Gain Insight From Our Fresno Bankruptcy Attorneys
At Fear Waddell, P.C. our Fresno bankruptcy attorneys understand that clients
have many questions that need answers as they consider going through bankruptcy.
We are happy to provide you with the tools and knowledge that you need
to make an informed decision about how best to handle your financial future.
Below, we have compiled some of the most frequently asked questions we
receive. If you do not see your question below, feel free to
contact us for more answers.
Can Bankruptcy Stop My Creditors From Constantly Calling Me?
Yes, for the most part. As soon as you file a bankruptcy petition, Section
362 of the United States Bankruptcy Code prohibits creditors from taking
most actions to collect a pre-petition debt. This is called the automatic
stay, and prohibits most calls from creditors. If you hire an attorney,
the attorney will often allow you to give the creditor the attorney’s
phone number, and you can then instruct creditors that you are represented
and they need to call your attorney.
Do I Need an Attorney to File Bankruptcy?
There is no legal requirement that individuals must have an attorney file
a bankruptcy petition. However, the bankruptcy law can be complicated
and a bankruptcy attorney can help walk you through the process.
There are two main benefits to hiring a bankruptcy attorney:
- Maximizing the benefits of bankruptcy
- Avoiding serious mistakes.
Bankruptcy has many obscure provisions that could be quite beneficial to
you and unless you hire a competent bankruptcy attorney, you may miss
the benefit of these provisions altogether.
For example, bankruptcy allows you to avoid judgment liens in some situations.
However, you have to take affirmative action to do so and unless you know
how to do that, you would lose the benefit. A bankruptcy attorney can
also help you avoid serious mistakes. For example, there are provisions
in the code that allow a bankruptcy trustee to recover property transferred
within a certain amount of time.
If you transferred property to your children three years before filing
bankruptcy, a bankruptcy trustee would likely be able to sue your children
to recover that property. There are many similar potential pitfalls to
filing bankruptcy, but a competent bankruptcy attorney can help you address
these and plan for them before filing bankruptcy.
What Are the Different Types of Bankruptcy?
There are five different types of bankruptcy. They are identified by the
chapter in the bankruptcy code that discusses them.
They are as follows:
- Chapter 7 (Liquidation)
- Chapter 9 (For municipalities)
- Chapter 11 (Reorganization)
- Chapter 12 (Re-payment plan for family farmers and fisherman)
- Chapter 13 (Re-payment plan for those with regular income)
Chapters 7 and 13 are most frequently used in by consumer debtors. Chapter
11 is primarily used by corporations or individuals with large assets
and liabilities. Chapter 9 is rarely used. Chapter 12 is similar to Chapter
13, except that it has special provisions for family farmers. Chapters
7 and 13 are discussed in more detail below.
What Type of Bankruptcy Should I File?
Each type of bankruptcy has its own advantages and disadvantages, and a
thorough discussion of each is beyond the scope of this website. (There
are volumes dedicated to the subject.) While bankruptcy can provide effective
debt relief, bankruptcy law contains many traps for the unwary. A competent
bankruptcy attorney can help you avoid these traps. You should consult
a bankruptcy attorney before deciding whether to file bankruptcy and what
type of bankruptcy is right for you.
What is Chapter 7 Bankruptcy?
“Chapter 7″ refers to Chapter 7 of the United States Bankruptcy
Code (Title 11). Chapter 7 is also known as liquidation bankruptcy, because
the basic idea of Chapter 7 is that the debtor exempts those assets he
can and turns all of his other assets over to the Trustee to be liquidated
and paid to creditors. In most cases, the debtor is able to exempt all
of his assets. This is called a “no-asset” bankruptcy case.
If you want a simple word picture for Chapter 7 bankruptcy, think of a
giant bucket. The debtor puts all of his property into the bucket before
filing bankruptcy. Then, he goes through and determines what items are
exempt. All of the exempt items get taken out of the bucket. Whatever
is left in the bucket is sold to pay creditors. If nothing is left, it
is a no-asset bankruptcy.
What Are Exemptions?
You may be asking, “what are exemptions?” or “how do
I know what is exempt?” Exemptions are provided by California state
law and they provide that a debtor can keep certain amounts of several
different types of property. There are two different exemption schemes
in California and the rules regarding exemptions can be complex. Even
if you do not have all of your property in an exempt form now, a Fresno
bankruptcy attorney can advise you how to (if it is possible) put that
property into exempt form so that it would not be lost in a Chapter 7
What is the Timeline For a Typical Chapter 7 Bankruptcy Case?
Upon filing the Chapter 7 petition, a Chapter 7 Trustee is appointed and
a date is set for the meeting of creditors. The meeting of creditors is
usually about 30 days after the petition is filed. Unless a complaint
to deny the discharge has been filed, the discharge is usually entered
about 90-120 days after the Chapter 7 petition is filed. This is the timeline
for a typical no-asset bankruptcy case. The bankruptcy case is closed
after the Trustee administers all of the assets (if any) of the estate.
My House Is in Foreclosure. Can a Chapter 13 Bankruptcy Filing Help Save My House?
Possibly. If your house is in foreclosure, that probably means you have
a substantial arrearage on the mortgage. Most debtors are unable to pay
an accrued arrearage immediately (unless the property can be refinanced)
and mortgage holders are reticent to cancel foreclosure proceedings unless
the entire arrearage has been paid. Thus, unless something is done, the
debtor is often in a situation where the house will be foreclosed upon.
Chapter 13 allows the debtor to stop the foreclosure (it cannot proceed
because of the automatic stay) and pay the arrearage over time.
What is a Chapter 13 Bankruptcy?
“Chapter 13″ refers to Chapter 13 of the United States Bankruptcy
Code (Title 11). In Chapter 13 cases, the debtor proposes a plan to pay
back at least some of the debts that are owed. Chapter 13 is often used
when Chapter 7 is unavailable for some reason, e.g., if the debtor’s
income is too high to qualify for a Chapter 7.
Chapter 13 also has many benefits over Chapter 7 as described in more detail
below. In a Chapter 13, the debtor keeps all of his property, but pays
a set amount each month to the Trustee pursuant to a Chapter 13 Plan the
Chapter 13 Plans usually last 3 to 5 years. After all of the Plan payments
have been made, the debtor receives a discharge of even more debts than
would be discharged in a Chapter 13. Chapter 13 is more complicated than
Chapter 7 and care should be taken in deciding whether to file Chapter 13.
What is the Timeline For a Chapter 13 Bankruptcy Case?
The timeline for a Chapter 13 case is different for every case and depends
upon the Plan proposed by the debtor and the jurisdiction in which the
case is filed. Most plans are required to last 3 years, but Chapter 13
plans may not run longer than 5 years. The meeting of creditors usually
takes place within 30-60 days after the petition is filed. The time from
the filing of the petition to plan confirmation for an uncontested case
can take anywhere from 25 days to 270 days depending on the jurisdiction.
The average is approximately 90 days.
What Are the Benefits of Filing a Chapter 13 Bankruptcy?
There are many benefits to filing a Chapter 13 bankruptcy, as opposed to
a Chapter 7 bankruptcy. These are only some of the benefits of Chapter
13 when compared to Chapter 7.
Super-Discharge. The discharge in Chapter 13 cases is broader than the Chapter 7 discharge.
For example, the Chapter 13 discharge includes debts related to violation
of federal securities law, and many fines or penalties owed to governmental
units, none of which would be dischargeable in a Chapter 7 case.
Avoid Foreclosure. Chapter 13 allows debtors who have an arrearage on a mortgage to pay off
the arrearage through a Chapter 13 Plan. As long as the plan is confirmed
and all payments are made, the mortgage holder cannot foreclose on the
property. In Chapter 7, the secured creditor will almost always be granted
relief from stay to foreclose on the property.
Lien-Stripping. Where the amount of a secured debt is more than the value of the property
it secures (i.e., it is undersecured), the debt is bifurcated and that
part of it that is over the value of the property is treated as unsecured
debt. Unsecured debt and secured debt are treated differently in Chapter
13 cases. Secured debts must be paid in full (with interest), but unsecured
debt does not have to be paid in full. Thus, for most undersecured debts,
the debtor may be able to pay substantially less than he would have had
Debtor Keeps All Property. In a Chapter 13 case, the debtor is allowed to keep all property, including
non-exempt property. This is especially important for some people whose
primary source of income is rental property.
How Would a Bankruptcy Filing Affect My Credit Rating?
Unfortunately, there is no clear answer to this. A bankruptcy filing can
stay on a credit report for up to 10 years. If you are contemplating filing
bankruptcy, your credit may already be bad and bankruptcy may not make
it significantly worse.
In some situations, bankruptcy may allow you to improve your credit worthiness
faster than you could have otherwise because most of your debts are cancelled.
However, there is no guarantee you will be able to get new credit after
filing, and it will probably take several years to rebuild your credit.
It is important, however, to use such credit wisely.
In addition, with a Chapter 13 case, the discharge (cancellation) of your
debts does not occur until the end of the Plan, so you would only have
the ability to start rebuilding your credit after the Plan has been completed.
Can a Bankruptcy Filing Help Me “Clean Up” My Credit Report?
After you obtain a bankruptcy discharge, creditors are required to report
your debts as discharged in bankruptcy. While the bankruptcy will be on
your credit report and the debts might still be listed, those potentially
offering you credit will also see that you no longer have the substantial
debt burden that you had before the bankruptcy filing.
This, of course, is no guarantee that you would be more likely to obtain
credit after filing bankruptcy. And, as discussed above, a bankruptcy
will almost certainly negatively affect your credit in the short term.
What Should I Do if My Credit Report Is Inaccurate?
A good first step is to notify the creditor and the credit reporting agency
in writing of the error. If nothing is done to correct your report, you
may have legal recourse under the Fair Credit Reporting Act. For information
on how to dispute your credit report, go to
Get personalized help from a Fresno bankruptcy lawyer by filling out a
free consumer case evaluation or calling (559) 418-3022 today.