1) Will I lose my money or property?
Many people think that they will lose their property if they file for bankruptcy. THAT IS NOT TRUE! Bankruptcy can stop repossession, foreclosure, garnishment, and bank levies. Most of our clients do not lose any property through the bankruptcy process! Many times you can file to reaffirm your debts or redeem your debts in a Chapter 7 case. Good bankruptcy lawyers will protect your assets and discuss how to accomplish your financial goals before filing your case. Our office does NOT file any cases without describing exactly how it will affect your property!
2) What is the difference between Chapter 7 and Chapter 13?
Chapter 7 bankruptcy is “straight bankruptcy”. You do NOT pay your debts except your car or your house if you want to keep them. You must be current on your secured debt to keep them. You must qualify to file Chapter 7 and our office will perform a “means test” or an income test to make sure you qualify. Chapter 7 bankruptcy is often the best option for a financial fresh start.
Chapter 13 bankruptcy is “wage earner” or a payment plan. Chapter 13 is designed to save property that you are behind on including houses and cars. Chapter 13 can also get your driver’s license back for unpaid court fines or child support arrears. Chapter 13 is a court-approved reorganization of your debts into one simple payment plan through a Chapter 13 Trustee. Your payments can come directly out of your paycheck. Chapter 13 provides many individuals more time and better options to handle their debts.
Can I put payday loans under bankruptcy?
YES! All debts that you owe must be included in your petition for bankruptcy and all creditors are treated the same. Once you file for bankruptcy, personal loans and payday loans are included just like any other debts.
4) Does bankruptcy stop criminal cases against me?
No. Filing for bankruptcy does not affect criminal cases. HOWEVER, a Chapter 13 bankruptcy can stop courts from holding you in contempt for failure to pay as the court directed. These are usually child support orders and Chapter 13 bankruptcy can stop you from Shelby County Juvenile Court holding you in contempt for child support.
5) Will I ever be able to buy anything after bankruptcy?
Of course! This is the question most people have incorrect information about. Back in the 1980s, when consumer credit was given through the banks, bankruptcy could haunt your credit for years. THIS IS NOT TRUE ANYMORE! Bankruptcy does stay on your credit reports for 8 years after the last date of activity. However, it does not stop you from obtaining credit. You can buy a home, car, or furniture after bankruptcy. There are mortgage companies and auto finance companies that have specific plans for individuals with bankruptcy on their credit reports. Many of my clients see their credit scores INCREASE after their bankruptcy is complete! This is because your DEBT TO INCOME ratio decreases dramatically. Less collectable debts on your credit report = better credit scores.