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Frequently Asked Questions About Bankruptcy

  1. Will I lose my home in Bankruptcy?
    • A. No. Generally, Bankruptcy protection takes a look at the assets you have and whether those assets are in excess of a set schedule of assets which are protected. Depending on the nature of the assets you own, there are two schedules of protections to choose from in California. Unless your home has significant equity in excess of the allowable protected amounts, you will not lose your home.

  2. Will I lose all my other property in Bankruptcy?
    • A. No. There is a list of exemptions for property you own, which cannot be used to satisfy creditors. For families without extravagant holdings and over the top property, typically there is no loss to personal property.

  3. What happens to my retirement accounts?
    • A. Retirement accounts are protected from the Bankruptcy process up to those amounts reasonably necessary for the retirement needs of the debtor. Generally the amounts in the retirement accounts have to be very significant in relation to the debts to cause a percentage of those accounts to be un-protected.

  4. Will I be able to get another loan or credit card?
    • A. Yes. Many people are surprised to learn that they can get new loans quite soon after a Bankruptcy. This of course should not be confused with the loans often seen on TV or radio offering very low interest rates. Generally loans are available with lenders who specialize in lending to persons who have a Bankruptcy in their credit reports. Generally, the person who has gone through the Bankruptcy process is a better credit risk than a person who is otherwise just delinquent with their bills and accounts.

  5. Is Bankruptcy just a loophole in the law?
    • A. No. One form of Bankruptcy or another has been around for over two thousand years. Our present system stems from Old English Common law and was brought to the Americas by the Settlors bringing their common law with them. Our founding fathers realized that the citizenry was not well served and production lacked when the workers were indebted with no hope of getting out debt. While laws change from time to time, this form of protection will not be changed anytime soon.

  6. Will going to credit counseling / consolidation be better for my credit score?
    • A. No. Credit counseling or consolidation is a method of working out a plan between you and the creditors, usually through a middle man / company. this means a couple of things: 1) the middle man / company takes a payment from you, which would otherwise go to the creditors; 2) the creditors have to take less than what was owed under the contract; and 3) payment of the debt will be over time, keeping the bad debt on the books of the creditor longer. The creditor (Visa, MasterCard, etc.) continues to report negative information on your credit report. When you go through Bankruptcy, the creditor, after notification of the discharge of the debt on the credit report, must stop all further negative reporting. This means that the clock is running toward a time when negative information will no longer be viewable. With credit counseling / consolidation, the negative reporting continues on until he plan is complete – if you complete the plan – most do not.

  7. How soon will my credit score recover?
    • A. With a Bankruptcy proceeding, your credit score can begin to recover immediately by stopping the bleeding and negative reporting.n This is not an overnight process. However, debtors often find they can again qualify for small loans or low limit credit cards and begin to slowly rebuild their credit and score.

  8. Will my family / neighbors or anyone else know if I file for Bankruptcy?
    • A. Generally, the only people who will know are those who you choose to tell. While the Bankruptcy proceeding is open to the public there are not advertisements, there are no signs in front of your home, etc. All creditors have to be noticed – meaning they receive written notice of the proceedings. However, Visa, MasterCard and the like are not disclosing your private information, so no one should know about this unless you want them to.

  9. How long does it take to file and complete a Bankruptcy?
    • A. Persons who wish to file must not have used their credit cards or obtained new loans with a minimum of 90-days prior to filing for a Bankruptcy petition and preferably not more than 180-days prior to filing. Once the petition is filed, there is a hearing usually around 30 days from the filing with a discharge being issued to the debtor generally 60 – 90 days after the hearing.

  10. When will the phone calls and threatening letters stop?
    • A. Once the Bankruptcy petition is filed, an automatic stay goes into effect preventing creditors from attempting to collect on the debt. After filing the calls usually stop within a matter of days.

  11. What does it take to get started?
    • A. Call our office to schedule a free no obligation consultation. Our office will send you a questionnaire which must be completed prior to coming and you will meet with the attorney to discuss your specific case. Give us a call.