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Bankruptcy FAQ’s

Bankruptcy FAQ’s

FAQs – Bankruptcy

“How can bankruptcy help me?”

As a constitutionally protected right, bankruptcy can do some pretty powerful things. It can:

  • Immediately stop all creditor attempts at debt collection (phone calls, letters, lawsuits);
  • Immediately stop a wage garnishment or bank levy;
  • Halt all lawsuits filed against you;
  • Stop a pending foreclosure of a property;
  • Make a creditor return a repossessed car;
  • Wipeout many of your debts (credit cards, medical bills, personal or business loans, deficiency balances, lines of credit, etc.);
  • Remove a second mortgage from a house;
  • Force creditors to accept a court-ordered repayment plan of up to five years regarding your vehicle or missed back payments on your home. Read more about Bankruptcy here.
“Could I lose my paycheck, my car, or my house…?”

Almost certainly no. The assets you can protect are determined by state law and California is one of the most generous states in this respect. The vast majority of people filing bankruptcy in California fall below the state granted protection limits and do not have to worry about losing a thing.

Further, even if you do go over the asset limit, you always have the choice to do a Chapter 13 Bankruptcy which would allow you to keep the asset (e.g., equity in your home) by paying back its value into the bankruptcy plan over a period of three to five years. In addition, almost all IRS approved retirement accounts are fully protected by California law. Did we answer your question about Bankruptcy?

“Can I get rid of the 2nd mortgage on my house in bankruptcy?”  

If your house is worth less than what you owe on your first mortgage, you may be able to eliminate your 2nd mortgage completely. This process is called “lien stripping,” and it can be a major advantage of federal bankruptcy law protection for you and your family. Did we answer your question about Bankruptcy?

“Can I get rid of a Creditor (Judgment) Lien against my property?”

There is a specific section of the bankruptcy code which allows you to eliminate involuntary liens against your house. These types of liens occur when a creditor has sued you, received a judgment against you in court, and then recorded this judgment against your property. Did we answer your question about Bankruptcy?

“Can a bankruptcy stop a foreclosure of a house?”  

Yes. A bankruptcy filing creates a court-ordered automatic stay which will prevent your home from being foreclosed on. Did we answer your question about Bankruptcy?

“Will my credit be ruined if I file bankruptcy?”

If you are in difficult financial straits, and you have lost your home or have not been paying on your credit cards, chances are your credit is already damaged. In cases like this, Bankruptcy may actually be the quickest way to repair your credit score by wiping the slate clean so you can start rebuilding your financial health.

Though a Chapter 7 Bankruptcy and a Chapter 13 Bankruptcy will remain on your credit report for 10 years and 7 years respectively, your credit will rebuild much quicker than that since you will no longer have those debts dragging your score down. In general, our clients have been able to receive credit cards in 4 to 6 months, buy cars in 1 to 2 years, and buy a house 3 years after finishing their Bankruptcy process. Following your successful debt discharge, we stand ready to inform you of actions you can be taking to help repair your credit score and are happy to review your annual credit report with you. Did we answer your question about Bankruptcy?

“If I file for bankruptcy will I ever be able to buy a house again?”

Yes. When you are able to buy a house again is related to when the government will begin backing your mortgage loans again. Currently, people are able to purchase a house in as short as 3 years of completing their bankruptcies. Did we answer your question about Bankruptcy?

“Can I file for bankruptcy protection if I am not a U.S. citizen or permanent resident?”  

Yes. Anyone can file for bankruptcy, even if you are not a U.S. citizen or permanent resident. Further, if you have other questions about immigration matters, as a Miranda, Magden & Miranda Bankruptcy client, you are provided with a free initial consultation with one of our immigration attorneys!

“How long will I be in bankruptcy?”

In general, a Chapter 7 Bankruptcy lasts 3 to 4 months, and a Chapter 13 Bankruptcy lasts 3 to 5 years. During this time you are protected by court order from any harassment from creditors. Did we answer your question about Bankruptcy?

“If I’m married, does my spouse have to file bankruptcy with me?”  

No. One spouse can choose to file for Bankruptcy alone and this, with some planning, will have no bearing or effect on the other spouse’s credit score. If you do choose to file with your spouse though, you have the right to file a joint case saving you from having to pay extra filing fees and attorney costs for two cases. Did we answer your question about Bankruptcy?

“Will bankruptcy affect my current or upcoming divorce proceeding?”

If you have assets and debts acquired during your marriage, then Bankruptcy may affect the issue of property division within your divorce proceeding. Fortunately, Miranda, Magden & Miranda also specializes in Family Law matters. We recommend you reach out to our family law attorney for a specialized consultation.

“Am I responsible for debts I co-signed for such as cars or houses?”

Yes. If you co-signed on a car or line of credit for a relative or friend and they did not continue to pay for it, the creditor can come after you for the debt. A Bankruptcy filing can eliminate this type of debt. Did we answer your question about Bankruptcy?

“What if I forget to include a creditor in my bankruptcy?”  

You can amend your list of creditors any time during the Bankruptcy to include a creditor you may have forgotten to list when you first filed. Additionally, current case law for California (In Re Beezley) states that in a Chapter 7 Bankruptcy, no-asset case, every dischargeable debt you owed before the Bankruptcy was filed is erased even if it was not listed. Did we answer your question about Bankruptcy?

“Should I be embarrassed to file bankruptcy?”  

No, you should not. Between 2008 and 2013, there were 7,703,444 bankruptcy filings in this country. Chances are someone close to you has already filed for bankruptcy and you just don’t know it. The laws of bankruptcy exist to ensure that there is a way for honest and hardworking people to begin again if life’s circumstances make it impossible for them to climb out of debt. Did we answer your question about Bankruptcy?

“What if I can’t afford my stick to my Chapter 13 Bankruptcy plan payments?”

If a change in circumstance occurs which does not allow you to continue with your plan payments, you may be able to modify your plan to reduce the amount you are paying or you may convert to a Chapter 7 Bankruptcy. Did we answer your question about Bankruptcy?

“Can I discharge taxes in Bankruptcy?”  

You can eliminate certain types of taxes in Bankruptcy. The general rules are that the overdue tax must be at least 3 years old, the tax returns must have been filed at least 2 years before, and the governing tax agency must have assessed the taxes at least 240 days before the Bankruptcy is filed. The timing of the Bankruptcy filing is critical in cases involving tax debt so be sure to speak to an attorney regarding your tax issues. Did we answer your question about Bankruptcy?

“Where can I go to find more information about bankruptcy in California?”

Try here, or contact our firm for a point in the right direction. We look forward to evaluating your financial options and helping you reach the better days ahead.

Miranda, Magden & Miranda, LLP is a designated Debt Relief Agency. We help consumers file for relief under federal bankruptcy laws designed to protect people like you.

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