Frequently Asked Questions About Bankruptcy
At Bulie Diaz Law Office, we provide effective bankruptcy solutions to clients throughout North Dakota and Minnesota. With more than a decade of experience serving Midwest communities, our legal team is intimately familiar with avenues for debt relief, and can answer any questions you may have about bankruptcy and how it may affect you.
What can bankruptcy do for me?
If you are struggling with making payments on unsecured debts such as credit cards, medical bills or debts from a failed business, bankruptcy may be right for you. Bankruptcy can “discharge” or wipe out the vast majority of the debts you owe and provide you with a clean slate, helping you rebuild your tattered and worn credit history. A discharge order received in Chapter 7 or 13 in bankruptcy prevents any creditor from taking action against you to collect what you owe them.
Will I lose all of my personal property if I file bankruptcy?
In most cases, you do not lose any property. We will help you determine whether or not your property is exempt, which essentially means that it cannot be taken from you by the trustee.
What happens to my credit if I file bankruptcy?
It depends. This is not an easy question to answer as there is no bright-line rule of how credit scores are affected by filing bankruptcy. If you have past-due payments, charged-off accounts, foreclosures, judgments, etc., on your credit report right now, filing bankruptcy may actually improve your score faster than letting the accounts sit idle or allowing the creditors to pursue with collection lawsuits, levies and garnishments. Bankruptcy clears the balance of these accounts and allows your credit report to show little to no debt after your bankruptcy is complete. From our experience, we have seen that most of our clients were able to obtain new credit within two years of their discharge.
If you have concerns about your credit rating and bankruptcy, you can discuss them with us at your free initial consultation.
What about my home mortgage or my car loans? Will I lose my home or car if I file bankruptcy?
When you have secured loans such as mortgages or car loans, in order to keep the property you must show that you can afford the payments that are required pursuant to your loan agreement with the lender. You need to continue making payments on these types of loans during the entire process and after your case is finished. If you default on these payments, the secured lender has the right to repossess the asset or pursue foreclosure proceedings.
When you meet with us, we will discuss other options under bankruptcy law that may assist you with secured debt issues.
What is the difference between Chapter 7 and Chapter 13 bankruptcy?
In Chapter 7, you receive a court-ordered discharge of your debts. There are exceptions to these debts such as student loans, most income taxes, criminal fines and penalties, child support and divorce decree, and others. Your attorney will discuss what debts are typically not dischargeable.
In most Chapter 7 cases, clients do not lose any property or cash to the bankruptcy estate. It is vital that your attorney is aware of all of your assets so we can properly exempt and disclose your assets. Your 341 meeting with the trustee appointed to your case is typically scheduled around 30 days after your case is filed. The Chapter 7 bankruptcy case lasts about three months from when it is first filed with the bankruptcy court.
A Chapter 13 case is available to individuals who have difficulty making their debt payments on their own but are able to make what is called a “disposable income” payment each month to the Chapter 13 trustee. A Chapter 13 case proposes a three- to five-year plan that estimates payments to be made to your creditors. Note: In most cases, you do not pay every penny you owe to your creditors. Your payment is based on your ability to pay, which is determined by calculating your income under the means test, and by proposing your forward-looking income and expenses in your bankruptcy schedules.
Chapter 13 also affords opportunities to try to get house or car payments out of default, pay back taxes or child support in a plan that dramatically reduces interest, or even pay back a car loan at the car’s fair market value.
Chapter 13 has some flexibility to change with your income and expenses. So long as we can show the changes in your expenses are reasonable and necessary to your household, they can be modified. If you lose your job or suffer a loss of income, we may be able to modify your payment to a lower amount.
Disposable income: Because you are pledging your disposable income, you will need to show proof of your income in each year of your Chapter 13 by providing a copy of your income tax returns to the Chapter 13 trustee. If your income has increased, you may have to increase your monthly payment. It is very important to notify your attorney if you expect your income to be higher than what we estimated in your bankruptcy schedules.
Chapter 13 is also available to debtors who have previously received a discharge in Chapter 7 within the last eight years. This is very common for debtors who do not have health insurance and have a major medical setback.
Can I file bankruptcy for my business?
Failed businesses can cause severe financial situations for debtors, even where the businesses were incorporated or protected by organized partnerships. Taxes, guaranteed debts and other liabilities can put the unfortunate business owner in a very difficult situation. Bankruptcy can be the avenue to clear out from a failed business and start afresh.
Businesses that need to reorganize also have options under bankruptcy law.
How can I find out more? What do I need to do to prepare to file bankruptcy?
First, we would like you to fill out our Bankruptcy Questionnaire. Yes, we know it is lengthy, but it helps us to help you! If you are unable to view or print the worksheet, please call our office to have one mailed to you. Our consultation worksheet reviews the documentation we need to start the process for you. Generally, we need your two most recent tax returns, six months of pay stubs or another proof of your monthly income, and a list of your monthly living expenses. You will also need to complete the required credit counseling course prior to any petition being filed with the bankruptcy court.
Contact Our Firm Today
Bankruptcy and financial distress can be daunting to deal with on your own. But you don’t have to. Call Bulie Diaz Law Office at 1-701-800-2685, or contact us online to schedule a free initial consultation at one of our convenient locations.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.