimum of four months from start to finish.
It also takes time for us to prepare the case.
Will I have to go to court?
There will be what is called a Meeting of Creditors or "341a"
occurring one month after you file. In most cases, creditors do not attend
these meetings because they usually have little to no course of action
at that point. These meetings are usually very brief, with short questions.
Most cases only last a few minutes.
How often can I file bankruptcy?
Chapter 7: You may file another Chapter 7 eight years after a prior Chapter 7, or
four years after a Chapter 13.
Chapter 13: You may file another Chapter 13 two years after a prior Chapter 13, or
four years after a Chapter 7.
Why is it legal to file bankruptcy?
Long ago, Congress recognized that even good, responsible people can find
themselves facing serious financial problems that lead to overwhelming
debts that they cannot repay. bankruptcy is often the result of unexpected
events such as the loss of a job, illness, disability, and more. In some
cases, it is simply an outcome of poor financial planning. No matter the
reason for the bankruptcy, (except, of course, in cases of dishonesty
or fraud), federal law states that everyone deserves a second chance.
Granting you an opportunity to start fresh makes you a more productive
member of society, which is good both for you and for society as a whole.
Who will know that I filed?
Bankruptcy is a public record, so anyone can go search court records to
find information on your bankruptcy. The court will not notify anyone,
however, except for your creditors. Your employer and family members will
not be notified unless they are your creditors.
How much does it cost to file for bankruptcy?
While our fees vary depending on the complexity of each case, we are very
competitive with our prices. When you come in for a free consultation,
we will quote you a fee.
In a Chapter 13, we may be able to include attorney fees in the reorganization
plan, so it will significantly reduce your up-front cost. Our number one
goal is to make bankruptcy &
debt-relief affordable for you.
How much are the court filing fees for Chapter 7 and Chapter 13?
At present, the court filing fee for a Chapter 7 is $299 and for a Chapter
13 it is $274.
Do I need an attorney or can I represent myself?
In a bankruptcy proceeding, it is not mandatory to hire an attorney. Keep
in mind, however, that professional counsel can save you time and money
in the long run. Bankruptcy laws are extremely complex and without guidance,
the following could happen:
- You could lose property that you could have been able to keep.
- Certain debts may not be discharged.
- You may not be granted debt relief due to a mistake.
Also, remember that the courts and your creditors will be holding you to
the same standard as an attorney. Any ignorance of court procedures or
bankruptcy law will not be excused and are sometimes