- General Questions
- 1. How do I rebuild my credit after bankruptcy?
If you handle your credit responsibly after bankruptcy, with on-time payments of your auto loan, etc, you can rebuild your credit reputation in a few years. Approximately 2 years after discharge, most people can qualify for a home mortgage with favorable terms. Open a Low Balance Credit Card or a Secured Credit Card: The only way you can rebuild your credit is to use credit.You will likely have to pay an annual fee to obtain a high interest credit card, post bankruptcy. Start with a low balance credit card. For example, you may be approved for a $300 limit. Credit unions are a good place to start. Use about 10% of your credit limit per month, and always pay the balance in full when you get your statement. A year of on-time payments will improve your credit score. Remember not to carry a balance and not to exceed 10% of your available credit.
Review your credit reports at AnnualCreditReport.com (free service) to make sure your old account statuses match the bankruptcy outcomes. Annual Credit Report links you to the 3 major credit bureaus. You can receive them once a year for free.
- 2. How much does a bankruptcy cost?
No two clients are the same, and it would not be fair to charge everyone the same fee. In our free consultation, we discuss your situation to determine how simple or how complex it is, and quote you a reasonable fee. We can work out payment terms if necessary.
- 3. How does bankruptcy effect my credit?
There is no question that bankruptcy will effect your credit, but so does any other negative credit information. It may take as little as 2 years to rebuild your credit, and you be able to buy a home or obtain other credit. We believe that in the creditors’ view, when all of your debt is discharged, you become a better credit risk than you were before the bankruptcy, so long as you have a decent income stream (e.g., job) and are paying your necessary expenses because all of your other debt will have been wiped out by your discharge.
- 4. What kind of bankruptcy do I qualify for, and what is the difference between a chapter 7 and chapter 13?
A chapter 7 case is commonly known as "Liquidation", however, that does not mean you will lose anything in bankruptcy. We carefully analyze your situation to be sure that all of your assets are protected by "exemptions" designated by applicable law. If not all protected, then we will advise you what to do next.
A trustee is appointed and the trustee's main job is to look for nonexempt assets to sell to pay creditors' claims. Again, frequently all of the debtor's assets are exempt and there's little or nothing for the trustee to liquidate. Then typically you receive a discharge about 90 days after you file for bankruptcy. A chapter 7 case normally lasts 3-4 months, from the filing day to the discharge date.
A chapter 13 case is a payment plan, with a 3 -5 year term, depending on your gross income. The Plan is not based on the amount of your debt, it is generally based on your excess income after necessary monthly expenses. Typically, creditors end up receiving a minor percentage of the amounts they are originally owed. There are good reasons you may want to choose to file a chapter 13 case, for example, to pay off tax debt, or to remove a second mortgage from your home. A chapter 13 is also a case that allows you to run your small business without interruption.
A trustee is also appointed in a 13 case but his job is to monitor the plan, make sure the debtor pays all of his excess income into the plan and then the trustee pays creditors from the debtor's plan payments. The bankruptcy trustee does not interfere with your daily life. Then you receive a discharge after you have made all your payments under the plan.
- 5. Will they turn down my bankruptcy after I file?
Almost everyone has the "right" to file a bankruptcy, and it isn’t a decision of whether your case will be denied. Rather, the court and trustee’s approach is to view your situation on whether you have any non-exempt assets, or any excess income. Our free consultation is to advise you of these issues and how to assess your options, before we file your case.
- 6. Will they take everything from me if I file bankruptcy? What property is protected from liquidation by a trustee in a chapter 7 bankruptcy?
The state of Nevada has rather generous exemptions to protect your assets, so it is very common that you will retain all of your assets in a chapter 7 case. In our initial consultation, we will analyze your asset situation and explain how you are protected, or if you have non-exempt assets, we will advise you on your options to deal with such assets. For example each debtor gets one vehicle to exempt so long as it has less than $15,000 of equity; the Homestead exemption protects your residence up to $550,000 so long as you have owned the property for more than 3.3 years; necessary household items such as furniture, appliances, kitchen wares, household tools and electronic items are exempt up to $12,000 per debtor; tax-exempt funds like 401(k)s and IRAs are exempt up to $500,000; family heirlooms and keepsakes, e.g., wedding rings – unlimited; tools of the debtor's trade up to $10,000; income from work up to 75%; and each debtor gets what is characterized as a catchall exemption up to $1000 that can be asserted against anything. So if you choose to keep your house, or your car, you simply continue making your regular monthly payments until paid in full, and your house or car is not effected. If a chapter 7 case will present difficulties for you, then we will discuss the benefits of a chapter 13 case.
- 7. Can taxes be discharged in a bankruptcy?
Income taxes can sometimes be dischargeable if they are more than three years old, from a filed return and the debt has been assessed by the IRS within 240 days before the filing of the bankruptcy.
- 8. Can certain debts be left out of a bankruptcy?
You are required to list all of your debts in a bankruptcy. And typically debts like medical bills, credit cards etc. that are unsecured will be legally discharged. However you have the right to continue to pay debts if you want to after the bankruptcy.
- 9. Do I have to file bankruptcy to solve my debt problems? What are my options?
During our initial consultation, we will present your options to you. Not everyone wants to file bankruptcy, nor does everyone have to. We offer other suggestions and services to deal with your creditors, negotiating a reasonable pay-off.
- 10. How long does it take to file a bankruptcy? What if I have an emergency and need to file immediately the same day?
If you are in a situation that is an emergency, for example, a foreclosure is pending on your house, or your car is soon to be repossessed, or even if your wages are soon to be garnished, we may file an emergency case immediately, that will put you under the protection of the bankruptcy court, so no creditor may take action against you.
- 11. Do I qualify for bankruptcy?
Any person may qualify for bankruptcy, even those who are self-employed. Individuals have two chapters they may file under, a chapter 7 or a chapter 13 case, depending on their personal circumstances. Our free consultation will assist on what may be the best option, or whether an option other than bankruptcy may be best. A chapter 11 case is not just for large companies, it is also for those who own businesses and/or have substantial assets and debts.