FAQ
Frequently Asked Questions: New ClientsAnswers to some of these questions may vary depending on the state in which you file. Please rely on your attorney for answers to questions about your specific circumstances. Frequently Ask Questions Index
Q: Do I have to speak with a Debt Counselor before filing?A: Yes, every debtor must speak with an accredited Debt Counselor and obtain a certificate before he/she is eligible for bankruptcy. Here are a few Debt Counselors that can help you complete your pre-filing screening. [ back to top ] 1 Q: Can creditors attempt to collect their debts after I file for bankruptcy?A: No, what is called an "automatic stay" goes into effect immediately upon filing which prohibits creditors from attempting to collect their debts. [ back to top ] 2 Q: Who will know about my bankruptcy filing?A: Bankruptcy is a matter of public record. However, as a practical matter, the only people who will know about a bankruptcy filing (aside from the debtor and creditors) will be anyone who receives the records of filing in the Portland Daily Journal of Commerce. However, in a Chapter 13 Bankruptcy, monthly plan payments are sometimes made via payroll deduction. However, it is a violation of federal law for an employer to discriminate in employment because of a bankruptcy filing. [ back to top ] 3 Q: Can I not "file on" some creditors that I want to pay?A: No. When filing a bankruptcy petition, the debtor must certify under penalty of perjury that all creditors are listed. This does not prevent the debtor from voluntarily paying some debts (particularly car loans and home loans), but all debts must be listed. [ back to top ]
4 Q: Can I file a "medical bankruptcy"?A: Yes and no. Technically, there is no such thing as a "medical bankruptcy", though many people file for bankruptcy because of an overwhelming amount of medical bills. [ back to top ] 5 Q: Can I lose IRA, 401(k) and similar retirement accounts in bankruptcy?A: No. These assets are considered exempt in bankruptcy. [ back to top ] 6 Q: How will bankruptcy affect my ability to get credit in the future?A: There is no magic formula to reestablishing credit after a bankruptcy filing. A bankruptcy filing remains on the credit report for ten years, and, despite what some unreputable "credit repair" agencies may claim, cannot be removed until the ten years have elapsed. However, once a discharge is entered, the person generally can obtain an auto or even a home loan immediately. The creditor may charge a higher interest rate. [ back to top ] 7 Q: How can Chapter 13 prevent home foreclosure?A: Under federal bankruptcy law, foreclosure efforts must stop immediately once a bankruptcy is filed. In Chapter 13 (Oregon), the debtor generally continues with regular monthly mortgage payments, and cures the mortgage arrearage as part of the Chapter 13 Plan over 3-5 years. [ back to top ]
8 Q: Can I use bankruptcy to stop IRS or ODR collection actions?A: Yes. As noted above, a bankruptcy filing requires that the creditor immediately cease collection efforts. As noted earlier, some taxes can be discharged in bankruptcy. A Chapter 13 case can also be used to pay non-dischargeable tax debt over a period of time. [ back to top ] 9 Q: What if my income decreases while I am in a Chapter 13 case?A: The plan can usually be modified to deal with the decrease in income. [ back to top ] 10 Q: If I am married, must my spouse file with me?A: No. If one spouse "came into the marriage" with debts, those debts do not become debts of the new spouse. However, to the extent that a married couple has joint debts, if one spouse files for bankruptcy, creditors may pursue the other spouse for collection. In Oregon, a debt incurred by one spouse alone during the course of the marriage generally does not become a debt of the other spouse. In Washington, because of community property laws, a debt incurred by either spouse during the course of the marriage is generally considered a debt of both spouses. [ back to top ]
11 Q: My ex-spouse filed bankruptcy, and listed debts that he or she was required to pay under our divorce decree. Those creditors are now pursuing me. What can I do?A: Under some circumstances, depending on the language of the divorce decree and other factors, the non-filing spouse may have recourse in Bankruptcy Court against the filing spouse. In some circumstances, the non-filing spouse may be forced as a practical matter to file for bankruptcy protections as well. [ back to top ] 12 Q: What if I owe tax debt, and I have not filed the returns?A: In Chapter 7, tax debt where the return is not filed cannot be discharged. In Chapter 13, tax debts for unfiled years are usually not discharged, but your attorney may be able to file a plan which would discharge penalties and some interest. [ back to top ] 13 Q: I am self-employed. Will I lose my business if I file bankruptcy?A: If the business has tangible assets that can be sold, or if the business can be sold as a going concern, Chapter 7 may not be helpful. However, businesses can be protected by filing a Chapter 13 case. [ back to top ] 14 Q: My car was repossessed last night. Can I file bankruptcy to get it back?A: Generally yes. If a Chapter 13 case is filed quickly following the repossession, and the vehicle is insured, the debtor can usually obtain a release of the vehicle from the creditor. [ back to top ]
15 Q: A creditor already has a judgment against me. Can I still file bankruptcy?A: Yes. However, if the debtor owns real property, the judgment may be a lien against the real property, and may or may not be able to be avoided in bankruptcy, depending on the amount of equity in the property. [ back to top ] 16 Q: My mother co-signed for my car. How will this affect her if I file for bankruptcy?A: If you are current on the payments, and remain current on the payments, it should not affect her. However, if you surrender the vehicle as part of the bankruptcy, or if you fail to continue with payments after the bankruptcy resulting in a repossession, the lender may pursue your mother for the deficiency (the amount of the debt less the amount the creditor obtains for the vehicle upon sale, usually at the auction yard). [ back to top ] 17 Q: I have a vehicle that I own free and clear that is worth $10,000. Can I give it to my sister and then file bankruptcy so that the bankruptcy trustee does not take it?A:. No. This would be a fraudulent transfer, and the bankruptcy trustee would likely be able to obtain possession of the vehicle from your sister. [ back to top ]
18 Q: Can the bankruptcy trustee take my tax refund?A: It depends. If the refund has not been received and spent prior to the bankruptcy filing, the trustee would be within his or her rights to seize the tax refund in certain cases depending on how much the refund is and what state you are filing in. Earned income tax refunds are generally protected from seizure. [ back to top ] 19 Q: Can I repay debts owed to relatives before filing bankruptcy so that I do not have to list them on my bankruptcy petition?A: Probably not, unless the amount is very small. Payments made to relatives within one year before filing bankruptcy are considered "preferences". The trustee may have the right to pursue the relative to recover the preference, and divide the money equally among all creditors. [ back to top ] 20 Q: I own real estate, and am behind on the payments. A foreclosure sale is scheduled for next month, and I can't continue with the regular payments, but I do have equity in the property. Is there anything I can do?A: Probably. With a Chapter 13 filing, you can usually obtain some additional time to be able to sell or refinance the property so that you do not lose the equity. [ back to top ] 21 Q: I am behind on my child support, and the State is garnishing 50% of my income. Can bankruptcy help me?A: While child support can never be discharged in bankruptcy, a Chapter 13 case can be filed so that the support arrearage is repaid over a 3-5 year period of time. You still must pay regular monthly support, and the Bankruptcy Court has no authority to alter the regular payment amount. [ back to top ]
22 Q: My driver's license is suspended because I have a lot of unpaid traffic tickets. Can bankruptcy help me?A: It depends. In Chapter 7 traffic tickets are not dischargeable, and the Chapter 7 filing will not allow you to regain your license. In Chapter 13, a license suspension can usually be vacated so long as the fines are not criminal, and that the basis of the suspension is solely for failure to pay fines. However, you will have to do a lot of legwork in obtaining clearances from the various courts. [ back to top ] 23 Q: I took out a second mortgage on my home from a lender which loans on 125% of the appraised value. The first mortgage is actually more than the value of the home. Do I have to pay on the second mortgage?A: It depends. In Chapter 7, you will have to continue with payments on the first and second mortgage in order to keep the home. However, in Chapter 13, under some circumstances, the second mortgage can be "stripped" if the debt owing on the first mortgage exceeds the value of the home. [ back to top ] 24 Q: I got caught in the trap of payday advance loans. Can I discharge those in bankruptcy?A: Yes. Payday loans are not excepted from discharge in bankruptcy. [ back to top ]
25 Q: A collection agency for a credit card company called me, and said that I could not discharge the debt? Is this true?A: Generally not. Dischargeability of debt in bankruptcy is determined by federal law, not by what the creditor says. Unless one of the exceptions to discharge applies, a debt will be discharged. In addition, you cannot waive your right to file bankruptcy by promising a creditor that you will not file bankruptcy when you incur the debt. However, if you take out a debt without the intent to repay, or knowing that you would be filing for bankruptcy, the debt will likely be declared non-dischargeable. [ back to top ] 26 Q: What if I accidentally forget to list a creditor on my bankruptcy petition?A: This is not an absolute rule, but generally in Chapter 7, unlisted debts are considered discharged as long as the failure to list them was unintentional. [ back to top ] 27 |
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