Consumer Bankruptcy Questions
Houston bankruptcy attorney Vicky Fealy provides answers to some basic consumer bankruptcy questions about creditor harassment, wage garnishment, IRS issues, foreclosure, credit card debt, repossession, chapter 7 bankruptcy, liquidation, debt collection or chapter 13 bankruptcy. Remember that the information provided here is a general overview and should not replace a consultation with a knowledgeable bankruptcy attorney.
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- WILL BANKRUPTCY STOP ALL THE HARASSING PHONE CALLS AND MAIL FROM BILL COLLECTORS?
- WILL BANKRUPTCY STOP A WAGE OR BANK GARNISHMENT FROM THE IRS OR A LAWSUIT OVER AN UNSECURED DEBT?
- CAN FILING BANKRUPTCY STOP FORECLOSURE?
- CAN FILING BANKRUPTCY STOP REPOSSESSIONS?
- CAN FILING BANKRUPTCY HELP WITH IRS TAXES?
- DO I GET TO KEEP MY ASSETS IN A CHAPTER 7?
- WHAT DOES "SECURED" OR "UNSECURED" DEBT MEAN?
- WHAT HAPPENS WHEN ONE SPOUSE FILES WITHOUT THE OTHER SPOUSE?
- DOES MY DIVORCE DECREE PROTECT ME IF MY EX-SPOUSE HAS FILED FOR BANKRUPTCY AND HAS LISTED ME AS A CO-DEBTOR OR CO-SIGNER?
- CAN I BE HELD RESPONSIBLE FOR A DEBT THAT I CO-SIGNED?
- CAN ALL DEBTS BE DISCHARGED?
- WILL I LOSE MY SOCIAL SECURITY PAYMENTS IF I FILE?
- CAN I PICK WHICH DEBTS TO PUT IN THE BANKRUPTCY?
- DO I HAVE TO LIST ALL OF MY ASSETS?
- DO I HAVE TO GO TO COURT?
- WHEN WILL I GET MY DISCHARGE?
WILL BANKRUPTCY STOP ALL THE HARASSING PHONE CALLS AND MAIL FROM BILL COLLECTORS?
Yes. Once you retain our law firm, a contract will be signed allowing us to accept your creditor calls so that you may refer them to us. Furthermore, as soon as your case is filed, an automatic stay will go into effect which will stop all creditor activity, including calling you.
WILL BANKRUPTCY STOP A WAGE OR BANK GARNISHMENT FROM THE IRS OR A LAWSUIT OVER AN UNSECURED DEBT?
Yes. The automatic stay will stop the garnishment in most instances.
CAN FILING BANKRUPTCY STOP FORECLOSURE?
Generally speaking, yes, but there are exceptions. If you qualify, filing Chapter 13 allows you to reorganize your debt and repay your mortgage arrears over time, thereby stopping the foreclosure. However, if you have filed multiple bankruptcies you may not be entitled to the automatic stay which stops judicial proceedings, repossessions and foreclosures without first seeking approval from the court. Chapter 7 may temporarily stop foreclosure, but will not protect you long term from foreclosure if you do not immediately become current on your mortgage.
CAN FILING BANKRUPTCY STOP REPOSSESSIONS?
Yes, the automatic stay will stop creditors from repossessing collateral. If you qualify, the debt can be reorganized in a Chapter 13. Similar to foreclosures, Chapter 7 may temporarily stop repossession but will not offer long term protection.
CAN FILING BANKRUPTCY HELP WITH IRS TAXES?
Yes, but this is a very complicated area of the law. Some taxes may be discharged in extremely specific circumstances and some taxes may be reorganized. It is highly recommended you review your particular circumstances with an experienced attorney.
DO I GET TO KEEP MY ASSETS IN A CHAPTER 7?
When you file for bankruptcy relief under Chapter 7 (liquidation), a bankruptcy trustee is appointed to administer your non-exempt assets. If you have non-exempt assets, the Trustee can sell them and pay your creditors. However, this does not mean you cannot keep assets. Under the bankruptcy code and Texas law, certain assets are exempt, meaning they are yours to keep unaffected. Which exemptions to use and how they are applied is critical to the completion of a bankruptcy. It is best to consult an attorney to know your rights, but briefly: certain amounts of equity in your homestead, vehicles, personal assets and retirement plans are often exempt. The majority of people who file for Chapter 7 do not have non-exempt property to liquidate.
WHAT DOES "SECURED" OR "UNSECURED" DEBT MEAN?
Secured debt is debt that is secured by collateral (e.g. home, real property or car) which can be taken if you do not pay the underlying debt. Unsecured debt is held by creditors that have no collateral securing the debt (e.g. credit cards, medical bills, signature loans).
WHAT HAPPENS WHEN ONE SPOUSE FILES WITHOUT THE OTHER SPOUSE?
It is possible for only one spouse to file an individual bankruptcy without the other spouse. However, you need to discuss this carefully with your attorney. The spouse that doesn't file may end up being responsible for some of the debts.
DOES MY DIVORCE DECREE PROTECT ME IF MY EX-SPOUSE HAS FILED FOR BANKRUPTCY AND HAS LISTED ME AS A CO-DEBTOR OR CO-SIGNER?
If you are contractually bound with your ex-spouse on a debt, the creditor can require the entire payment of that debt from you even though the divorce decree assigns the debt to your ex-spouse. Depending on the terms of your divorce decree, you may be able to have certain support obligations under it determined to be non-dischargeable by the bankruptcy court or in state court. If you find out that your ex-spouse has filed for bankruptcy, you should seek legal advice to find out your possible obligations.
CAN I BE HELD RESPONSIBLE FOR A DEBT THAT I CO-SIGNED?
Yes. You can be held responsible for any debt that you signed an agreement that said you would pay in the event that someone else failed to make the payments (co-signed).
CAN ALL DEBTS BE DISCHARGED?
No. There are certain debts like student loans, government loans, some back taxes, child support and other debts that cannot be discharged. Some taxes can be discharged or reorganized in a Chapter 13. It is important to discuss any delinquent taxes with a bankruptcy attorney.
WILL I LOSE MY SOCIAL SECURITY PAYMENTS IF I FILE?
No, social security payments are protected.
CAN I PICK WHICH DEBTS TO PUT IN THE BANKRUPTCY?
No. You must include all of your debts. However, some debts may be reaffirmed if you and the creditor agree.
DO I HAVE TO LIST ALL OF MY ASSETS?
Yes. It is important that you list all of assets for several reasons. First of all you must list all of your assets pursuant to the bankruptcy code. It is important that you disclose your assets to your attorney so he or she may properly advise you . Some things which may not seem like assets to you, may be, which is why it is important to carefully answer all of the attorneys' questions. It is a crime not to disclose all of your assets. By failing to disclose assets, you risk losing your discharge or facing prosecution for bankruptcy crimes.
DO I HAVE TO GO TO COURT?
Yes, in a typical Chapter 7 you will need to go to one hearing which is called your 341 meeting of creditors. This is usually within 40 days of filing your case. Ms. Fealy or one of her associates will attend the hearing with you and make sure all of your proper paperwork is submitted. In a typical Chapter 13, you will need to attend the 341 meeting of creditors and possibly also a confirmation hearing when your Chapter 13 plan is confirmed.
WHEN WILL I GET MY DISCHARGE?
Generally a Chapter 7 bankruptcy discharge is entered approximately 60-75 days after the 341 meeting of creditors. In Chapter 13, your discharge will be sent to you once you have completed the payments under the Chapter 13 plan .
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