BANKRUPTCY FREQUENTLY ASKED QUESTIONS



Q: Will I lose all my property if I file bankruptcy?


A: No. This is a common misconception. Most often, you will be able to file bankruptcy and keep 100% of your property.


Q: Will I receive garnished wages back?


A: Yes. You are entitled to receive garnished wages back that were taken within 90 days of filing bankruptcy, in the event they exceeded $600. You also are entitled to receive back garnished wages taken after you filed, no matter the amount.


Q: What is the role of the bankruptcy trustee in a Chapter 7 case?


A: The bankruptcy trustee has several roles, such as: reviewing the petition and other documents that are filed, questioning the filer under oath, avoiding certain security interests and transfers, and selling nonexempt assets.


What is the automatic stay?


A: The automatic stay is an injunction that arises once a debtor files for bankruptcy. The automatic stay prevents most collection activities such as: garnishments, bank levies, filing or continuing lawsuits, and trying to collect debt.


Q: What should I do if a creditor violates the automatic stay?


A: There are several options, such as: notify the creditor that you filed bankruptcy, tell the bankruptcy court, and file a lawsuit against the creditor. Bear in mind that sometimes a creditor qualifies for an exception that allows them to violate the automatic stay.


Q: What are the exceptions to the automatic stay?


A: The automatic stay will usually protect debtors from creditor collection activities. However, there are a few exceptions, such as: child support actions, criminal cases, debts incurred after bankruptcy filing, and certain eviction cases.


Q: Will bankruptcy ruin my credit?


A: The majority of the damage has most likely occurred already. A bankruptcy filing will remain on your credit report for ten years. However, this does not mean that your credit will be ruined. You will be able to obtain credit soon after filing bankruptcy. Depending on your income, you may even find lenders who are willing to loan you money before your case is even discharged. However, it's best to minimize use of credit. Credit scores usually improve after filing bankruptcy because your debt has been eliminated. Our office will discuss ways to improve your credit after bankruptcy, such as obtaining a secured credit card and only carrying a small balance, paying it on time each month. The bottom line is, bankruptcy will actually improve your credit.


Q: Can student loans be discharged in bankruptcy?


A: Yes. Both federal and private student loans can be discharged in bankruptcy. It's rare. However, it is possible and few people try. In order to obtain a student loan discharge in bankruptcy, one must prove an "undue hardship". You may also have a defense that may allow you to avoid having to pay the debt at all.


Q: How long will it take after bankruptcy to qualify for a mortgage?


A: It depends on the lender, type of loan and your financial position, but generally expect to be able to qualify for a mortgage in as early as two years after your bankruptcy discharge.


Q: Will filing chapter 7 bankruptcy get rid of a home equity line of credit?


A: No, however there are other options. You could file chapter 13 bankruptcy or try to settle with the lender.



Q: What will happen to my co-signer if I file bankruptcy?


A: The co-signer will still be liable on the debt, so while creditors can no longer come after you for payment, your co-signer is still liable to pay. In some situations, a co-signer will be protected if the debtor files a chapter 13 bankruptcy.


Q: What will happen to lawsuits once I file for bankruptcy?


A: Bankruptcy stops virtually all lawsuits that you are facing, however criminal matters and certain family law proceedings are not affected by bankruptcy filings.


Q: I'm going through a divorce and need to file bankruptcy now. How will filing bankruptcy affect my pending divorce?


A: Bankruptcy will stop divorce proceedings involving property division, however, it won't stop custody, child support or spousal support proceedings.


Q: If I file bankruptcy, will I be able to keep my credit card?


A: Not likely. The credit card company may allow you to keep the card if you reaffirm the debt, however, this is never a good idea and such agreements aren't likely to be approved. Even if you have a $0 balance on a credit card, the credit card company will likely cancel the card as you will no longer be contractually obligated to pay them for future charges. Often, however, you will receive credit card offers within a few months after your bankruptcy discharge. Obviously it's best to avoid credit cards, but they will be available after bankruptcy.


Q: Is it okay to borrow money before bankruptcy?


A: Our office cannot advise you to take on additional debt, however, there is no law that says you cannot. Please keep in mind, however, that any loans secured by collateral need to be kept current, or the creditor can repossess the collateral, even though you filed bankruptcy. Also, by incurring additional debt prior to filing bankruptcy it may result in your case being dismissed or a creditor objecting to the discharge of the particular debt.


Q: Can I pay my bankruptcy lawyer fee with a credit card or use proceeds from a cash advance?


A: No. Our office will accept debit card payments, but no credit cards and please don't take out a loan to pay the fee either. If you do, you will risk having your case dismissed or the creditor objecting to your discharge.


Q: After filing bankruptcy, will I be able to rent an apartment?


A: Yes. A landlord can refuse to rent you an apartment due to a prior bankruptcy, however, if the landlord is hesitant, offering a larger security deposit is usually all that is needed to overcome their reluctancy.


Q: I want to file bankruptcy, however, I would like to pay my mother back for a loan. Can I leave her off the petition?


A: No. Mom has to be listed on the bankruptcy petition. However, there is nothing that would prevent you from voluntarily paying her back once your bankruptcy case is over.



Q: What areas does your bankruptcy law firm serve?


A: Our law firm offers bankruptcy in Holland, Michigan as well as the surrounding area including Ottawa, Allegan, Kent, Kalamazoo, Barry, Van Buren, Berrien and Cass counties.