- Do I really need an attorney to file bankruptcy?
- Can I make my creditors stop calling me if I file for bankruptcy?
- Can I keep my car when I file bankruptcy?
- Can I keep my house when I file bankruptcy?
Although having an attorney is not a requirement when filing bankruptcy, there are many reasons why you would benefit from retaining the services of an experienced bankruptcy attorney. Much like anything else, an attorney who practices bankruptcy law will understand the many nuances involved with filing bankruptcy. When you are injured you seek a doctor. When your car breaks down you seek a mechanic. When your pipes in your home explode you seek a plumber. In the same way, when you are attempting to file a bankruptcy, you should seek a bankruptcy attorney.
Many people believe that their case is “easy” or “uncomplicated”. While this may be true to some extent, no bankruptcy case is a simple thing. Every bankruptcy involves many facts that are specific to each individual or family alone – whether it’s income, property, foreclosures, debt, inheritance and so on. A bankruptcy attorney who knows California and Federal Bankruptcy rules can identify the factors that may be important in your case; factors that you may miss without even realizing it.
When you consider everything a bankruptcy can involve – from filing paperwork, providing documentation, calculating numbers, contacting other attorneys, appearing in court, opposing creditors, creating court forms, and abiding by deadlines, just to name a few – you’ll want an attorney on your team that can navigate the process and make it as painless for you as possible. Not to mention that if your case is handled incorrectly, it could costs you hundreds or thousands of dollars to correct the errors after the fact. By having an attorney on your side, you can end up saving yourself a lot of money in the end. If you have taken the step toward repairing your financial future, make sure you do it right.
When you file a bankruptcy, your creditors are put on notice, thus becoming aware of the fact that you will be attempting to discharge your debt. They can no longer contact you for collection efforts, but can contact you to provide information, such as loan modification options, or to determine whether you intent to reaffirm a secured debt, such as the intent to keep a vehicle and continuing making payments for it.
The best way to ensure that no creditors contact your for any reason whatsoever is to obtain the services of an attorney. Once an attorney represents you, not only can you prevent your creditors from contacting you, but they are prohibited from doing so. The moment you are represented by an attorney, your creditors absolutely cannot contact you. This is particularly beneficial when you are intending to file bankruptcy, as you do not necessarily need to wait for your bankruptcy petition to be filed, but can get a head start on cutting off creditor contact from the moment you hire the services of a bankruptcy attorney.
Most likely. The general rule with regard to bankruptcy is that if you want to keep the asset, then you must keep the debt attached to it. However, if you do not want to keep the asset, then you do not have to keep the debt attached to it. This varies somewhat between a chapter 7 and a chapter 13 bankruptcy, but the general rule is the same.
Most people will definitely be able to keep their vehicle, or numerous vehicles, when filing for bankruptcy. If you own a vehicle outright, or more than one, you can keep it as long as it is covered by the exemption limit. For most people, this is always the case. For a few, it will depend on the amount of equity in your home or other valuable assets you own that you intend to keep. It is best to discuss your situation with an attorney, who can them advise you as to what assets you will be able to keep and those you may have to or want to surrender.
If you want to keep a vehicle that you do not own outright, but are currently making payments for, you can also most likely do so. Generally, keeping and continuing to pay for a vehicle will depend on your ability to do so. If you can reasonably continue making payments without it causing your expenses to outweigh your income, then you can. The difficulty arises when your income is less than your expenses, in which case the bankruptcy court may agree with the idea that you can and should keep a vehicle you cannot pay for. Again, it depends on your situation. That being said, most often this is not a problem.
Keep in mind that if you do decide to keep and continue paying on a vehicle, most creditors will require you to sign an agreement stating so. In bankruptcy, these are called “reaffirmation agreements” and essentially renegotiate your contract, calculating your payments from the date your bankruptcy is filed.
Most likely. The general bankruptcy rule again controls – if you want to keep the asset, you must keep the debt. Thus, if you want to keep your house, then you must keep paying on it. If you intend to do so, then you state as much in your bankruptcy petition and you keep your home.
There are, however, a few complications in which this rule may not be as cut and dry. Namely, if you have a large amount of equity in your home or if you are “underwater”. First, if you have a large amount of equity in your home, it will depend on the amount of equity, your marital status, your age, and other factors. California allows certain exemption amounts based on these factors, which will determine how much of the equity in your home you can protect, and how much you cannot. If the amount of equity is less than the exemption, you should be in the clear. If you have more equity than the exemption allows for, you’ll need to consider the amount, what your options are and whether bankruptcy is actually the best option for you.
If your home is underwater, you should have no problem keeping it, if that is your desire. Many creditors offer loan modification or reduced rates when you file for bankruptcy. These are often helpful to take advantage of, but be aware of the ramifications of doing so, particularly if you risk losing your home for nonpayment of your mortgage as part of a trial period.