February 18, 2020


BankruptcyIf I file bankruptcy, will I lose my property? What are exemptions?

Most people who file bankruptcy do not lose their property. This is because of exemptions (state and federal law) that protect property through the bankruptcy process. There are numerous exemptions in place that protect a person’s property, from exemptions that protect certain amounts of equity in cars, houses, domestic animals, to jewelry, household items, and more.
An important part of the free consultations that I offer is to analyze not only your debt, but also your assets to determine which exemption can be applied, and to what extent, to protect your property.

If I file bankruptcy, what will it do to my credit?

It is safe to say that bankruptcy has one of the greatest adverse effects on credit. However, for many people that I meet, it is not until they file bankruptcy that they can begin rebuilding their credit. For example, after filing bankruptcy, a person’s debt-to-income ratio dramatically improves, thereby adding to their credit-worthiness. Additionally, by filing bankruptcy, you can start building credit right away rather than struggling for years trying to pay off old debt. Bankruptcy will remain on your credit report for 7-10 years.

What is the difference between Chapter 7 bankruptcy and Chapter 13 bankruptcy

  • Chapter 7

Chapter 7 bankruptcy, commonly known as the “liquidation bankruptcy,” essentially wipes out most if not all your debt. Certain tax liability, domestic support obligations, etc., survive the bankruptcy. But essentially all secured and unsecured debt will be discharged through the bankruptcy process.
A chapter 7 usually lasts about 3 months, for administrative purposes. After a client files, there will be a hearing about 4 weeks later (known as the “meeting of creditors”) before a bankruptcy trustee, and about 2 months after this hearing, the client will receive his or her bankruptcy discharge.

  • Chapter 13

Chapter 13 bankruptcy, commonly known as the “wage-earner’s bankruptcy,” allows an individual to restructure their debt and make reasonable monthly payments toward that debt over 3-5 years. Chapter 13 bankruptcies are more complex than chapter 7 bankruptcies, but provide a great means to stop a foreclosure and catch up on mortgage arrears, to pay down certain tax liabilities, to retain property that would otherwise be lost in a chapter 7 bankruptcy, or for individuals who may not qualify for a chapter 7, among other reasons.

Reaffirmation Agreements in Chapter 7 – What if I want to keep the car I have a loan on?

An individual must list all creditors in their bankruptcy. This includes secured debt, such as a loan on a car. The bankruptcy code, however, provides a process whereby an individual may be able to retain their property by “reaffirming” that debt, or re-obligating themselves to the debt. Through reaffirmation agreements, many people are able to retain their financed vehicles.

Must I include all my creditors in my bankruptcy? – I don’t want to include my primary physician or relative I owe money to!

The simple answer is “yes.” If you owe a person or entity a debt, you must list them in your bankruptcy. This includes physicians and family members. However, after you file bankruptcy, you can voluntarily “repay” any debt you wish. This repayment will essentially be a “gift” since the creditors discharged in your bankruptcy are permanently enjoined from collecting the debt from you.

Pursuant to 11 U.S. Code § 528: "I am a debt relief agency. I help people file for bankruptcy relief under the Bankruptcy Code."

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