Answers to Frequently Asked Questions

Answers to Frequently Asked Questions by the Law Offices of John A. Sterbick

Bankruptcy

In the United States, bankruptcy is a legal procedure that allows an individual or business to be released from debts. In Washington State, there are two main types of personal bankruptcies: Chapters 7 and 13. Chapter 7 bankruptcy is a three-month process that may require liquidation of non-exempt assets to repay creditors. Chapter 13 bankruptcy is a monthly payment plan that lasts from three to five years before the bankruptcy filer completely discharges their debts. The benefits of filing bankruptcy can be seen by looking at your monthly budget as well as how much money you owe on your credit cards, loans, and other debts owed. There are downsides to filing bankruptcy, including short-term and long-term consequences such as having a higher interest rate when applying for new credit cards or loans in the future. A significant upside is that you now become a good credit risk. Your credit will be reset, and you will have a fresh start.

The questions and answers below will help you understand many of the common questions and answers that Washington State residents ask about bankruptcy. When you make an appointment to consult with John Sterbick, you can discuss any particular questions about your particular situation with him to ensure that you fully understand how John will proceed to get you the financial help that you need to begin to rebuild a better financial future for yourself and your family.

Q - What is bankruptcy?

Title 11 of the United States Code is Bankruptcy law. It allows insolvent individuals or businesses (debtors) to either work out a plan to repay the money over time or completely eliminate (discharge) all or most bills.

A personal bankruptcy, or Chapter 13 bankruptcy in Washington State, is an affordable payment plan of all or part of your debt. The process for filing and completing personal insolvency may vary depending on which type of bankruptcy you file (Chapter 11 vs. Chapter 13). For example, if you are considering filing for a Chapter 11 Bankruptcy in Washington State, your unpaid debts will be discharged after successfully restructuring your business plan or reorganizing your finances. But with an individual’s Chapter 13 Bankruptcy in Washington state, there must still be some proof that repayment over time is possible despite income limitations, such as through secured property liens or by adjusting payments according to the ability to pay.

Q - Is Filing Bankruptcy Bad? Can It Be Good?

The pros and cons of filing personal bankruptcy are hotly debated in the United States.

Some people feel that it establishes a fresh start for those who are weighed down by debt, while others worry about what will happen to their assets and credit rating after bankruptcy.

The decision is up to you whether bankruptcy is right for your situation. It’s important to understand all the consequences of filing bankruptcy before making this big choice. Contacting our office for a consultation is the best way to fully understand the consequences of a bankruptcy filing based on your unique personal circumstances.

Q - What are the main types of bankruptcy?

The two main types of bankruptcy filings are Chapter 7 and Chapter 13 for individuals and Chapter 7 or 11 for businesses. There is also a new Subchapter V within Chapter 11 for small businesses that qualify under the definition of a “small business debtor” and elect to be a Subchapter V debtor.

Q - What should I do before I file for bankruptcy?

Before filing bankruptcy, you should consult with an expert in bankruptcy law, such as John Sterbick.
- Contacting a Washington bankruptcy lawyer to discuss your options may be the best way to determine what you should do before filing for bankruptcy
- Bankruptcies are public records and will stay on your credit report for up to ten years. Consultation is needed if this affects your situation or the timeline of when you can file.

In most cases, it’s wise not to make any major purchases (e.g., home improvements) during the year prior to filing for bankruptcy because these expenditures cannot be used towards repaying creditors through Chapter 13 repayment plans or liquidating property under Chapter 11 reorganization proceedings without first disclosing them and obtaining approval from the bankruptcy trustee.

Q - What is Chapter 13 Bankruptcy?

Chapter 13 Bankruptcy is a type of bankruptcy for individuals who have not filed within the last six years and intend to stay current on secured debt and priority debt obligations they are going to retain going forward. Filing under Chapter 13 helps them pay off some or all debt depending on the individual’s disposable income over time, or they can’t afford it. In this case, any money left before completing the process goes back into working capital because the individual wants to get out from under debt.

Q - What is Chapter 7 Bankruptcy?

Chapter 7 Bankruptcy is another type of bankruptcy for individuals who have not filed within the last eight years and cannot stay current on their obligations going forward. It’s generally recommended for those with debts they can’t repay and have below median income. It will discharge most debt from credit cards to car loans, meaning no more monthly payments or interest rates for those debts are applied over time. The Chapter 7 process takes roughly 90 days unless there are non-exempt assets that the Bankruptcy Trustee can recover.

Q – Who can file bankruptcy? Can I File Bankruptcy?

Any person above 18 years of age and is cognizant, or a business with debt, litigation, or legal contracts, can file a bankruptcy petition.

An individual may file either Chapter 7 or Chapter 13 bankruptcy in Washington State if they qualify.

Chapter 13 Bankruptcy is for individuals who have not filed within the last six years and plan to stay current on their obligations going forward. It’s generally recommended for those with above-median income or non-exempt assets, or priority debts or foreclosure where they can repay certain debt and discharge other debt. Chapter 13 bankruptcy requires monthly payments for three to five years.

Chapter 7 Bankruptcy is another type of bankruptcy for individuals who have not filed within the last eight years and don’t plan to stay current on their obligations going forward.

Q – What do I need to begin the bankruptcy process?

When you meet with attorney John Sterbick, he will provide you with a document checklist and questionnaire to complete. We will obtain your credit reports, so a list of creditors is not needed except for any new medical bills, payday loans, or other debts that are not on your credit report.

Q – How often can you file for bankruptcy?

Filing bankruptcy can adversely affect your ability to obtain future credit, rent housing, and even negatively impact a job application. Any decision to file must be carefully considered. Chapter 7 can be filed every eight years from a previous Chapter 7 filing or six years from a prior Chapter 13 filing. Chapter 13 can be filed four years from a prior Chapter 7 filing or two years from a prior Chapter 13 filing.

Q - How much debt do you have to have to file Bankruptcy?

Before deciding to proceed with a bankruptcy filing, please consider that not all situations warrant filing for bankruptcy. If your financial situation is temporary, you may consider making arrangements with individual creditors for a change in payment amounts or a reduction in the total amount due. If you have little property or money, filing bankruptcy may not be necessary, as the creditor may not be able to collect the debt.

There’s no such thing as too much or too little debt for Chapter 7 bankruptcy. The real issue is whether at your current income level, you pass the means test, meaning your income is below the IRS standard of living for your area.

As for maximum debt amounts, as of April 1, 2019, if your secured debts (mortgages and liens) add up to more than $1,257,850, or your unsecured debts add up to more than $419,275, Chapter 13 bankruptcy may not be available to you. At the time this answer was written, the Chapter 13 debt amounts are scheduled adjust again effective April 1, 2022.

You certainly can and should evaluate if filing bankruptcy makes sense in your current situation by contacting the Law Office of John Sterbick for a consultation.

Q - How long does it take to file for bankruptcy?

In general, it should take between two to three weeks to prepare your case to be ready to file once you have submitted all the paperwork and three months to complete the Chapter 7 process from start to finish. Chapter 13 runs between three to five years for a discharge.

It is important that you understand your personal situation by consulting with the Law Office of John Sterbick, as there are many factors at play. The unique circumstances of your situation can make it difficult for either your bankruptcy attorney or the court to give an accurate estimation of how long filing will take in your case.

Q - What are the most common mistakes when filing personal bankruptcy?

The most common mistakes include not properly completing the bankruptcy forms, waiting too long to file your case, and letting it grow larger than what you can handle, or waiting so long your wages and bank accounts become garnished. Other common mistakes are failing to list all your income on Schedule I and your assets on Schedule B.

Q - Is it possible that the court will not approve my chapter 7 or chapter 13 bankruptcy?

It is possible that the court may not accept your bankruptcy petition because you do not meet one or more of the requirements. If this happens, it will be difficult for you to discharge your debts and create a fresh start.

A Chapter 13 case requires meeting affordability guidelines and is commonly used to prevent foreclosure or pay non-dischargeable taxes. Filing for chapter 11 provides more flexibility for assets in possession or property ownership at the time of filing. A Chapter 11 can also help ease financial hardships for those forced into foreclosure by a creditor who won’t work with an individual on restructuring their debt payments without resorting to defaulting on their home loan agreement.

The Law Office of John Sterbick works hard so that all individuals who qualify can obtain relief through personal bankruptcy filings.

Q - Are personal bankruptcies denied by the court?

Generally speaking, personal bankruptcies are not denied by the court. Personal bankruptcies should be filed in a timely manner. They will go through all the same legal proceedings as business bankruptcy filings. However, it is imperative that you file your case at the right time to have the best chance for success with this filing. That’s why consulting an experienced attorney like John Sterbick before proceeding can help ensure that everything goes smoothly throughout each step of the process.

Q - Can I Keep My Car If I File Bankruptcy?

You can keep your car if you file either Chapter 7, 11, or 13 bankruptcy in 2021.

Under Federal and State law, if the debtor owns a car and owes money on the loan, then he or she can keep driving it even after filing for bankruptcy protection. In Chapter 7, the debtor must remain current on the payments on the loan, and in Chapter 13, the monthly bankruptcy payments will include the car payment.

In Washington, there are liberal exemption laws. Washington is what is called a dual exemption state. A Bankruptcy Trustee rarely liquidates a vehicle.

Q - What Are Bankruptcy Exemptions?

Washington is a dual exemption State. There are Federal exemptions or State exemptions. The attorney will advise which exemptions are best for the debtor.

Bankruptcy exemptions are laws that allow a debtor to keep their property and possessions.

Federal exemptions include a generous “Wildcard” exemption that can be used on any asset and can be stacked on top of the exemptions for most personal property. For instance, if a Debtor owns a vehicle and the vehicle’s value is above the vehicle exemption, then the “wild card” exemption can be added to protect the vehicle from liquidation.

The Washington State exemption laws provide a minimum amount of exempt personal property but provide a very generous homestead exemption of $125,000.00 equity in a residence.

Q - How Can I Stop My Wages from Being Garnished in 2021?

Bankruptcy is a way to stop your wages from being garnished.

If your wages are about to be garnished due to unpaid IRS debt, your attorney can file an “offer in compromise” with the IRS. Your attorney should submit an offer in compromise before wage garnishment occurs and the amount of debt owed determined. For an offer in compromise to be successful, it must represent at least as much money as required to cover all tax liabilities that are due plus 75% of collection costs and penalties assessed upfront. John Sterbick is the only tax and bankruptcy attorney in Washington state. A bankruptcy filing can also release an IRS levy.

Suppose your wages and/or bank account are being garnished by medical creditors or credit cards. In that case, a bankruptcy filing will stop the garnishment immediately, and in certain cases, you will receive a refund of the garnished amount.

Q - Should I File for Bankruptcy for Credit Card Debt in 2021?

You can file for personal bankruptcy for credit card debt for both Chapter 7 and 13. Credit card debt is unsecured debt and is fully dischargeable.

Q - What Happens to My IRS Tax Debt If I File Bankruptcy in 2021?

Certain years of tax debt can be discharged in Chapter 7 or 13 bankruptcy.

John Sterbick is an expert in both IRS tax law and federal bankruptcy law, along with special considerations for residents of Washington State. You will thank yourself later if you contact the Law Office of John Sterbick for an initial consultation so that we can evaluate your full financial condition. After your consultation, you will understand what you can keep, what assets may be liquidated by the order of the court, and what options are available to you to repay monies owed over time to retain certain assets.

Q - Can I Get Rid of my Medical Bills in Bankruptcy?

You can get rid of all medical debt in bankruptcy. While most medical bills are forgiven when you file for personal bankruptcy, there may be exceptions like copayments or other charges made prior to the date listed on your official discharge order. There may be other charges that have special conditions that will not be forgiven.

Q - Can Student Loan Debt Be Discharged in Bankruptcy?

At the time of this writing, student loan debt may not be discharged in bankruptcy. There are discussions underway in Congress about whether to partially forgive student loan debt. Still, no legislative action is complete, and none is expected in the near term as of this writing (April 2021).

You should understand the consequences of filing bankruptcy before deciding to proceed. Contacting our office for a consultation will help you make an informed decision about whether filing for bankruptcy is right for you and your situation with student loans.

Q - What Happens to My Credit if I Declare Personal Bankruptcy?

Declaring bankruptcy will improve your credit score within two years after discharge, depending on the steps you take to repair your credit after discharge. However, bankruptcy will be on your credit report for ten years. When you file bankruptcy, creditors consider you a good credit risk, and you will be surprised how quickly you receive credit card and car purchase offers once you file bankruptcy.

The most important thing to do after filing for bankruptcy is to be cautious about taking on new debt or starting large purchases until you have rebuilt your credit history with responsible borrowing habits.

In some cases, people might find they need additional work from their creditors before being able to take out loans again without having to pay high-interest rates like those offered by payday lenders. Bankruptcy lawyers can advise clients about how long this process takes, which varies based on the type of creditor. Generally, you should expect the process to take between six months and two years. At the Law Office of John Sterbick, we provide information on credit repair after bankruptcy discharge.

Q - Should You File for Bankruptcy Before or After Foreclosure?

If your property is in foreclosure, it is important to understand the benefits and downsides of filing bankruptcy before or after foreclosure.

The main advantage of filing before your foreclosure is that you can stay the foreclosure property and repay the mortgage arrears in a Chapter 13 bankruptcy filing. If a foreclosure has taken place, then the mortgage will have been paid, but sometimes not in full. It is extremely important to file bankruptcy within the same year as the foreclosure to avoid receiving a 1099 cancellation of debt if the mortgage was not paid in full. The difference between the mortgage amount owed and the amount paid becomes taxable income imputed to you. If a second mortgage is not paid in the foreclosure, the mortgage lender will pursue you to collect unless you file bankruptcy.

Q - Canceled Mortgage Debt: What Happens at Tax Time?

If you have had any portion of your outstanding mortgage balance forgiven, then it is likely that this amount will be considered taxable income for tax purposes. A bankruptcy filing will discharge that debt. You may also need to pay taxes on some property-tax breaks or other incentives offered by local governments to help homeowners keep their homes during the Home Affordable Modification Program (HAMP) federal program introduced in 2009 to help struggling homeowners avoid foreclosure. The general idea behind these offsets is that they should not turn into an unintended windfall profit because people stopped making payments early. Instead, they’re supposed to serve more like gifts designed specifically for those who stay committed through foreclosure proceedings.

Q - What is the FDCPA, and how does it apply to collection agents?

The FDCPA stands for the Fair Debt Collection Practices Act. The FDCPA was enacted in 1977 by Congress to protect consumers from abusive, deceptive, and unfair debt collection practices by third-party commercial collectors of consumer debts.

Q - Can I go to bankruptcy court in a city other than where I live?

Bankruptcy is Federal. In Western Washington, there are two Federal courthouses. One is in Seattle, and the other courthouse is in Tacoma. The Seattle Bankruptcy court covers King County to Whatcom County, and the Tacoma court covers Pierce county down to the Oregon border. The counties on the Olympic Peninsula are assigned to the Seattle court. In Eastern Washington, there is one courthouse in Spokane. The mandatory meeting of creditors is assigned to different court locations depending on where the debtor lives.

Q - What Is a Bankruptcy Discharge?

A bankruptcy discharge is a Federal Court Order that the bankruptcy court issues which discharges (forgives) much of the debt owed to creditors.

A discharge releases you from personal liability for most unsecured debts covered in your case, meaning those unsecured and secured debts (such as car loans or mortgages) will be considered discharged whether paid or not. Secured debts like houses and cars must be paid to avoid repossession and foreclosure. If you choose to surrender a vehicle or home, the associated debt is discharged, and you are released from any liability.

However, there are exceptions like student loans, certain IRS taxes, state taxes, child support, or alimony. These are considered priority debts and are non-dischargeable. These debts can be repaid via Chapter 13 bankruptcy.

Q - How soon after filing for bankruptcy do you get your credit back?

The length of time that it takes to restore your good name after filing a Chapter 13 or Chapter 7 differs from person to person. The severity of the debt, how long your repayment plan lasts, and making all payments in the repayment plan on time are factors in how quickly you can reestablish your credit. Most people have restored their financial health by six months to two years post-bankruptcy, depending on the effort made to repair it.

Q - How long will bankruptcy stay on my credit report?

One of the most common misconceptions about bankruptcy is that it will negatively impact your credit for a long time. A Chapter 7 will remain on your credit report for ten years, a Chapter 13 for seven years. However, in some cases when debt has been discharged through Chapter 13 Bankruptcy or liquidation through Chapter 7 bankruptcy, you can see an improvement in your credit score six months to two years after filing. Creditors have no incentive to continue reporting late payments on your account because they cannot collect what you owe them after you filed your case. At the Law Office of John Sterbick, we will show you how to repair your credit after bankruptcy.

Q - Can I provide my own credit report, or does someone else obtain the credit report about my financial situation?

The Law Office of John Sterbick works with a firm specializing in credit agency reports, and we will be able to provide you accurate reports from all three bureaus to obtain your creditors.

Q - Can I file jointly with my spouse? Does my spouse have to file? Will this affect my spouse’s credit? Is my spouse responsible for my credit cards if they are an authorized user? When would my spouse be liable for my credit cards?

Your spouse does not have to file jointly with you.

You are responsible for all debts incurred in your name or names. If your spouse is an authorized user on a card account in good standing at the time of filing bankruptcy, they would still need to pay off this debt as it becomes due or remove their name from the account. You will also need to add their income and debt service into the calculation when determining how much should be contributed toward paying creditors during Chapter 13 proceedings (if eligible).

Q - Will a cosigner on a loan that I took out be protected?

If the person co-signing on a loan that is in good standing when filing bankruptcy, you or they would still need to pay this debt as it becomes due, unless the consigner is also going to file bankruptcy.

Q - I have a life insurance policy, my child is listed as the beneficiary, and it has a cash surrender value. Is this policy exempt?

If the life insurance policy has a cash surrender value of over $13,400.00 under Federal Exemptions, it is not exempt unless the “Wildcard” exemption can be applied. You can find the value on your most recent statement. You should also contact your attorney to verify if you are eligible for an exemption.

Q - How much money can you have in your bank account when filing for bankruptcy?

Washington State provides a “Wildcard Exemption” that allows a bankruptcy filer to exempt up to $3,000 worth of any type of personal property other than wages with the following limitations: no more than $1,500 total in cash and $500 total for bank accounts. Federal exemptions have a “Wildcard Exemption” of $13,900 for a single person with no $500 limit on bank balances for a single filer, double that with a married couple.

Other typical exemptions in Washington State include the homestead exemption that protects up to $125,000 of equity in a debtor’s home or principal residence, including a manufactured or mobile home or boat if the debtor is living in them. On May 18, 2021, Washington State is making a substantial change to the homestead exemption- the value of the home will be based on the previous year’s median single-family home value.

A debtor can exempt up to $6,500.00 in one motor vehicle in Washington exemptions and $4,000.00 in Federal exemptions. Spouses who file jointly can each claim a vehicle exemption.

Q - What are the income limits for filing either chapter 11 or chapter 13 bankruptcy?

A person must have less than $419,275.00 in unsecured debt and less than $1,257,850.00 in secured debt in 2021 to file Chapter 13 bankruptcy. A Chapter 11 bankruptcy has no debt limits. A Sub Chapter V has a debt limit of $7,500,000.00.

Q - What Is the Bankruptcy Means Test?

The Means Test is used to qualify a debtor for Chapter 7. It uses a debtor’s household size and averages income for six months before filing. The debtor’s income minus IRS standard of living expenses for the area where the debtor resides equals disposable income. Disposable income is a monthly surplus over the allowed expenses. If the means test calculates disposable income, the debtor is not qualified to file a Chapter 7 and must file a Chapter 13.

Q - Can I file personal bankruptcy and not have it affect my business?

If you are considering filing bankruptcy and own a business, it’s important to discuss the ramifications with your attorney. If a person files personal bankruptcy, the business assets are considered owned by the debtor. They must be exempted completely in Chapter 7 and non-exempt assets paid to value in Chapter 13. The Law Office of John Sterbick has great expertise in business matters and can advise you on what path to take.

Q - What is Chapter 11 bankruptcy?

Chapter 11 Bankruptcy is most often used by businesses or property owners to reorganize their assets and debts to continue operating as a going concern. Individuals seeking Chapter 11 protection must show that they
- intend to run what remains of their business,
- intend to pay any remaining unsecured creditors at least some part of what’s owed, and
- won’t simply take advantage of this form personal gain once it has been completed.

Q - What is Subchapter V of Chapter 11 Bankruptcy?

The Small Business Reorganization Act of 2019, which created Subchapter V of chapter 11 of the Bankruptcy Code, became effective on February 19, 2020 (11 USC §§ 1181-1195 “Subchapter V”).

Subchapter V was intended to mitigate perceived challenges faced by small business debtors, with no more than $2,725,625 in debt. In response to the COVID-19 crisis, the CARES Act expanded Subchapter V eligibility until March 27, 2022 (or longer if extended by Congress) by increasing the cap to $7,500,000 in aggregate secured and unsecured non-contingent and liquidated debt.

Widespread distress and decreased asset values along with the subchapter’s debtor-friendly rules likely will make Subchapter V an even more attractive option for larger than originally contemplated businesses. Businesses may choose to file Subchapter V who seek to benefit from its short timeline (debtors must file plans of reorganization within 90 days), its reduced administrative expense (there is no disclosure statement to prepare and pay for, no creditors’ committee to fund, and no administrative fees to be paid to the United States Trustee), and its elimination of the “absolute priority” rule (owners can retain their equity in a Subchapter V small business over the objection of a class of unsecured creditors, without paying those creditors in full).

Q – Who Develops the Reorganization Plan for the Company in Chapter 11 Bankruptcy?

As part of the development process for a Chapter 11 bankruptcy reorganization plan and before submitting it to the court and creditors, the debtor’s attorney develops a “reorganization plan,” which must be approved by a committee or the creditor pool. The plan includes provisions that detail how much money will be paid to each creditor over time to repay their debts. Often this amount will vary between different groups of creditors, with larger amounts given to those who have more money owed. Once approved by all parties (the company filing for bankruptcy and its creditors) and after approval from the court, these negotiations are then put into law via a proposed Reorganization Plan which becomes binding if accepted by all parties involved.

Q – My house payment and car payment are three months behind, I owe thousands on credit cards, and I must keep the house and the car. What should I do?

Chapter 13 might be the best avenue for you. You can make up the missed payments over 60 months, pay off your car, and you can probably discharge all your credit card debts, too.

Q – If I file Chapter 7, do I have to give up my house, car, and furniture?

Generally, no. If you continue to make the house and car payments, you can keep them, provided your home equity is exempt. You can almost always keep your furniture and car because bankruptcy exemption law protects them from seizure by creditors.

Q –The IRS filed a Federal Tax Lien on my property. I have little equity. However, the interest on the tax debt makes it impossible to repay the taxes. What can I do?

You may wish to consider filing a Chapter 13 bankruptcy. You can pay the tax lien back at very low interest, and the IRS will discharge the lien.

Q – I embezzled $50,000.00 from my employer. My employer knows about it and fired me. He is demanding back the money right now. What can I do?

If you file Chapter 7 bankruptcy, and your employer does not pursue his claim in your bankruptcy case, then you may be able to discharge the $50,000.00 debt. If he does pursue it, you could file a Chapter 13 and perhaps negotiate to pay a reduced portion of the $50,000, discharging the balance.

Q – I was a general partner in a business that failed. I owe over $1,000,000.00 to suppliers, landlords, and former employees. I also owe about $100,000.00 to the IRS for unpaid payroll taxes, and I owe the Washington Department of revenue over $50,000.00. Should I file Chapter 11?

Possibly. Yours is a very complex situation. If you have substantial personal assets, you may be forced to file Chapter 11 or the new Subchapter V bankruptcy. However, if you have depleted your personal assets, a Chapter 7 bankruptcy filing may be appropriate. Please note that certain tax debt is not dischargeable. John Sterbick can help you with what would be the best path to take.

Q – Will I lose all the money in my 401k, TSP, or VIP if I file bankruptcy?

ERISA qualified (tax-deferred) retirement plans are completely exempt in a bankruptcy filing.

Q – Will I lose my cash value in the whole life insurance policy I have obtained?

There is a bankruptcy exemption available for much of the cash value, depending on the amount of whole life insurance you have.

Q – Will I ever be able to obtain credit again?

Yes. Bankruptcy resets your credit and gives you a fresh start. Many people can purchase homes two to three years after a bankruptcy discharge, and purchase cars the actual day you file bankruptcy, or even during bankruptcy. Ironically, after completing Chapter 7 bankruptcy, you may receive many offers for car loans and credit cards. The reason is that you cannot file Chapter 7 bankruptcy again for eight years, so you are now considered a good credit risk. If you charge purchases on your newly issued credit cards, the creditors have many years to pursue you for payment.

Q – How do I get my driver’s license back?

We can file a Chapter 13 for you and obtain reinstatement of your license within two to three weeks if it was suspended for failing to pay court fines or being responsible for an accident for which you had no insurance.

Q – Can I file bankruptcy alone, or does my spouse need to file also?

One spouse can file alone. Usually, spouses file together to “clean out” all debts.

Q – How often can I file bankruptcy?

You must wait eight years between each Chapter 7 bankruptcy filing. Contact us to find out about your eligibility. You may be able to file for chapter 13 bankruptcy if you need relief from debt.

Q – How long does the filing process take?

Your Chapter 7 Bankruptcy or Chapter 13 Bankruptcy case can usually be filed with the court in a short time. At most, your bankruptcy will be filed with the court only a few weeks after your initial appointment with our office, depending on how quickly you complete your paperwork and submit it to us. However, the amount of time required depends on the complexity of your case and the workload in our office at the time.

Q – How soon will my wage garnishment stop?

Your brighter financial future starts right away if your paychecks are under a garnishment. The bankruptcy filing in any chapter will stop the wage garnishment by the next pay cycle. In fact, if the garnishment has been going on for less than two months, you may get some or all your garnished income returned to you. Getting your garnished money back does not happen in all cases, however. It is best to consult with our firm on this point.

Q – Will the bankruptcy case stop my foreclosure?

If you are in a Chapter 7 case and you intend to surrender the home, then yes, the Chapter 7 case will place a temporary pause on the foreclosure process. The pause can be as little as two months and perhaps as long as six or more months. We can extend foreclosure out and even get it canceled.

If you are in a Chapter 13 case and intend to surrender the home back to the bank, as in Chapter 7 cases, there will be a temporary pause on the foreclosure process for the same two to six months.

If you are in a Chapter 13 case and you intend to save your home through the Chapter 13 plan, even though you are delinquent on payments on your mortgage(s), the Chapter 13 filing will stop the foreclosure.

As long as you make the required payments into your Chapter 13 plan, payable to the Chapter 13 Trustee, your home is likely to be safe from foreclosure. However, there are some rare exceptions. Our firm is very qualified to help you understand your case.

Q – Can I continue to live in my house after a bankruptcy filing?

It is best to break this down into two answers. If you are filing a Chapter 7 case, and the house payments on all mortgages are all current, and your equity is exempt, then the Chapter 7 filing in most cases will not have any net negative effect upon you keeping your house, providing of course that you keep up the payments.

If you are filing a Chapter 13 case, then the answer has two parts. If, as of the time of filing Chapter 13, the payments on all mortgages are all current, then the Chapter 13 filing in most cases will not have any net negative effect upon you keeping your house, providing, of course, that you keep up the payments.

If you are in a Chapter 13 case that proposes to “save” the house because you are delinquent on mortgage payments, then so long as you make the payments as required into your Chapter 13 plan, then you can continue living in the house and keep it forever.

Q – What will the bankruptcy case do to my credit score?

If your financial situation requires a bankruptcy filing, then filing bankruptcy is usually the start of a return to a better credit score over time. If you have a pending foreclosure, past car repossession, or delinquent on debts, your credit score is already low. When you take responsibility to address your financial problems with a bankruptcy filing, your return to a higher credit score can be faster than you might think.

Q – Does my divorce decree protect me from creditors if my ex files for bankruptcy?

No. If you’re a co-signor with your ex-spouse on a debt acquired while married, the creditor can require the entire payment of that debt from you even though the divorce decree assigns the full debt to your ex-spouse. Your divorce decree may address any recourse you may have against your ex-spouse should they default on the loan obligations.

Q – What happens if one spouse files for bankruptcy and not the other?

If one spouse files and the other doesn’t, the one who doesn’t file could be responsible for any community debts. Review this carefully with your bankruptcy attorney before filing.

Q – What’s a joint petition?

A joint petition is when an individual and a spouse file a single petition. Unmarried partners each must file a separate bankruptcy case.

Q – Can I change from one chapter of bankruptcy to another?

Generally, you can convert a case one time to any other chapter you’re eligible for. The request requires an order signed by the judge. Watch out for pitfalls, though. For instance, if you move from Chapter 13 to Chapter 7, some of your possessions may be part of the Chapter 7 estate may not be exempt and can be liquidated by the Trustee, even though they were safe from creditors under Chapter 13.

Q – Which Bankruptcy type or chapter should I file?

Consumers typically file Chapter 13 bankruptcy, where repayment is made to creditors, or Chapter 7, where the debts are discharged. The type depends on your circumstances and if you have disposable monthly income available to repay all or part of your debts. Bankruptcy laws can be tricky and involved, so determining if, when and which type of bankruptcy you need should be made with careful thought and the input of your bankruptcy lawyer.

Q – What’s the difference between secured and unsecured debt?

Secured debt is a claim secured by some type of property, either by contract or involuntarily with a court judgment lien or tax liens. Creditors that have a security interest in the property and can repossess or foreclose unless a Chapter 13 bankruptcy is filed. Unsecured debt is not tied to any type of property, and the creditor can’t claim it if you file for bankruptcy unless you are in a Chapter13 where funds are available to pay unsecured debts. A mortgage is a secured debt on your property.

IRS Tax Help

Q – Is there a streamlined tax relief process?

A – Various IRS tax relief programs require no financial statement in the application process. The response time from the IRS for tax relief requests is typically 30 days or less. However, be prepared to spend lots of time doing your homework and filling out paperwork in preparation. If you decide to hire the assistance of a tax relief professional, they will provide and facilitate the documents and filing for you.

Q – How can I qualify for tax relief?

A – Tax relief programs were implemented by the IRS to allow taxpayers to resolve tax debt over time with installment payments, or potentially settle the debt at a percentage of what is owed. The IRS does not openly promote such programs, but information on each as available in printed form or via the IRS website. Tax relief is available on multiple levels depending on your tax situation, and various programs have different requirements and qualifications. It is necessary to interface with the IRS and fill out application forms, provide documentation, even write a letter to the IRS stating your situation to be considered.

Q – Are there any guarantees?

A – Tax relief professionals promise satisfaction with their services in assisting taxpayers prepare requests for installation arrangements, offer-in-compromise or other tax resolutions. They cannot guarantee you won’t have to pay taxes, or predict with 100% certainty how the IRS will rule on requests for tax relief, however. If the IRS rejects the initial request for tax relief, many tax relief professionals will review the rejection letter and prepare a response and appeal for no charge.

Q – What can a tax relief specialist do for me?

In cases involving existing businesses or in personal cases where the IRS has taken dramatic steps towards collection including threats of liens, garnishments or levies tax relief professionals can be very helpful. This representation will be knowledgeable on rules and formulas, procedures and paperwork. Tax relief specialists are a recommended aid for contacting, and negotiating with, the IRS. They can help “even the odds” when you must deal with government agents, who can be very intimidating when making demands on the taxpayer. IRS agents tend to be less forceful and more reasonable when dealing with a tax professional.

Q – What is tax relief?

A – The phrase “tax relief”, in general, refers to taxpayers attempts to mitigate their tax problems whether on the local, state or federal level. Generally speaking, individuals seek tax relief because they have been notified by the IRS with a Notice of Intent to either levy accounts, lien on property, real or personal, or garnish wages. Tax relief may be extended to either individuals or a business that can show a specific need for a tax breaks. Tax relief concessions are not usually granted to individuals or businesses with deep pockets.

There are numerous reasons why a taxpayer may seek out specific tax relief. Most often, taxpayers are unable to pay their tax debts in full or have failed to file returns for a number of years and eventually are notified by the IRS of impending action. A number of tax relief programs are available through the IRS. However, to qualify, taxpayers are required to fit within specific guidelines of tax regulations.