Bankruptcy Overview & Information

Bills.com Team
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Highlights


  • Understand the types of personal bankruptcy available.
  • Consult with an experienced attorney when considering bankruptcy.
  • Choose bankruptcy as an option of last resort.
4.5
/5.0
(8 Votes)

Advice to Help You Avoid Bankruptcy

Bankruptcy is a complicated and public legal process. Types of personal bankruptcy include Chapter 7 and Chapter 13. Both are options for consumers seeking to get debt relief.

Unfortunately, after the passage of the , it became harder to qualify for a liquidation bankruptcy, and there is now more complexity to an already intimidating process.

Chapter 7: Liquidation

When you hear the word “bankruptcy,” you are most likely to think of a bankruptcy. This type of bankruptcy is also called Liquidation.

A Chapter 7 is a court-supervised procedure by which a trustee takes over the assets of the debtor’s estate, reduces them to cash, and makes distributions to creditors. Some assets may be protected from creditors, based on state law. This means a court appointed trustee can sell everything you own to pay off your creditors, except property that is exempt.

Sometimes, there is little or no nonexempt property in a Chapter 7 bankruptcy case, so there may not be an actual liquidation of the debtor’s assets. These cases are called no-asset bankruptcy cases.

In most Chapter 7 cases, if the debtor is an individual, he or she receives a discharge that releases him or her from personal liability for certain dischargeable debts. The debtor normally receives a discharge several months after the petition is filed. Amendments to the Bankruptcy Code enacted in to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 require the application of a “” to determine whether individual consumer debtors qualify for relief under Chapter 7.

Under the new bankruptcy means test, if a debtor's income is in excess of certain thresholds, the debtor may not be eligible for Chapter 7 relief, and instead be forced to file for a Chapter 13 bankruptcy.

Chapter 13: Adjustment of Debts of an Individual With Regular Income

The formal title of a bankruptcy, Adjustment of Debts of an Individual With Regular Income, pretty much states what Chapter 13 is all about.

Chapter 13 bankruptcy is designed for an individual debtor who has a regular source of income, whether it be from a job or social security benefits. Chapter 13 is often preferable to Chapter 7 for people with valuable assets, because it enables the debtor to keep the asset. A common example is for someone who owns a home where the equity exceeds the limits under the home state’s homestead exemption.

A Chapter 13 bankruptcy also allows the debtor to propose a “plan” to repay creditors over time-usually five years. Chapter 13 is also used by consumer debtors who do not qualify for Chapter 7 relief under the means test, which went into place in 2005 with the Bankruptcy Reform Act.

At a Chapter 13 confirmation hearing, required as the basis for the order approving the plan and ordering the creditors to accept it (the hearing is called a section 341 hearing, or simply, “the three forty-one”), the court either approves or disapproves the debtor’s repayment plan, depending on whether it meets the Bankruptcy Code’s requirements for confirmation.

Chapter 13 is very different from Chapter 7 since the Chapter 13 debtor usually remains in possession of the property of the estate and makes payments to creditors based on the debtor’s anticipated income over the life of the plan.

Unlike Chapter 7, the debtor does not receive an immediate discharge of debts. The debtor must complete the payments required under the plan before the discharge is received. The debtor is protected from lawsuits, garnishments, and other creditor actions while he plan is in effect. The discharge is also somewhat broader (i.e., more debts are eliminated) under Chapter 13 than the discharge under Chapter 7.

Although it is now more difficult to qualify for a Chapter 7 and more people are required to enter into repayment plans, bankruptcy is still available to most people in need of its protection. Several types of bankruptcy are available, depending on your assets, income, and financial situation.

Let Bills.com point you in the right direction, first to evaluate what your debt resolution options are, and whether you can avoid bankruptcy, and then to see if you can qualify for bankruptcy and what form is best suited for your needs. You will learn about the different types, the recent changes to the law, and which debts can and cannot be discharged. If you are ready to file, review our instructions on filing bankruptcy.

Be aware though, bankruptcy should be a last resort and will damage your credit score for up to 10 years. Before file for bankruptcy, investigate whether consolidating your debts is better solution, one that may help you avoid bankruptcy.

Look at each bankruptcy alternative, so you can weigh the pros and cons of all the against each other. That's the best way to solve your debt problems and protect your financial future.  

Lastly, seek counsel from an attorney with bankruptcy experience.

4.5
/5.0
(8 Votes)

73 Comments

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  • 35x35
    Apr, 2013
    Charles
    This was some really helpful information! Especially the section on chapter 13 bankruptcy. Thanks for informing the public on this. It really is nice to have so much knowledge, right at your fingertips.
    1 Votes

  • 35x35
    Jun, 2012
    Stacey
    I am an American who will marry a Canadian soon. I filed chapter 7 in the US a year ago. I was told it won't affect me in Canada since I have to build Canadian credit. Is that true? Also, how will my bankruptcy affect my Canadian husband? We will reside in Canada.
    1 Votes

    • 35x35
      Jun, 2012
      Bill
      There is a theoretical possibility the Canadian credit reporting agencies could connect the dots and determine you are the same Stacy who filed bankruptcy in the US a year ago. As a practical matter, I do not believe the credit reporting agencies are advanced enough to do so. (Readers, please chime in if you have experience to the contrary.) As a result, your credit file in Canada will start with a blank slate.

      Your US bankruptcy as a single person will have zero impact on your future spouse, whether he or she is American, Canadian, or a citizen elsewhere.
      1 Votes

  • 35x35
    May, 2012
    Michael
    Can anyone tell me if i can file chapter 7 or 13 on my medical bills? I have about $60 grand total in debt but i am also disabled and receive about $1,000 a month. I really would like to improve my credit but i am not sure what i should do? Would I be a candidate for 7, 13 and if so would i do i choose. Do you know if there are lawyers that deal with this stuff for low-income individuals?
    0 Votes

    • 35x35
      May, 2012
      Bill
      Please see the Bills.com resource Means Test for Bankruptcy to learn if you qualify for a chapter 7 or 13 bankruptcy.

      Contact your country bar association to learn the name of the organization in your area that provides No-cost legal services to people with no or low income in your area. Make an appointment with that organization, and bring all of your documents relating to your debts to your meeting. The lawyer you meet will advise you accordingly.
      0 Votes

  • 35x35
    May, 2012
    Holly
    I filed for bankruptcy in 2008. It was dismissed in late November 2008 as I decided not to pursue it further. It still appears on my credit report. How long are dismissals reported on credit reports? Is there anything I can do to eliminate the report of the bankruptcy dismissal on my credit report?
    0 Votes

    • 35x35
      May, 2012
      Bill
      I am not optimistic you can dispute a public record entry on your credit report successfully. However, there is no harm and little cost to try. See the article I just mentioned to learn how.
      0 Votes

    • 35x35
      May, 2012
      Holly
      Another question or two or four - sorry - this website is so incredibly helpful. I want to make sure that the SOL (CA) has passed of four years. I stopped paying all credit cards in March/April 2008. I filed for bankruptcy in June 2008 and it was dismissed in November 2008. I have done nothing to pay most of my debts since then (I negotiated a settlement with two of the credit cards), but have one very large debt (30K+) still outstanding with a large bank. For some unknown reason (the Good Lord smiled down on me), they never came after me for the money. The large debt with the large bank shows on my credit reports: "debt included in or discharged through Bankruptcy Chapter 7" and "included in bankruptcy" and "unrated or bankruptcy." Am I safe to assume the SOL has passed and they cannot successfully collect the debt? If so, is there anything you recommend me do to start to clean up my credit report. I went through an awful and traumatic divorce that left my finances in shambles. I would really like to improve my score as I've been living without any sort of credit for the last 4 years. I do not want to rack up any more credit card bills (I've learned my lesson) but I would like to buy another house some day. (I had to short-sell my house in 2008 as part of my divorce.) ANy advice would so very much appreciated.
      0 Votes

    • 35x35
      May, 2012
      Bill
      I will assume you really meant "dismissed" when you used that word, and did not mean to say "discharged." A bankruptcy court may dismiss a case it finds defective. Alternatively, a bankruptcy court will discharge debts at the conclusion of a successful bankruptcy filing.

      Under some state laws, the clock on a statute of limitations for a breach of contract will be paused during some legal actions, such as a bankruptcy filing. This pause is called "tolling." If your state has such a tolling rule, the statute of limitations would have an additional 5 or 6 months, depending on the exact dates of filing and dismissal.

      You indicated you reside in California, which has a four-year statute of limitations for breach of written contracts. See the Bills.com resource California Collection Laws to learn more about California's rules. Here in your case, the statute of limitations would probably run for four years from the date of breach (the date you missed the payment) plus five or six months. I wrote "probably" because it is possible you may have agreed to use another state's rules when you signed the contract for the credit card. If there is a choice of laws clause in the contract for another state, the credit card issuer may try to argue to a California court that a different set of laws may apply to your case, should the case ever go to trial.

      In all states but North Carolina and Wisconsin, the passing of a statute of limitations for a breach of contract does not mean the debt is canceled, or no longer collectible. The statute of limitations is an affirmative defense a defendant can raise in a trial to ask the judge to dismiss a case. Unfortunately, some Internet commentators over-simplify the statute of limitations defense into something like, "when a statute of limitations passes a debt is no longer collectible," but that is untrue. It is a defense and nothing more, except in the two states I just mentioned, where it is a barrier to collections.

      See the Bills.com resource 7 Techniques to Improve Your Credit Score to learn how to raise your credit score.
      0 Votes

    • 35x35
      May, 2012
      Holly
      Yes, I did mean dismissed. I did not qualify for chapter 7 bankruptcy because of my income. The trustee moved to have my case changed to a chapter 13 bankruptcy. I elected not to pursue the chapter 13 and 1) wait to see what the creditors would do and 2) work the debts out myself. I appreciate the information re: the tolling of the SOL re: my bankruptcy. I think I will not awake the sleeping giant and hold out until November until I do anything further with my credit.
      0 Votes

    • 35x35
      May, 2012
      Holly
      Also, what about this law that says the SOL is governed by where I live and signed the contract - which is the state of CA: What state should I use in figuring out the Statute of Limitations? The state statute can be either where the debtor lives or where the contract was entered into. The creditor does have the right to choose the state with the longer statute but the creditor's or collector's location is moot. This is covered in Section 811 of the FDCPA and in Consumer Credit Protection Sec. 1692i. Here is the rule; CONSUMER CREDIT PROTECTION Sec. 1692i. --2) in the case of an action not described in paragraph (1), bring such action only in the judicial district or similar legal entity - (A) in which such consumer signed the contract sued upon; or (B) in which such consumer resides at the commencement of the action
      0 Votes

    • 35x35
      May, 2012
      Bill
      We are at a tricky intersection of contract law and civil procedure rules, with the added twist of a federal rule — the FDCPA. The FDCPA rule you mentioned sets the venue of the action. The venue, the rule you quoted states, must be in a forum convenient to the defendant now, or where the contract was signed. However, in contract law, the parties are free to decide in advance which state laws they will follow if there is ever any litigation that arises from the contract. This means that if you sign a contract that says, "If there is ever a controversy arising from this contract, we will agree to use State A law," that means even though you reside in State B and an action is brought against you there, you have agreed to use State A's rules.

      Where this gets complicated is local judges will often try to find ways to avoid following choice of laws clauses in contracts, and usually use public policy or fairness arguments to get around them. Instead, judges will use their local, familiar laws.

      My point is, just because a trial occurs in State A, it doesn't necessarily mean the court will follow all of State A's rules.
      0 Votes

  • 35x35
    May, 2012
    Stephen
    I have over 40,000 in credit card debt. I don't own my home or my car. I lost my job last year and was able to find something at one third of my salary. My wife is out of work. Should I take my 401-k and pay what I can. I know the tax ramifications of early withdrawal and I would be left with nothing for retirement.
    0 Votes

    • 35x35
      May, 2012
      Bill
      Stephen, your retirement accounts should be beyond the reach of any creditor, so I don't think that tapping into them to repay your debts is a good option.

      I suggest that you speak with a debt settlement firm and with a bankruptcy attorney. If the monthly payment for the settlment program is unaffordable, then bankruptcy becomes a more attractive option.
      0 Votes

  • 35x35
    Feb, 2012
    Lawrence
    I've been looking into my options with my high debt, and bankruptcy seems like a pretty valid option. I know that it's a last resort and will affect my credit for ten years, but I'm not sure what to do about the loans that I can't pay off. I've been looking into a bankruptcy attorney a for a consultation. This article has helped me clear up some of my doubts, but also brought up more. Thanks for covering so many of the complications with debt and bankruptcy.
    0 Votes

  • 35x35
    Feb, 2012
    christine
    My husband and i split after 17 years he moved back to Mexico and left me with over $16,000 in credit cards and loans. I have never been late on a payment but i just can't live with 2 kids with what i have left the cards are $640.00 a month and loans are $200.00 a month..I am listed on the llc of the insurance office my dad started..i am on the house the office is in which still has a mortgage on it and also listed on the land we owe as a family ..i have tried to get loans to consolidate using the office building and the land but no bank will help me..I am thinking of bankruptcy. Is this something i could do being listed on 2 properties?
    0 Votes

    • 35x35
      Feb, 2012
      Bill
      Consult with a bankruptcy lawyer who will evaluate your financial situation, including your assets and debts. I recommend that you read about other debt relief options, including debt settlement.
      0 Votes

  • 35x35
    Jan, 2012
    Sarah
    I live in nc and I have a debt for around 20 thousand. I do not own nothing under my name except a bank account. I'm really thinking about bankruptcy, but there is one account that has my name and my husbands name on it. If I file bankruptcy would it affect him? There is one car under his name. My name is not on there. Also about 2 weeks ago I received a civil summon from a credit card company who been sending the bills to my old address so I forgot about it. I owe them $5,000 and I don't know what to do!! What can I do? Can I file bankruptcy without affecting my husband and what do I do about this civil summon?
    0 Votes

    • 35x35
      Jan, 2012
      Bill
      Taking your name off of an account and then quickly filing bankruptcy could be viewed as an improper transfer of assets. I strongly recommend for you to speak with a bankruptcy attorney as soon as possible. You did not specify how much money is in the bank account. Ask the lawyer if there is a way to properly dissipate the funds in that account, if he advises that you can't immediately take your name off of the account. Maybe you could properly use the money to pay for the bankruptcy lawyer or for some of your fixed expenses such as housing, food and clothing, and transportation.
      If you do not share the debts with your spouse and are not in a community property state, then your spouse should not be responsible for your debts. He will not be directly affected, but will be affected indirectly by however the bankruptcy affects you.
      0 Votes

  • 35x35
    Oct, 2011
    Terri
    I filed a chapter 7 bankruptcy last year and was discharged in December 2010. I have been making voluntary payments on my leased vehicle since then. I would like to surrender that vehicle now because although I have made payments on time they are not reporting them to the credit reporting agencies. I have decided to purchase another vehicle so I can start re-establishing credit. How will this surrender be reported by the lease company?
    0 Votes

    • 35x35
      Oct, 2011
      Bill
      Did you reinstate the lease? A reinstatement is a document the debtor signs voluntarily to continue to restore personal liability for a liability discharged in bankruptcy. If you signed a reinstatement, then the default you plan will appear on your credit report. If you never signed a reinstatement, then a default or other derogatory will not appear on your credit report.
      0 Votes

  • 35x35
    Sep, 2011
    Chris
    My parents are looking into filing a bankruptcy without an attorney (as they cannot afford to hire one). They are elderly and only have social security income. They have one mortgage (60K) and an equity line of credit (35K) on their house which is now valued at around 100K. With the drought, their foundation has cracked, the floors have lifted and they cannot afford the 15K quoted to fix the foundation. They have decided to walk away from the house and wonder if it is possible in a Chapter 7 bankruptcy (they qualify based on income) There are no other assets beyond the house. Is there anything complicated to dealing with the two mortgages in a self filing?
    0 Votes

    • 35x35
      Sep, 2011
      Bill
      I do not recommend pro per (do it yourself) bankruptcy filings. Bankruptcy law is technical, counter-intuitive in some places, full of jargon, and sometimes unnecessary. It may save money for your parents in the long run if they consult with a bankruptcy lawyer. Here, for example, if their only source of income is Social Security, and your parents otherwise have no assets, they may be considered "judgment proof" in their state of residence. A one-hour visit with a bankruptcy lawyer will reveal the costs and benefits to each of their options, including not filing at all.
      0 Votes

    • 35x35
      Sep, 2011
      Chris
      Thank you for your reply. They earn so little income and have no assets so they are in fact judgement proof but they are old-fashioned and afraid of having the outstanding debts and creditors harassing them so prefer to do the bankruptcy. We simply do not have 1000$ for them to consult with an attorney. I understand that you do not recommend this. Could you advise though if there are special situations with 2 mortgages in a chapter 7? All I can find is information for those who want to keep their house in a Chapter 13 and strip off the 2nd lien. I'm hoping that the Chapter 7 will allow them to discharge both mortgages.
      0 Votes

    • 35x35
      Sep, 2011
      Bill
      In a chapter 7 filing, there is nothing special or different about the debtor having liability for more than one mortgage or deed of trust. Each debt and creditor requires some work on the lawyer or paralegal's part, but a second mortgage is really just another line in a filing.

      Consider the following thought: Call the county bar association in the county in which your parents reside. Ask for the names of the groups in the area that provide no-cost legal services to people with low and no income. Have your parents make an appointment with that organization, and ask them to bring all of the documents they can find relating to the mortgages to their meeting. The lawyer they meet will give them more precise advice than I can here, and may offer to file the chapter 7, depending on that organization's rules.

      If the lawyer they meet cannot or will not file for them, then I recommend the Nolo Press series of bankruptcy books. Find these in large bookstores, or at the Nolo Press Web site. If your parents decide to file pro per tell them to be careful and methodical as they complete the filing. Most pro per filings fail, and I confess I do not know why, but I suspect it is due to sloppy or incomplete work.
      0 Votes

  • 35x35
    Sep, 2011
    Mike
    How far back do you have to report bills in a bankruptcy? I got a few back in 2003-2007. I don't see anything on my credit report about them but I don't want it to haunt me later.
    0 Votes

    • 35x35
      Sep, 2011
      Bill
      Err on the side of caution. Include each and every debt you can find in your bankruptcy. When in doubt, add it to your filing. Be relentless and exhaustive in your search for old debts, and do not rely on your credit report as an authoritative or complete record of your debts.
      0 Votes

  • 35x35
    Sep, 2011
    Lise
    Thanks for the informative post! I've also heard that before you file, it can be a good idea to consult with a bankruptcy attorney. Would you agree?
    0 Votes

    • 35x35
      Sep, 2011
      Bill
      I always recommend people considering bankruptcy to consult with a lawyer experienced in bankruptcy law. The success rate in lawyer-filed bankruptcy cases is almost 100%, whereas the success rate of pro per bankruptcy filings is much less.
      0 Votes

  • 35x35
    Sep, 2011
    Melanie
    I an 42 years old and have almost $73,000 in Subsidized and unsubsidized Stafford Loans (Student Loans). I have no income and haven't for 8 years. I keep them in deferment or forbearance. What options, if any, do I have for these loans that have me overwhelmed? Is there a way to file bankruptcy on them?
    0 Votes

  • 35x35
    Sep, 2011
    Beejay
    Hi, We used to have two loans with countrywide which were then turned over to bank of america, we applied for modification and was approved, the problem is that the 2nd loan is not included and it was sold to a collection agency, we are now and have been current with our principal loan/modification terms but we do not know what to do with the 2nd that is in collection, what would be the best way to deal with this? We tried contacting the collection agency and the amount they were asking us to pay for every month is close to $400 which is going to make the modification useless. We appreciate your help. Thank you.
    0 Votes

    • 35x35
      Sep, 2011
      Bill
      I think your best step is to speak with a loan officer about a VA loan. He or she will run your credit and review your debt-to-income ratio and let you know if you need to pay down the car loans, to improve your DTI.

      Make sure that you account for any taxes that may be owed on the stock sales, before you dispose of the funds.
      1 Votes

    • 35x35
      Sep, 2011
      Bill
      The collection agent bought the collection account for a significant discount from the face value amount of the account. It probably paid no more than 10 cents on the dollar. The collection agent has the legal right to collect the face value balance of the loan, but given that it paid much less for the collection account, it has considerable room to maneuver. Negotiate a different monthly amount, or a lump-sum settlement.
      1 Votes

  • 35x35
    Aug, 2011
    Barbara
    My Chapter 7 Bankruptcy was discharged in 2009. It included both my mortgage and my Home Equity of Line of Credit (from the same lender). The property was foreclosed on (as expected), but shortly after that I began receiving collection notices for payment of the HELOC. When I questioned this, the lender told me that they have to foreclose on this loan in order to remove it from their books. I've never heard of this and I don't understand what there is to foreclose on. The lender already took the house and sold it! What's going on here? Is this normal or are they trying to pull a fast one?
    2 Votes

    • 35x35
      Sep, 2011
      Bill
      I believe your obligation was discharged in the bankruptcy, but you need to review your bankruptcy paperwork to confirm this. Contact the attorney that handled your BK and find out what he or she says.
      1 Votes

  • 35x35
    Aug, 2011
    Patty
    Can a parent plus loan that I have with American Education Services be included in a Chapter 7 bankruptcy?
    0 Votes

    • 35x35
      Aug, 2011
      Bill
      It is possible to include Parent Plus loans in bankruptcy, but it is very difficult, as it is with all student loans. You essentially have to prove to the court that there is no reasonable expectation that you will ever have the means to repay the loan. Consult with a bankruptcy attorney to see if your situation will allow you to include it or not.
      1 Votes

  • 35x35
    Aug, 2011
    Heather
    Live in Az, retired from Bridgeport Police Dept., Connecticut. Getting divorced with no children. Can my pension be attached/garnished for alimony, and under what conditions? Any help is much appreciated in advance, Thanks
    0 Votes

    • 35x35
      Aug, 2011
      Bill
      Your wisest course is to consult with an attorney experienced in family law. He or she will let you know what the risks are for garnishment, as well as helping you to negotiate favorable terms for the divorce.
      0 Votes

  • 35x35
    Aug, 2011
    peter
    Hello, I left a house due to abuse wich i cosigned with a partner. I attempted to suit for a partition, however we never found the co-owner. My house is about to get foreclosed. An attorney recomended chapter 13 bankrupcy to remove liablity for the loan. Is she correct? I have already paid her the fees to start the process.
    0 Votes

    • 35x35
      Aug, 2011
      Bill
      I am loath to contradict the legal advice of a reader's lawyer. First, the reader's lawyer has all relevant facts at hand, which I never do. Second, the reader's lawyer probably has a better understanding of the local laws in play than I. My first thought would be chapter 7, but again, I have no information about your personal finances, and can only guess if you qualify. Also, I do not know if you have a desire to occupy and retain the property. My conclusion: If you have serious concerns about chapter 13, talk to your lawyer again. Get a second opinion from another local lawyer if you have doubts.
      0 Votes

  • 35x35
    Jul, 2011
    Kathy
    If a relative made me beneficiary on a life insurance policy is that money exempt from Chapter 13. I have been in bankruptcy 2 years.
    0 Votes

    • 35x35
      Jul, 2011
      Bill
      I can't give you legal advice, but will share a few thoughts with you.

      First, it is not clear to me if you are asking if you have to report that you were made a beneficiary or if you have to report receiving funds from a payout on a life insurance policy for which you were a beneficiary. It is my guess (and please note that word choice) that you don't have to report the simple fact that were named a beneficiary.

      If you received a payout, I look at it differently. In my view, the payout is likely part of the bankruptcy estate. How the money you receive affects your bankruptcy depends, in part, on the exemptions in your state. Other issues may be what percentage of your debts the court is requiring you to repay and how the money you received affects your Chapter 13 "liquidation analysis."

      Your best course of action is to speak with an attorney who can provide legal counsel. The last thing you want to do is blow up your bankruptcy case if you were required to report the money and failed to do so.
      0 Votes

    • 35x35
      Sep, 2011
      kim
      If I went to a lawyer for the possibility of Ch 7 or Ch 13, & pd him $300.00, for retainer, yet he never took any of my info or opened my case. never met w/ me once or even talked to me. Decided not to file the bankruptcy,let the attny know, before he did anything. Am I entitled to my money back?
      0 Votes

    • 35x35
      Sep, 2011
      Bill
      If you gave the lawyer no details, then there is no possibility the lawyer could have started work on the case, unless the lawyer is clairvoyant. So yes, you are entitled to a full refund because the lawyer put no time into the case. Consult with your state bar association if you do not receive a prompt refund.
      0 Votes

  • 35x35
    Jul, 2011
    Ken
    My wife's house in New Mexico is in the foreclosure's process . Only her name is on the loan. If she file for bankruptcy, will the bank/collector goes after my assets? we live in california. Thank you in advance.
    0 Votes

    • 35x35
      Jul, 2011
      Bill
      California is a community property state (as is New Mexico), so it is possible that a if judgment-creditor received a California judgment against a California resident, the judgment creditor could attempt to reach that resident's community property. In other words, property shared by the spouses. However, in practice, this is unlikely because the process is complicated.

      Consult with a California lawyer for a more precise answer that is tailored to your particular facts.
      0 Votes

  • 35x35
    Jul, 2011
    sarah
    I have a private student loans at a variable interest rate in which the company has told me will never be considered for consolidation. I've also been told by debt consolidators that they will not deal with these loans. The amount of the loan is $70,000 and my annual income is only $35,000. I can only seem to make a payment that is a small amount over the interest due is there anything I can do? I looked at your page on Student loan bankruptcy for private loans and I'm aware that if they accept my filing it will not absolve all the debt will my credit score also be ruined by this? Thank you
    0 Votes

    • 35x35
      Jul, 2011
      Bill
      Which company told you it would not refinance, which is another word for consolidate, your student loan? Just because one lender refuses to refinance or consolidate your student loan does not mean every other lender will not, although given the size of your debt it may be the case that no one will be willing to consolidate your loans.

      Regarding bankruptcy and your credit score, please see the Bills.com resource The Higher a Consumer's Credit Score, the Farther it Will Fall With a Short Sale, Bankruptcy, or Foreclosure.
      0 Votes

    • 35x35
      Jul, 2011
      sarah
      The company that I have the loan through. National Collegiate Trust owns the loan and I go through American Education Services to pay them and every time I ask them if there is something I can do they tell me because it's private it doesn't qualify for consolidating. So I'm stuck with this variable interest rate which is good now but could change anytime and that what I'm afraid of.
      0 Votes

    • 35x35
      Jul, 2011
      Bill
      When your lender tells you can't consolidate your student loan, because it is a private loan, what they are really saying is they don't offer any consolidation product that can help you.

      You can see if any other lenders are willing to consolidate your debt, though you may find that adjustable rate loans are the kind that are usually offered by other lenders, too.
      1 Votes

  • 35x35
    Jun, 2011
    John
    will I lose my job if I file for bankruptcy? Will they find out??
    0 Votes

    • 35x35
      Jun, 2011
      Bill
      Generally speaking, no, employers are not notified of an employee's bankruptcy filing. However, there are some jobs where a bankruptcy may result in a job termination or a status change. For example, some government jobs involving high security clearances require that the employee maintain a pristine credit score. Similarly, jobs with a high fiduciary trust, such a comptrollers, may be jeopardized if the employee files for bankruptcy or allows a foreclosure.

      In my experience, employees with these rare jobs are told by their employers that keeping a clean credit rating is a condition of employment. For the rest of us, a bankruptcy or foreclosure does not matter to our employers. Ask your HR office to be sure.
      0 Votes

  • 35x35
    Jun, 2011
    Tom
    I got the best bankruptcy advice from these guys. Very informative
    0 Votes

    • 35x35
      Aug, 2011
      Blanche
      Excellent comments from Bill! Thank you very much!
      0 Votes

  • 35x35
    May, 2011
    John
    My mother's spouse declared bankruptcy (I believe it was Chapter 13) in Pennsylvania, before they were married. He recently passed away, leaving an obligation to his creditors in the low double digits. Is my mother now responsible for paying those debts, either from the value of the estate which they created together since the original declaration (prior to marriage), or from any proceeds relating to a life insurance policy of which she is the beneficiary? or do these debts retire with his passing? If there is liability remaining, is there a way to delay payments until appropriate funding requirements can be met by my mother, or what is the relevant timeline associated with repayment?
    0 Votes

    • 35x35
      May, 2011
      Bill
      A decedent's assets (things he or she owned and rights he or she had) and liabilities (unpaid bills and obligations) are called the decedent's estate. In a process called probate the estate's executor will tally all of the assets and liabilities. If the assets are greater than the liabilities, all of the decedent's bills and obligations are paid. The remainder is distributed according to the decedent's will or the laws of the decedent's state of residence. If the decedent's liabilities are larger than the assets, then the executor will follow the state distribution rules. This is a simplified explanation, but it conveys the general idea.

      Some unscrupulous collection agents will telephone the spouse or family of the decedent and say they owe the decedent's debts, and this claim is almost certainly untrue. If you receive such a call, refer the collection agent to the executor, and do not pay the caller a dime unless the executor explains why you owe the debt.

      In summary, the decedent's estate must go through the state's probate process. Consult with a lawyer in the decedent's state who has probate experience to learn how to begin this process.

      You mentioned a life insurance policy. The beneficiary (be it the decedent's spouse, offspring, long-lost nephew, or mail carrier) has no liability for the decedent's debts by virtue of being a beneficiary. In other words, just because a person is lucky enough to receive a life insurance benefit does not mean he or she is responsible for the decedent's debts, too.
      0 Votes

  • 35x35
    May, 2011
    Lisa
    An attorney has filed for summary judgment against me due to nonpayment of a credit card. I am unemployed at this time and looking for work. There are no defenses since I do owe this money. I want to file for bankruptcy, but I don't even have the money to do that yet. My questions is this: If judgment against me is given, will this debt be wiped clean when I file for Chapter 7 in New Hampshire? I have no assets.
    0 Votes

    • 35x35
      May, 2011
      Bill
      In general, judgments can be discharged in a bankruptcy unless they are related to fraud or child support. Consult with a New Hampshire lawyer who has consumer law experience to learn more about your rights as a New Hampshire resident. You mentioned you cannot afford a lawyer. Call your county bar association and ask for the name of the organization that provides no-cost legal services to people in your area who have low or no income. Make an appointment with that organization and bring all of the documents relating to the debt and motion for summary judgment to your meeting. The lawyer you meet will help you file a response to the motion, and advise you in detail regarding your bankruptcy question.
      0 Votes

    • 35x35
      May, 2011
      Lisa
      Thank you so much for the information about the no fee legal representation. You have relieved a lot of my stress. Thanks again!!
      0 Votes

    • 35x35
      May, 2011
      Bill
      No problem Lisa. That's what we take a lot of pride in doing, helping folks out with money problems. Good luck. bills.com
      0 Votes

  • 35x35
    May, 2011
    Robert
    I have a question about Chapter 7 bankruptcy and home equity line of credit. I have met with an attorney and am considering Chapter 7 as an option for rebuilding my financial troubles. The attorney I met with said if I kept my house with the first mortgage the equity line would stay as it is. If I default on the equity line prior to filing Chapter 7, why would'nt the equity line be listed in the bankruptcy case? Any information would be helpful? I have also heard of lien stripping? Does this apply to my situation. Thanks
    0 Votes

    • 35x35
      May, 2011
      Bill
      Arizona is in the Ninth Circuit Court of Appeals, which decided that Chapter 13 bankruptcy strips personal liability from mortgages and deeds of trust. (This is something of an oversimplification, but is accurate enough for the sake of this discussion here.) As part of any bankruptcy filing, the debtor must list all assets and liabilities, regardless of the payments being current or delinquent.

      Regarding the lien stripping, ask your attorney if the following cases apply to yours:
      • In re Zimmer, 313 F.3d 1220 (9th Cir. 2002)
      • In re Lam, 211 B.R. 36 (9th Cir.BAP 1997)
      • In re Hill, 440 BR 176 (2010, S.D.Cal)

      Consult with your lawyer for specific answers to your questions.

      0 Votes

  • 35x35
    May, 2011
    bonnie
    Can a medical provider refuse or fire you from practice if you have filed bankruptcy?
    0 Votes

    • 35x35
      May, 2011
      Bill
      I am unaware of any state or federal law that prohibits an employer from terminating the employment of a person who files for bankruptcy. (Reader's: Please comment below if you know of any such rule.) For most jobs, an employee's financial status is irrelevant. However, in jobs where the employee handles the employer's finances, or where national security is involved, it makes sense for the employer to keep an eye on the employee's credit score and financial health, and to sever the employment of a person the employer cannot trust.

      You mentioned a medical provider. If the employee is responsible for billing or finances, then the employee should explain the circumstances behind their bankruptcy. If the bankruptcy is due to a once-in-a-lifetime event, then if the employer has any sense at all, it should ignore the bankruptcy. If the employee has no connection to billing or finance, I fail to see how a bankruptcy has any impact on that person's ability to provide care to patients.
      0 Votes

  • 35x35
    May, 2011
    Sam
    Can I escape wage garnishment for a personal injury which was found as an intentional tort thru bankruptcy? If so how and which one
    0 Votes

    • 35x35
      May, 2011
      Bill
      The few facts you provided in your question lead me to conclude you are deep into a gray area. Potentially non-dischargeable debts include several varieties of fraud, and debts incurred for willful and malicious injury by the debtor to another or the property of another. See 11 U.S.C. §523 and 11 U.S.C. §1328, and consult with a lawyer who has bankruptcy experience.
      0 Votes

  • 35x35
    Apr, 2011
    Tony
    I have a question. My dad filed bankruptcy a couple of years ago for issues he was having. I noticed recently on my credit report that my dads bankrupty was in my credit report. My dad has a very different name than I do but I found out the reason why his bankruptcy was in my credit report is because they put my name on the box that asks if he has any other nicknames. I spoke with his lawyer and he wants to charge me for this error. My question is, is he correct in charging me for something he screwed up? Because it sounds like he wants to sue the credit agencies.
    0 Votes

    • 35x35
      Apr, 2011
      Bill
      Ask the lawyer exactly what services will be rendered for the fees you will pay. As for a lawsuit, who would be the plaintiff (the harmed party)?
      0 Votes

    • 35x35
      Apr, 2011
      Tony
      well he stated that the fee would be to fix the issue at hand with the credit agencies. He stated that if they dont fix the issue and do not take off my dads bankruptcy from my credit report then he would sue the agency for millions (that is what he said) but i dont feel i should pay anything since it is not my fault that this happened
      0 Votes

  • 35x35
    Mar, 2011
    Vicki
    Can I file bankruptcy to stop a garnishment against Social Security? I was receiving SSDI payment for a few years and they claim I was overpaid, but they will not explain why. They are claiming $70,000, the entire amount I received including dependent payments.
    0 Votes

    • 35x35
      Mar, 2011
      Bill
      Open a negotiation with the Social Security Administration to learn why it believes you are ineligible for benefits, and explore your repayment and deferral options if you were not. See the Bills.com resource Social Security Overpaid Me & Now Wants It Back for a list of steps you can take and your options. After you exhaust your options, then talk to a lawyer in your state who has bankruptcy experience to learn if this is a dischargeable debt.
      1 Votes