Bankruptcy FAQ
Let Us Help You Get The Answers You Need
At Gold Lange, Majoros, & Smalarz, P.C., in Metro Detroit, we put more than 100 years of combined experience to work for you in your bankruptcy case. You can rest easier as a result, knowing you are in the hands of a legal team that knows what it is doing.
Specific Answers Make For A Successful Bankruptcy Case
You will also rest easier knowing you are getting real answers to your questions. We have a comprehensive knowledge of how bankruptcy works that cannot be communicated through one simple bankruptcy FAQ page.
You should also be skeptical of any frequently asked questions page to provide you with all the answers you need. Practiced right, bankruptcy is a highly specific legal process. For that reason, while general answers are fine for starters, they should not be relied upon for final decisions.
With that said, we here provide at least two resources that address some commonly expressed concerns by people considering bankruptcy. We provide one FAQ addressing the different kinds of debts handled in a bankruptcy. We also provide one FAQ offering an overview of bankruptcy information in general.
Our attorneys excel at providing the kind of personally-tailored answers to questions that make for a successful bankruptcy case. Our lawyers’ secret? Taking the time to learn about you, the client.
Do You Want Answers That Apply To Your Actual Situation?
Call us to schedule a free initial consultation when you decide you would like to hear about how the bankruptcy laws would apply to your own circumstances. You can call us at 248-350-8220. You can also contact us online if you like.
Does Filing Bankruptcy Ruin My Credit Forever?
People work hard to establish a good credit score and often want to know what impact bankruptcy filing will have on their credit. A chapter 7 filing will stay on your credit for 10 years and a chapter 13 will stay on it for 7 years. That does NOT mean that you cannot get credit during that time. The bankruptcy filing is simply a factor that a lender will consider during that time. You will rebuild your credit post-bankruptcy and it is common for our clients to get mortgages, credit cards and car loans after their bankruptcy case is over. It will, of course depend on your income and the other usual factors that a lender will consider at the time that you apply for credit. We can advise you on the steps to take to rebuild your credit which will include things such as reaffirming debts, removing incorrect information from your credit report, building a relationship with a credit union, getting a secured or low-limit credit card.
Can I get rid of all my debts if I file bankruptcy?
When a person files a bankruptcy case, the goal is to wipe out as much debt as possible so that the person can get a fresh start. You may not want to get rid of some of your debts if, for example, you want to keep your home and car and want to continue to pay the mortgage and car payments. There are other debts that you cannot get rid of. Your other debts are either dischargeable, meaning that your personal liability will be eliminated, or non-dischargeable, meaning that you will continue to remain liable on the debt after your bankruptcy is over.
Here are other types of debts that generally won’t be dischargeable in bankruptcy:
- Income tax liabilities for returns due within 3 years before the bankruptcy filing
- Income tax liabilities for tax returns that were never filed
- Child support
- Spousal support
- Debts for injuries to another person or property resulting from intoxicated driving
- Debts incurred through fraud
- Debts arising from intentionally harming another person or property
- Most student loan debts
- Fines and penalties
- Criminal restitution
So, as a general statement, your other unsecured debts will be dischargeable. That means that you can get rid of debts such as these:
- Credit card debts
- Credit union loans
- Bank loans
- Personal loans
- Car repossession deficiency balances
- Medical debts
- Payday debts
- Debts resulting from negligence
- Utility bills
- Rent owed to a previous landlord
- Judgments
Will I Lose My House or Car If I File Bankruptcy?
Will I Lose My Car If I File Bankruptcy?
Not necessarily. There are different options when it comes to vehicles when filing for bankruptcy. The typical options are:
- You keep your car and keep paying the same amount of money each month.
- You keep the car and reduce your monthly payments.
- You surrender the car because it isn’t in your best financial interest to keep it.
Depending on what chapter bankruptcy case you file, these options will be handled differently.
What If My Car Has Equity In It? Will I Lose My Car?
Not necessarily. If there is equity in your vehicle, there are few different factors that need to be considered. These factors include:
- What chapter of bankruptcy you are filing.
- What exemptions are available to you.
- Whether you want to keep the car.
When filing for bankruptcy, you have to disclose everything you own, the value, and any liens that may encumber the property. If there is equity in personal property, you then have to see what exemptions are available to protect these items.
If there is still leftover equity after applying exemptions, the equity will be handled differently depending on what chapter of bankruptcy you filed. If you filed for Chapter 7 bankruptcy, you may be able to buy back the equity from the trustee, or you can surrender the property for the trustee to sell at auction. If you filed for Chapter 13 bankruptcy, the amount of equity you have has to be paid back to your creditors throughout your case, but you keep the asset.
Will I Lose My House?
Not necessarily. There are different options when it comes to your home when filing for bankruptcy. The typical options are:
- You keep your home and keep paying the same amount of money each month.
- You keep the home and keep paying the same amount of money each month, plus an additional amount to catch up delinquent payment.
- You keep the home and reduce your monthly payments through a mortgage loan modification.
- You surrender the home because it isn’t in your best financial interest to keep it.
Depending on what chapter bankruptcy case you file and how your home is titled, these options will be handled.
What If My Home Has Equity In It? Will I Lose It?
Not necessarily. If there is equity in your home, there are few different factors that need to be considered. These factors include:
- What chapter of bankruptcy you are filing.
- How your home is titled.
- What exemptions are available to you.
- Whether you want to keep your home.
When filing for bankruptcy, you have to disclose everything you own, how the property is titled, the value, and any liens that may encumber the property. If there is equity in your home, you then have to see what exemptions are available to protect it.
If there is still leftover equity after applying exemptions, the equity will be handled differently depending on what chapter of bankruptcy you filed. If you filed for Chapter 7 bankruptcy, you may be able to buy back the equity from the trustee, or you can surrender the property for the trustee to sell at auction. If you filed for Chapter 13 bankruptcy, the amount of equity you have has to be paid back to your creditors throughout your case.
Our experienced attorneys will review your circumstances with you and determine what exemptions are available to apply to your case and whether your home is protected.
Do I Quality for Bankruptcy?
Bankruptcy can be beneficial for some individuals who have assets that they want to protect from their creditors, such as a home, vehicle, or other valuable property. For others who own significant valuable assets, the filing effort and credit impact outweigh the benefits. If you have significant amounts of debt from sources such as medical bills, credit cards, mortgages, or personal loans, you may speak with one of our attorneys who will review your situation and determine if bankruptcy is right for you.
Federal law governs bankruptcy cases, although each state has their own specific rules for filing for bankruptcy. There are two common types of bankruptcies available for individuals: Chapter 7 and Chapter 13. Each allows an individual to protect (i.e. keep) part of their assets, commonly referred to as “exempt property.” Generally, exempt property is protected from creditors. Our experienced attorneys will assist you to determine what type of bankruptcy is right for you.
Chapter 7 Bankruptcy
In Chapter 7 bankruptcy proceedings, a person lists all of their property and then submits a list of the specific items of property that they wish to exempt. All of their other (i.e. non-exempt) property is then liquidated or sold to pay off their debts. Although Chapter 7 bankruptcies are relatively simple, they are reported on a person’s credit report for the next 10 years. Individuals with too much non-exempt property may choose instead to file a Chapter 13 bankruptcy. Similarly, individuals who earn a substantial income may not be eligible to file Chapter 7 bankruptcy and may be required to file Chapter 13 bankruptcy. The filing and outcome of prior bankruptcy cases may also impact eligibility to file Chapter 7 bankruptcy. Our experienced attorneys will review your situation and determine if Chapter 7 bankruptcy is right for you.
Chapter 13 Bankruptcy
By contrast, a Chapter 13 bankruptcy allows an individual to reorganize submit a plan to pay off their debts in 3-5 years. To qualify for a Chapter 13 bankruptcy, an individual must generally have sufficient disposable income to fund a repayment plan. A Chapter 13 bankruptcy allows an individual to retain all of their property, even if they could not do so in a Chapter 7 bankruptcy. A Chapter 13 bankruptcy only remains on a person’s credit report for a maximum of 7 years, as opposed to a Chapter 7 bankruptcy that is reported for 10 years. The amount an individual must repay their creditors varies on the specifics of each individual’s circumstances. The filing and outcome of prior bankruptcy cases may also impact eligibility to file Chapter 13 bankruptcy. Our experienced attorneys will work with you to determine how Chapter 13 will benefit you.
