Preparing Properly for a Bankruptcy

Will I Lose All of My Property?

People that file a liquidation or Chapter 7 bankruptcy case are able to exempt property and thus keep it. Exemptions and their limits are different for every state. To see a summary of exemptions for Maryland, DC and Virginia click here. An attorney consultation is probably necessary to reach a more comprehensive understanding of exemptions. If exemptions are not sufficient a plan bankruptcy may be filed to retain property.

Can I Get Rid of Any Mortgage Liens?

As a general rule, if a plan bankruptcy is filed, any secondary mortgage liens can be eliminated if your first mortgage exceeds the value of your property. In most cases only a small percentage of the mortgage debt is then repaid.

Can I Reduce My Car Payment?

This may be possible. It depends on a number of factors including whether you file a liquidation or plan bankruptcy, whether the payoff of the loan exceeds the value of the car, and when you bought the car. Discuss this in an attorney consultation.

What Debts Can I Get Rid of?

Most debts. You can even get rid of taxes some of the time. Among the debts that are very difficult, if not impossible, to get rid of are alimony, child support, student loans, and criminal fines.

Will I lose My Job?

It is against the law for an employer to fire you solely because you filed for bankruptcy.

What About My Security Clearance?

We are unaware of any case we have handled where a client’s security clearance has been negatively impacted by bankruptcy. As a practical matter your security clearance probably should not be a significant factor in making your decision about whether to file bankruptcy. The amount of your unpaid debts, by itself, may jeopardize your clearance, even if you don’t file bankruptcy. In that sense, not filing for bankruptcy may make you more of a security risk due to the size of your outstanding debts.

Bankruptcy Affect My Spouse?

Married couples may, but do not have to, file bankruptcy together. If a spouse chooses not to file, his or her credit will not be impacted by the other spouse’s bankruptcy filing. If only one spouse files he or she cannot get rid of debt jointly owed by the non filing spouse or liens (mortgages and other secured debt) attaching to joint property. A spouse owing joint debt will receive notice of a filing spouse’s bankruptcy case. It can create problems if a non-filing spouse, who lives with a filing spouse, does not cooperate in supplying necessary information.

Are Most People That File Bankruptcy Cheats or Deadbeats?

Bankruptcy is most often caused by a catastrophic event such as illness, job loss, business failure, investment failure or divorce. Of course there are cases involving unintentional financial mismanagement. Deceptive practices by lenders involving adjustable rates (low initial rates which rapidly increase) cause many bankruptcy filings.

May I Exclude Some Debts From Bankruptcy?

All debts are required to be listed when a bankruptcy case is filed. However, you can continue to pay secured debt such as house and car loans. If unsecured debt (i.e. credit cards, medical bills and loans from friends or family members) is paid after a bankruptcy filing this may jeopardize your case. Some debt is nondischargeable (i.e. some taxes and student loans) thus it must be paid.

What Does Bankruptcy do to My Credit?

Bankruptcy is one factor that lenders consider when deciding to loan you money, among other factors, including your income, the property you own and the debt you currently have. Different creditors make the decision to loan money differently and the factors they consider and the weight given to these factors is in constant flux. However, bankruptcy filers have historically been able to obtain credit. Sometimes the ability to obtain credit improves after a bankruptcy filing when individuals reduce debt load and eliminate judgments.

Will Everyone Know I Filed for Bankruptcy?

A bankruptcy filing is a public record you can find upon investigation. Almost no one will bother incurring the time and expense of conducting such an investigation other than a prospective lender. If you did conduct such an investigation, you might probably be surprised by the number of people who you know that have filed for bankruptcy.

Will I Have to Pay my Creditors in Full After Filing Bankruptcy?

Almost no one pays their creditors in full. Most people who file bankruptcy have the option of not paying any of their creditors (other than taxing authorities) back any money at all.

Can my Creditors Continue to Try to Collect Money from Me After I File?

By law, none of your creditors can contact you to demand repayment when you file. At a certain point after filing most people receive a discharge which prohibits contact by all their listed creditors except creditors owed for nondischargeable debt (i.e. some taxes and student loans).

What Should I tell Creditors that Constantly Call?

If you cannot pay your debts that is what you should tell them. Don’t lie to them or make promises you cannot keep. Collection agencies must stop contacting you if you give them written notice and tell them to cease contact. Once our firm is hired, tell them to contact us. They will almost always do that and stop bothering you.

Why do I need a Lawyer?

Our firm has handled hundreds of bankruptcy cases and can shepherd you through the many pitfalls that exist in bankruptcy. Internet petition preparers often charge as much or more than attorneys and do sloppy and unacceptable work. Our fees are a small fraction of the debt that is eliminated and are well worth the investment.

Should Credit Cards be Paid Before Filing Bankruptcy?

Talk to an attorney first. The answer is almost always – no!

What is the Difference Between a Chapter 11 and Chapter 13 Bankruptcy?

Both Chapter 11 and Chapter 13 Bankruptcies are plan bankruptcies in other words you will make payment through a plan that you propose and which must be confirmed by the court. Most people that file a plan bankruptcy file a Chapter 13 bankruptcy. A Chapter 13 bankruptcy involves much less in legal expenses that a Chapter 11 bankruptcy. If a business entity (i.e. a limited liability company or corporation) wants to continue operating while resolving its debt problems it must file a Chapter 11 bankruptcy. Also, if your debt exceeds limits set for a Chapter 13 bankruptcy, you can still file a Chapter 11 bankruptcy.

Is There Anything I Should Not Do If I am Going to File Bankruptcy?

You should not make any charges on your credit cards or run up debt. You should not try to give away property and valuables to friends or relatives. You should never be untruthful in the information you provide to your attorney or the bankruptcy trustee. You should not refuse to cooperate with the trustee if he or she asks you to do something or provide information. You should not try to represent yourself or use the assistance of anyone other than a qualified, experienced, law firm and an attorney that is admitted to practice in the state where the case is filed. Will I Lose any of My Privacy

When I File Bankruptcy?

Vital information such as social security and bank account numbers is not made public. While you must make some information part of a public record, your friends and neighbors will almost never expend the time and money necessary to review them.

What if I Want to Know More?

The best way to obtain sound information is to discuss your case with one of our attorneys. Other information is available on this site. Learn what to expect during the bankruptcy process, what the different types of bankruptcy are, and what property can be exempted. Click Here for a link to a government publication that contains detailed information about bankruptcy.

Chris Wampler Maryland Attorney

Chris Wampler & Eugene Souder: your Maryland attorneys

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