Bankruptcy FAQS and Information
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Will I lose my home and car if I file for bankruptcy protection?
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Can a user on my credit card be required to pay the debt owed if I file bankruptcy?
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How will filing a bankruptcy affect lawsuits, judgments and garnishments against me?
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Can filing a bankruptcy stop my house from being foreclosed?
WILL BANKRUPTCY RUIN MY CREDIT?
My experience representing clients in bankruptcy over the last 14 years has shown that most people wait too long before they take make the hard decision to meet with a bankruptcy attorney and file a bankruptcy action. By the time they meet with me, their credit has already been destroyed and many are in financial ruin. If you have excellent credit, a bankruptcy can damage your credit score. However, most people I speak to who are interested in filing bankruptcy have already damaged their credit score. In fact, many people find that their credit scores go up within the first year of filing. Over the long term, Chapter 7 bankruptcy usually shows on your credit report for 8 – 10 years and can affect your ability to get a loan at a reasonable rate. Chapter 13 bankruptcy usually shows on the credit report for less time.
WILL I LOSE MY HOME AND CAR IF I FILE FOR BANKRUPTCY PROTECTION?
One of the most common concerns that people have when considering bankruptcy is whether they will be able to keep their home and cars and other valuable property. The Court allows you to protect a certain amount of property when filing for bankruptcy relief. It is best to contact a bankruptcy attorney to insure that you can protect your home, car, retirement account or other valuable property.
CAN I FILE INDIVIDUALLY, WHEN I AM MARRIED, AND WILL MY BANKRUPTCY HURT CO-SIGNERS ON MY CREDIT ACCOUNTS
Under Chapter 7 bankruptcy you are permitted to file individually, without including your spouse in the legal action. Debts that are in your name only will be included in the bankruptcy, and your unsecured debt will ultimately be discharged. If you have a debt that your spouse or another person co-signed, you will want to keep paying that joint debt and not discharge it. If you stop payment and discharge the joint debt, it is likely that the creditor will proceed to collect from your spouse or the co-signer as soon as your bankruptcy discharges and the case is closed. It is important that you and your spouse or co-signer understand that your bankruptcy should not have a negative impact on his/her credit as long as you continue to pay the debt. It is always recommended that you and your spouse or co-signer review your credit reports to insure that no errors have occurred.
Under Chapter 13 bankruptcy you are permitted to file individually even if you are married and have joint debt with your spouse. To protect your spouse or another person who co-signs on the account, the court will generally require you to pay the joint debt in full. As long as you make the required payments under the Chapter 13 plan, the creditor cannot act to collect from your spouse or co-signer unless it becomes clear to the court that the plan will not pay the entire amount owed. This allows you to repay the debt without the creditor approaching your spouse or co-signer for repayment. If you decide not to protect your spouse or co-signer, the creditor can ask the court for permission to sue your spouse or the co-signer in an effort to collect the debt. It is important that you and your spouse or co-signer understand that your bankruptcy should not have a negative impact on his/her credit as long as you continue to pay the debt. It is always recommended that you and your spouse or co-signer review your credit reports to insure that no errors have occurred.
CAN A USER ON MY CREDIT CARD BE REQUIRED TO PAY THE DEBT OWED IF I FILE BANKRUPTCY?
Yes. People listed as users on your credit card account might be held responsible for paying the accumulated debt on the account if you file a bankruptcy and don’t pay the debt as required by the terms of your credit agreement and attempt to discharge the debt. This rule, however, varies from credit card company to credit card company. It is essential that you read your agreement before filing bankruptcy to insure that the user on your account is protected.
If you have a credit card that is in your name only, and another person is listed as a user on your account, the creditor might be able to proceed against that person if you don’t continue to pay the debt as required by the terms of your credit agreement. if you discharge the debt, only if the terms of your credit agreement allows them to. It is essential that you read your credit agreement before you file bankruptcy to determine if the creditor will be able to proceed to collect from the card user.
WILL CREDITOR HARASSMENT STOP IF I FILE A BANKRUPTCY?
Yes. Each of your creditors will receive notice of bankruptcy filing. Upon receipt of this notice, your creditors must immediately stop all efforts to collect the debt. The creditor cannot call you at home or at work and they are prohibited from sending you collection letter.
HOW WILL FILING A BANKRUPTCY AFFECT LAWSUITS, JUDGMENTS AND GARNISHMENTS AGAINST ME?
As soon as your Chapter 7 or Chapter 13 bankruptcy is filed with the court, your creditor receives notice of the filing and must stop all efforts to collect the debt. It stops your creditor from filing a lawsuit against you. If a lawsuit was started before your bankruptcy was filed, but no judgment has issued, the bankruptcy will stop your creditor from getting a judgment against you. If your creditor received a judgment against you before you filed for bankruptcy relief, the judgment will stick. If you file a Chapter 7, you may not be obligated to pay the judgment since the debt would be discharged. If you file a Chapter 13, you might be able to satisfy the debt over the term of your payment plan, not to exceed 5 years. If the judgment placed a lien on your home, you may be able to remove it. If you are being garnished, it will stop the garnishment.
CAN FILING BANKRUPTCY STOP MY CAR FROM BEING REPOSSESSED?
Yes. As soon as your creditor receives notice of the bankruptcy filing, he will have to stop all attempts to repossess your car while the bankruptcy is pending. Under chapter 7, you will be required to pay all arrearage and stay current with your car payments if you want to keep your car. Under chapter 13 you may be able to restructure your car note, usually at a lower interest rate, and stop the repossession. Arrearages can be paid over an extended period of time.
CAN FILING BANKRUPTCY STOP MY HOUSE FROM BEING FORECLOSED?
Yes. As soon as the creditor receives notice of the bankruptcy, all efforts to foreclose will have to stop. Under chapter 7 you will be required to pay all arrearages and remain current on your payments in order to keep your house. Through a Chapter 13 you will be able to stretch out your arrearage payments over a longer period of time while maintaining current on your monthly payments to keep your house.
CAN I FILE BANKRUPTCY AND STILL MODIFY MY MORTGAGE?
Yes. You can file bankruptcy and modify your mortgage. In general, the modification process takes many months and varies from lender to lender. If you started modifying your mortgage prior to filing bankruptcy, it is important that you notify your lender about the impending bankruptcy. Many times they will need consent from your attorney to continue to communicate directly with you. It is also important that you keep your bankruptcy attorney up to date with the terms of any proposed temporary or permanent modification.
Also be aware that there are many people and companies that target people threatened with foreclosure. It is extremely important that you deal with your mortgage company or their approved agent ONLY. Many of my clients have reported that they received calls from companies offering mortgage modification and assume the offer is from their mortgage company. They get confused because the person on the other side of the line sounds like they are an agent of your mortgage company, but they really are working for themselves, separate from the mortgage company. Before you commit to anything, contact your lender to verify everything.
HOW CAN I REBUILT MY CREDIT ONCE MY CASE IS CLOSED?
After your bankruptcy case closes, you will receive offers from credit card companies to open up new accounts. Usually, your credit limit will be low, but as time progresses and you meet the terms of your credit agreement, your ability to borrow money at a lower rate of interest gradually increases with time. This allows you to rebuild your credit. It is recommended that you review your credit report each year. Keep in mind that under Georgia law you are entitled to one free copy of your credit report each year.
HOW CAN I GET A COPY OF MY CREDIT REPORT?
Under Georgia Law you are entitled to one free copy of your report per year. The major reporting agencies are…
The major reporting agencies are…
- Equifax
- www.equifax.com
- 1-800-685-1111
- Experian
- www.experian.com
- 1-800-397-3742
- Transunion
- www.transunion.com
- 1-800-916-8800
