This Bankruptcy FAQ serves only as a brief survey of the most frequently asked questions someone may ask when looking into information regarding filing bankruptcy. If you would rather save time – skip the Bankruptcy FAQ and give us a call at 785-379-3600 for a FREE Consultation over the phone or in person or you can email us now.
Bankruptcy FAQ:
Q: What type of Bankruptcy do you guys do?
A: We deal strictly with Chapter 7 and Chapter 13 Bankruptcy
Q: What is the difference between Chapter 7 and Chapter 13 Bankruptcy?
A: Chapter 7 Bankruptcy is great for wiping out dischargeable debts like credit cards, medical bills, repossession deficiencies, payday loans, many civil judgments, even certain taxes. Chapter 7 works great when you are caught up or current on your secured debts, like your mortgage and car loans. Chapter 13 Bankruptcy can often wipe out most if not all of the debts that a Chapter 7 can wipe out, however, a Chapter 13 allows a debtor to pay back certain debts over a 3 to 5 year time period. These debts may include back taxes, title loans, missed car payments, mortgage arrears, even attorney fees. Click here for more information.
Q: What are Secured Debts?
A: There are three basic types of debt. Secured Debts are debts that are secured by collateral. Examples of Secured Debts are auto loans, purchases from Nebraska Furniture Mart, title loans, and mortgages. The collateral is generally physical property that can be repossessed, such as your car, your furniture and your home.
Q: I’ve heard that I won’t lose my stuff if I file Bankruptcy. Is that true?
A: Most of the time you can keep property in bankruptcy. It’s important to view Bankruptcy not as a punishment, but as a way to start over. With that in mind, YES, most of your assets will be safe, or what we call “Exempt” from Chapter 7 liquidation. Liquidation is when the Trustee seizes property and sells it for the benefit of your creditors. In Kansas, we have many Exemptions that allow you to keep pretty much everything you own as long as it is a necessity and not a luxury.
Q: What are examples of non-exempt luxury items?
A: Some examples of luxury, non-exempt items include a jet ski, boat, ATV, motorcycle, aircraft, a second home or property. Basically, things that are not necessary for day to day life. For more examples of non-exempt assets, click here.
Q: So luxury items aren’t exempt. Does that mean they will get taken?
A: Not necessarily. For a more thorough explanation, click here. But generally speaking, in Bankruptcy, the debtor will have the opportunity to either pay the liquidation value of the property to the trustee, or surrender the collateral/luxury item. In a Chapter 13, it is much easier to keep non exempt assets since you can pay the value of the property over the 3 – 5 year plan.
Q: You keep bringing up this 3 to 5 year plan. What is this?
A: In a Chapter 13, the debtor proposes to pay off certain debts to the Chapter 13 Trustee. Many times, secured debts are paid back through the plan at a reduced interest rate. This can offer the debtor significant savings over their traditional loan. For instance, if you bought a car with a very high interest rate, you may be able to pay that loan back at the “discount rate” of 4.75%. The discount rate is set by the government and is generally much lower than traditional secured loans.
Q: How much are my payments?
A: It depends on what you are paying back and what your budget allows. If your budget says you have about $500 disposable income at the end of the month – your payment may look close to this number. If you only have about $80 disposable income at the end of the month, chances are your payments will be close to this. Some times the only thing getting paid back in the plan is the attorney fee. Alternatively, some times a debtor owes a significant amount of taxes and their payments are much larger. As you can see, the scenarios are endless, and so are the payment plans.
Q: Can bankruptcy stop garnishments?
A: Filing a chapter 7 or chapter 13 bankruptcy will stop garnishments immediately; however, a creditor is entitled to garnish you up until the day you file.
Q: Can bankruptcy stop foreclosure?
A: Yes, both Chapter 7 and 13 bankruptcy will stop foreclosure – but if you are behind on payments and want to keep your house, you will need to consider Chapter 13 Bankruptcy.
Q: Can Bankruptcy Get Rid of a Lawsuit Judgment?
A: Generally speaking, yes – as long as the underlying debt is not non-dishargeable. For more information on getting rid of lawsuit judgments, click here.
Q: Can Bankruptcy get rid of my tax debts?
A: Both Chapter 7 and 13 bankruptcy may be able to discharge, or get rid of your tax debts. For more information, click here.
Q: Can Bankruptcy stop my vehicle from being repossessed?
A: Yes. The automatic stay that goes into effect with a bankruptcy is filed will immediately halt any attempt to repossess your vehicle. Simply put, it will stop repossession. Whether you get to keep it depends on what type of bankruptcy you file.
Q: I am getting divorced but we also need to file bankruptcy. Which should we file first?
A: There is no simple answer – for a detailed explanation, read this.
There is no Bankruptcy FAQ that will answer every question. For a FREE Consultation over the phone or in person, give us a call at 785-379-3600 or email us now.
