We are here to provide you Bankruptcy Help. We make the bankruptcy process easy and smooth. We understand it can be difficult to find good sources of information so we have provided a list of commonly asked questions to provide you with the bankruptcy help you deserve.

Below is a list of questions and answers that help you answer the questions, “How Do I File Bankruptcy?”, “What can bankruptcy do for me?”, and “I need bankruptcy help, where can I turn for more information?”

1. What documents do I need to complete bankruptcy?

     1. Prior 3 months bank statements

     2. Prior 6 months paystubs (and spouses if married)

     3. Most recent filed tax return (last 2 years if a ch. 13)

     4. Most recent mortgage statement (if you have a mortgage)

     5. Most recent car loan statement (if financing a car)

     6. Proof of vehicle insurance and registration

     7. Copy of all your collection letters (if you have any)

     8. Retirement statement and life insurance policy (if applicable)

2. Are there any alternative to filing bankruptcy?

If you have been a prompt payer in the past or raise the idea of filing bankruptcy, creditors may be receptive to lower your payments and/or schedule them over a longer period of time. Creditors generally know once you file bankruptcy they will probably collect only a portion of what is owed, if anything at all. Consumer credit counselors can also help you workout a repayment plan. Some of them work for non-profits and thus charge no fees. If these options either do not work or are not realistic for you and your financial troubles are long-term or if the creditors will not agree to an alternative payment plan informally, bankruptcy may be the best way for you to eliminate debt. If you need bankruptcy help, we are here to answer your bankruptcy questions and provide you your bankruptcy options. 

3. Are student loans discharged in a bankruptcy? 

Education loans granted by the United States government are generally not discharged in a Chapter 7 or Chapter 13 bankruptcy. They may be dischargeable, however, if the court finds you satisfy a rigid undue hardship test. For example, even if you show because of the student loan debt you will not be able to maintain a minimum standard of living you must also show you have made a good-faith effort to repay the loan prior to bankruptcy.

4. Does a bankruptcy eliminate all debt? 

The rules on this are different depending on the type of bankruptcy you file. Generally, under a Chapter 7 and Chapter 13 you can discharge all of your unsecured debt (i.e. credit cards). However, certain debts may not be eliminated in bankruptcy including but not limited to a home mortgage, debts for alimony or child support, certain taxes, debts for most government funded or guaranteed educational loans or benefit overpayments, debts arising from death or personal injury caused by driving while intoxicated or under the influence of drugs, and debts for restitution or a criminal fine included in a sentence on the debtor’s conviction of a crime. Some debts, such as debts for money or property obtained by false pretenses and debts for fraud or defalcation while acting in a fiduciary capacity may be declared nondischargeable only if a creditor timely files and prevails in a nondischargeability action.

5. Can I eliminate traffic tickets in bankruptcy?

Maybe. If your fine is for a criminal act as defined by the state government, it is not dischargeable in Chapter 7 or Chapter 13. If the fine is considered a civil penalty, it is not dischargeable in Chapter 7, but is discharged at the conclusion of your Chapter 13 case. If you need more bankruptcy help, give us a call today. 

6. Will I lose my home if I file bankruptcy? 

It depends. If you are in a Chapter 7 and are behind on your mortgage payments, your home could be lost. The mortgage lender in such cases usually asks the bankruptcy court to lift the automatic stay so that it can institute foreclosure proceedings, in which case the home will be sold and the proceeds used to pay off the debt. If you are not behind on your mortgage payments but have more equity in your home than the homestead exemption will exempt, then you may lose your home.

However, in a Chapter 13 proceeding, even if you are behind on your mortgage payments, if your plan includes paying back any missed mortgage payments (i.e. arrears) and you can get current on your postpetition mortgage payments before your confirmation hearing, then you should not lose your home. If you are current on your postpetition mortgage payments and Chapter 13 Plan payments, the home will not be lost as long as you continue to make those payments when due. How much equity you have in your home is a moot point if you complete the terms of your Chapter 13 Plan. 

If this does not answer your question(s) and you need more bankruptcy help, give us a call today.

7. How long will the bankruptcy be included on my credit report?

The Fair Credit Reporting Act (FCRA) allows a consumer credit report to include Chapter 7 and Chapter 13 bankruptcy information for ten years from the time the case is filed (i.e. date you filed your voluntary petition). The three major credit reporting agencies have policies which provide that Chapter 13 cases are reported for a shorter period, typically the seven-year period used for other credit information.

Mortgage creditors often rely upon the underwriting guidelines adopted by Fannie Mae, which require a four-year “waiting period” from the discharge or dismissal in a Chapter 7 case before you are eligible for a loan saleable to Fannie Mae. For a Chapter 13, the “waiting period” is two years from the discharge date or four years from the dismissal date. The four-years “waiting periods” may be reduced to two-years if extenuating circumstances can be documented.

8. What is a FICO Score and how is it calculated?

FICO® Scores are developed by Fair Isaac Corporation. The FICO Score provided by Experian is based on FICO Score 8. Many but not all lenders use FICO Score 8.

There are many different credit scoring models that can give a different assessment of your credit rating and relative risk (risk of default) for the same credit report. Your lender or insurer may use a different FICO Score than FICO Score 8, or another type of credit score altogether. Just remember that your credit rating is often the same even if the number is not. For some consumers, however, the credit rating of FICO Score 8 could vary from the score used by your lender. The statements that “90% of top lenders use FICO Scores” and “FICO Scores are used in 90% of credit decisions” are based on a third-party study of all versions of FICO Scores sold to lenders, including but not limited to scores based on FICO Score 8.

FICO Score 8 ranges from 300 to 850. Higher scores represent a greater likelihood that you’ll pay back your debts so you are viewed as being a lower credit risk to lenders. A lower FICO Score indicates to lenders that you may be a higher credit risk. There are three different major credit reporting agencies — Experian, TransUnion® and Equifax® — that maintain a record of your credit history known as your credit report. Your FICO Score is based on the information in your credit report at the time it is requested. Your credit report information can vary from agency to agency because some lenders report your credit history to only one or two of the agencies. So your FICO Score can vary if the information they have on file for you is different. Since the information in your report can change over time, your FICO Score may also change.

Source: usa.experian.com

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BANKRUPTCY HELP

Common Bankruptcy Terms:

Automatic Stay is an injunction that automatically stops lawsuits, foreclosures, garnishments, and all collection activity against the debtor the moment a bankruptcy petition is filed.

Bankruptcy Estate is all legal or equitable interests of the debtor in property at the time of the bankruptcy filing. (The estate includes all property in which the debtor has an interest, even if it is owned or held by another person.)

Chapter 7 of the Bankruptcy Code provides for “liquidation” (i.e., the sale of a debtor’s nonexempt property and the distribution of the proceeds to creditors).

Chapter 11 of the Bankruptcy Code provides (generally) for reorganization, usually involving a corporation or partnership. (A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. People in business or individuals can also seek relief in chapter 11.)

Chapter 13 of the Bankruptcy Code provides for adjustment of debts of an individual with regular income. (Chapter 13 allows a debtor to keep property and pay debts over time, usually three to five years.)

Collections and repossession are remedies sought by creditors against debtors who have defaulted on their obligations. Collections include any technique to get the debtor to make up the remaining debt, including use of a collection agency or the courts. Creditors may also have outstanding debts legally recognized, and then enforced against a debtor’s property involuntarily with garnishments, liens, or levies. Repossession of collateral is another technique used when property is pledged to secure a debt.

Commercial bankruptcy is a remedy available to businesses that are unable to pay their debts. Options include liquidation, in which many of the business’s assets are sold and the proceeds are divided among the creditors, and reorganization or restructuring, in which the business continues to operate according to a plan that allows for at least partial payment to creditors.

Confirmation is a bankruptcy judge’s approval of a plan of reorganization or liquidation in chapter 11, or payment plan in chapter 12 or 13.

Consumer bankruptcy is a method through which individuals may be able to get out from under insurmountable debt and make a fresh start, albeit with a negative impact on their credit ratings. As in commercial bankruptcy, there are two options: liquidate assets to pay off creditors, or file a wage-earner plan that allows the debtor to retain more assets while working to pay off his or her debts.

Credit counseling generally refers to two events in individual bankruptcy cases: (1) the “individual or group briefing” from a nonprofit budget and credit counseling agency that individual debtors must attend prior to filing under any chapter of the Bankruptcy Code; and (2) the “instructional course in personal financial management” in chapters 7 and 13 that an individual debtor must complete before a discharge is entered. There are exceptions to both requirements for certain categories of debtors, exigent circumstances, or if the U.S. trustee or bankruptcy administrator have determined that there are insufficient approved credit counseling agencies available to provide the necessary counseling.

Creditor’s meeting is a meeting of creditors required by section 341 of the Bankruptcy Code, at which the debtor is questioned under oath by creditors, a trustee, examiner, or the U.S. trustee about his/her financial affairs. Also called the “341” meeting. 

Creditors’ rights include a full range of options available to creditors to collect unpaid debts. These rights include collection actions, repossession, foreclosure, garnishment, replevin, attachment, obtaining a court judgment, liens, and forcing the debtor into involuntary bankruptcy. 

Discharge is a release of a debtor from personal liability for certain dischargeable debts identified in the Bankruptcy Code. A discharge releases a debtor from personal liability for certain debts known as dischargeable debts and prevents the creditors owed those debts from taking any action against the debtor to collect the debts. The discharge also prohibits creditors from communicating with the debtor regarding the debt, including telephone calls, letters, and personal contact.

Foreclosures are the actions taken when a mortgagor fails to make the required mortgage payments on time and the lender, or mortgagee, forces the sale of the property-often the debtor’s home-to pay off the debt. Foreclosures can be either judicial, which requires court involvement, or pursuant to a clause in the mortgage that allows for such sales.

Garnishment is a creditor’s remedy aimed not directly at the debtor but rather at a third party who owes money to the debtor or holds some of the debtor’s property. The garnishment process notifies the third party that the creditor intends to apply the third party’s property to satisfy the debtor’s debt. Typical garnishees, as the third parties are called, include the debtor’s employer and the bank in which the debtor has his or her accounts. 

Means Test or Section 707(b)(2) of the Bankruptcy Code applies a “means test” to determine whether an individual debtor’s chapter 7 filing is presumed to be an abuse of the Bankruptcy Code requiring dismissal or conversion of the case (generally to chapter 13). Abuse is presumed if the debtor’s aggregate current monthly income exceeds a statutorily set amount. The debtor may rebut a presumption of abuse only by a showing of special circumstances that justify additional expenses or adjustments of current monthly income. 

Plan is a debtor’s detailed description of how the debtor proposes to pay creditors’ claims over a fixed period of time.

Priority is the Bankruptcy Code’s statutory ranking of unsecured claims that determines the order in which unsecured claims will be paid if there is not enough money to pay all unsecured claims in full. For example, under the Bankruptcy Code’s priority scheme, money owed to the case trustee or for prepetition alimony and/or child support must be paid in full before any general unsecured debt (i.e. trade debt or credit card debt) is paid.

Property of the Estate is all legal or equitable interests of the debtor in property as of the commencement of the case.

Reaffirmation Agreement is an agreement by a chapter 7 debtor to continue paying a dischargeable debt (such as an auto loan) after the bankruptcy, usually for the purpose of keeping collateral (i.e. the car) that would otherwise be subject to repossession. 

Reorganizations & restructuring are methods by which a bankrupt business may reorganize itself in order to keep operating and pay off creditors at least part of what it owes. This commercial bankruptcy option has many advantages over liquidation, which requires selling off many assets and after which the business ceases to exist.

Secured Creditor is a creditor holding a claim against the debtor who has the right to take and hold or sell certain property of the debtor in satisfaction of some or all of the claim. 

Secured Debt is a debt backed by a mortgage, pledge of collateral, or other lien; debt for which the creditor has the right to pursue specific pledged property upon default. Examples include home mortgages, auto loans, and tax liens.

Schedules are detailed lists filed by the debtor along with (or shortly after filing) the petition showing the debtor’s assets, liabilities, and other financial information. (There are official forms a debtor must use.) 

Small Business Case is a special type of chapter 11 case in which there is no creditors’ committee (or the creditors’ committee is deemed inactive by the court) and in which the debtor is subject to more oversight by the U.S. trustee than other chapter 11 debtors. The Bankruptcy Code contains certain provisions designed to reduce the time a small business debtor is in bankruptcy.

Statement of Financial Affairs are a series of questions the debtor must answer in writing, concerning sources of income, transfers of property, lawsuits by creditors, etc. (There is an official form a debtor must use.)

Statement of Intention is a declaration made by a chapter 7 debtor concerning plans for dealing with consumer debts that are secured by property of the estate.

Workouts are non-bankruptcy agreements (i.e. settlement agreement) between debtors and creditors in which the creditors agree to take less money than the full amount owed or accept payments over a longer period of time than originally anticipated. Workouts have the advantages of being voluntary, less complicated, and less negatively perceived than bankruptcy. However, debt forgiven in a settlement agreement may be taxable whereas debt discharged in a bankruptcy is non-taxable. This may be a big deal if you have a lot of debt to get rid of. 

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