- Will bankruptcy ruin my credit?The typical answer is no, it will probably actually improve your credit. Most people who file bankruptcy already have low credit scores due to late payments and high balances. We offer all clients enrollment in 7 Steps to a 720 Credit Score. Most people who follow this program will be able to raise their credit score to over 700 in 12 to 24 months.
- Will I be able to buy a house after bankruptcy?For people who file a Chapter 7, most can qualify for an FHA or VA loan after 2 years. For a conventional mortgage it typically takes 3 years.
- Can I pay back friends or family from my tax refund?This is one thing that causes people problems in bankruptcy. If you pay a friend or family member back anything (not just from tax refunds) within the 12 months before filing bankruptcy the Chapter 7 trustee can take that money back and use it to repay your other creditors.
- Are taxes wiped out in bankruptcy?There are very strict rules that determine if taxes can be discharged in bankruptcy. The general rule is that the taxes were due more than 3 years ago and have been assessed more than 240 days before filing bankruptcy. There are other requirements that can toll the time periods. If the dischargeability of taxes is a potential issue in the case IRS records will have to be reviewed to make a determination.
- I’m married, do I have to file with my spouse?There is no requirement that both spouses file. It is not uncommon for only one spouse to have significant debt and it would make no sense for the spouse without debt to file.
- I have a payday or installment loan that says I can’t file bankruptcy on it, is that true?This is absolutely untrue. Many unscrupulous lendes put this type of language in their contracts so people think they cannot file bankruptcy on it. It is completely unenforceable and isn’t worth the paper it is written on.
- Are student loans dischargeable?Technically they can be discharged, but it is extremely difficult to do. There are several ways to treat student loans in bankruptcy that can be very beneficial.
- I filed bankruptcy before, can I file again?The short answer is absolutely! Many people think you can only file bankruptcy after 8 years. This is not the case and for some people repeat or consecutive bankruptcies can be a wise use of the law.
- Isn’t debt settlement better than bankruptcy?Debt settlement companies prey on people’s fear of bankruptcy. In essence, the debt settlement companies try to do the same thing as a Chapter 13 bankruptcy, but without any of the bankruptcy court protections. They tell you to stop paying credit cards and send them money each month instead. The problem with this is that the Automatic Stay of bankruptcy doesn’t protect you. Creditors can still sue you and garnish your wages. Every month you don’t pay they report you to the credit bureaus for not making the payment. Finally, the kicker at the end is if you settle a debt for less than is owed the lender “charges off” the balance. They issue you a 1099C for debt forgiveness. This is taxable income that the IRS then makes you pay income taxes on.
- How much does bankruptcy cost?The court filing fee is $335.00 for Chapter 7 and $310.00 for Chapter 13. In addition, you are required to complete a Credit Counseling class before filing and a Financial Management class after filing. These are both online classes that cost approximately $10.00.Because everyone’s case and situation is unique I base the cost on how complex your case is. Many attorneys charge everyone the same price, but I believe that is unfair. In order to charge everyone the same they have to guess at how much time an “average” case takes and charge everyone that. This results in someone with an easy case paying too much and someone with a complex case paying too little. We strive to treat everyone fairly so we evaluate your case and charge you only for the work that we will have to do on your case.
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