Frequently Asked Questions
Here are some of our frequently asked questions:
Will bankruptcy stop the harassing phone calls and letters I am receiving from my creditors?
Yes. An “automatic stay” goes into effect as soon as you file your bankruptcy. This prevents all of your creditors from seeking to collect any debts or further harassing you in any way. Sometimes it takes the creditors up to two weeks before they receive notice of your bankruptcy filing. If a creditor calls you after you have filed bankruptcy, simply answer the phone, give the creditor your bankruptcy case number, and they will not call you again.
Will bankruptcy stop the foreclosure of my home?
Yes. The same automatic stay that prevents creditors from calling you prevents any and all litigation from proceeding. Any lawsuit (with the exception of litigation over alimony or child support or criminal activity) will be stopped, at least temporarily. Creditors will have the right to have the automatic stay removed to continue with litigation, depending upon which chapter of bankruptcy you file and the type of litigation that is proceeding.
Will bankruptcy ruin my credit and be a black mark on my credit report for the next 10 years?
This is a trick question. If you are ready to file bankruptcy, the odds are that your credit is already bad. A foreclosure proceeding, for example, is as bad, or worse than a bankruptcy. A bankruptcy proceeding may remain on your record for 10 years; however it will not ruin your credit. To the contrary, after the initial “black mark’ of a bankruptcy filing lowers your rating, your bankruptcy proceeds and you receive your discharge. At that point, you no longer owe money to creditors and under the bankruptcy rules, you may not file another bankruptcy for 8 years. Therefore, you become a much better credit risk. Further, if you elect to continue to pay your mortgage, car payments or similar debts after the bankruptcy, this can help you re-establish credit quickly.
What if I want to keep my car, even though I owe money on it?
Bankruptcy provides a procedure called “reaffirmation” that allows you to file papers with the court stating that you agree to continue to make the payments on your car, whether it be owned or leased, for the duration of the contract. If you do so, you will be able to keep your car. However, if you fail to make your payments in the future there are ramifications that you should discuss with your attorney.
If I don’t owe any money on a credit card, can I keep that card for later use?
Typically, the answer is yes. If you do not owe a debt on a card, you are not required to list that card on your bankruptcy papers. If the card is not listed, it is likely the credit card company will not cancel the card. However, many credit card companies run your credit report periodically (once or twice per year). Some of those companies, upon seeing your bankruptcy, will cancel your card without notice, even though you did not list it in the your bankruptcy.
I heard that they changed the law a few years back making it virtually impossible to file a bankruptcy. Is that true?
No. In 2005, Congress changed the laws to place certain restrictions on individuals filing bankruptcy. Over the last several years, studies have shown that other than some additional paperwork burdens, the changes in the law affects less than 5% of individuals interested in filing bankruptcy.