Law Office Of Ronald E Norman, LLC
Frequently Asked Questions
Will a bankruptcy stop Mortgage Foreclosures, collections, repossessions, garnishments, Tax Collections and Garnishments by the IRS.
Yes in most cases. When you file a bankruptcy the court issues what is called an automatic stay. The automatic stay stops garnishments, repossessions, lawsuits, foreclosures, and other collection actions. This prevents your creditors from taking any type of collection action against you while the automatic stay is in effect. There are some exceptions which should be discussed with the attorney.
Will a bankruptcy stop creditors from harassing me?
Yes! It is a violation of federal law for a creditor to continue efforts to collect a debt after receiving written notification of a debtor's filing bankruptcy. Once the automatic stay is in effect, your creditors must contact your attorney and are forbidden by federal law to contact you except under very specific circumstances. You can stop creditor harassment.
Bankruptcies are covered under Federal Law and are divided into chapters. Which chapter is best for you is based upon your unique factual situation.
Chapter 7 - A chapter 7 bankruptcy is designed for individuals and married couples and individuals conducting a business as a sole proprietorship. Under a Chapter 7, some debts can be discharged and you do not have to repay the debt. In order to qualify for a Chapter 7 discharge your assets and income have to fall within certain guidelines. An attorney can review your situation and advise you as to your options.
Chapter 13 - A chapter 13 is also designed for individuals and married couples and individual conducting a business as a sole proprietorship. A chapter 13 is a reorganization. It differs from a chapter 7 in that a chapter 13 involves the repayment of some or all of your creditors. Normally a person would choose a chapter 13 over a Chapter 7 if they owned real property and were behind on their mortgage payments or taxes and wanted to get on a court approved payment arrangement to get caught up. Also under a chapter 13 you maintain possession of all of your property and if you are in business you can continue to operate your business.
Chapter 11- A chapter 11 although mostly used by businesses may be used by individuals under special circumstances. Under a chapter 11 you may continue to operate your business but your creditors and the court must approve a plan to repay your debts.
Chapter 12- A chapter 12 is similar to a chapter 13 but is used by family farmers.
What is a bankruptcy discharge and how does it operate?
One of the reasons that people file bankruptcy is to get a discharge of debts. A discharge is a court Order which prohibits all creditors which were listed in the discharge from collecting the debts. However, there are certain types of debts which cannot be discharge. Some examples include:
Federal and State Taxes which became due within three years from the filing of the bankruptcy petition many people are under the misconception that taxes are not dischargeable- this is not true. In fact, taxes due from more than three years from the date you file a bankruptcy petition may be discharged - but only if you filed your tax return on time (April 15); otherwise the taxes will be dischargeable three years after the time allowed to file in the extension.
Student loans. Most student loans are not dischargeable. However, there is a provision under the bankruptcy code where you may discharge a student loan if not discharging the loan would create a hardship however it is very difficult to meet this standard.
Court fines and criminal restitution
Personal injury caused by driving drunk or driving under the influence of drugs.
What is a Reaffirmation Agreement?
Many times even though a debt can be discharged, a person may want to reaffirm the debt. A reaffirmation is simply a negotiated repayment plan with your creditor. We notice that this is most common is Chapter 7 cases where a person has purchased a Home or a car and would like to keep it after the bankruptcy. Other people sometimes like to maintain a credit card so that they can begin to reestablish their credit.
Reaffirmation agreements are completely voluntary. A creditor cannot harass or coerce you into entering into a reaffirmation agreement. In order for a reaffirmation agreement to be effective, it must be:
1. Must be voluntary.
2. Must not place a heavy burden on you or your family.
3. Must be in your best interest.
*A reaffirmation agreement can be cancelled anytime before the court issues your discharge or within 60 days after the agreement is filed with the court, whichever gives you the most time.
Bankruptcy Law is Federal Law. This page gives you some general information on bankruptcy so that you are able to understand some of the basic principles. This is in no way intended to be a complete representation of bankruptcy law. We have simply highlighted a few of the more frequently asked questions that we receive from clients. Nothing contained on this page or anywhere throughout this web site is intended to be legal advise. A decision of whether or not bankruptcy is appropriate for your circumstances is not a decision that can be based solely on the information contained here. You may need legal advise. If you are considering bankruptcy or you would simply like to find out if bankruptcy is really the best solution for you, please contact our office. We will discuss your situation with you at no cost to you and let you know what we consider to be the best alternative for you.