Bankruptcy Basic's and The Last Resort

The Basics of California Bankruptcy Laws

 In its most basic form, California bankruptcy law is a consumer protection law. It is a federal process which allows consumers to have their qualifying debts forgiven.

The law recognizes that bad things sometimes happen to good people, and consumers sometimes simply do not have the ability to comply with creditors' repayment demands.

California bankruptcy laws are based on forgiveness rather than punishment. Bankruptcy does not seek to deter or regulate certain behavior as other laws do; it simply recognizes that there are sometimes circumstances beyond the consumer's control which can only be addressed through the cancellation of debt.

Filing for bankruptcy puts into effect an automatic stay, which stops creditors from trying to collect any debt from you. The automatic stay immediately stops creditor phone calls, collection letters, wage garnishments, lawsuits, bank levies, and all other types of harassment, intimidation and scare tactics by creditors.

Once a bankruptcy case is successfully completed, the consumer receives discharge information from the Bankruptcy Court. A Discharge is a legal release from debts. Creditors are left with no legal cause to contact you or pursue debts listed in the bankruptcy documents.

There are two common ways for the typical consumer to file for bankruptcy, Chapter 7 and Chapter 13. Chapter 7 is the most common type of bankruptcy. It allows a consumer to discharge debts completely through a relatively short process. Chapter 13 is a federal debt consolidation plan which allows you to rearrange your financial affairs and repay just a portion of your debts. In most cases, the idea is to allow you time to get back on your feet.

Bankruptcy Attorneys, California and other States.

National Loan Auditors hopes that the information on our site will  help you in the choices you need to make. Please do not confuse our site with legal advice. We are not attorneys and we do not give legal advice. If you are seeking help, don't hesitate to contact us. We'd be happy to recommend a bankruptcy attorney in our network that you can trust.

The Decision To File Bankruptcy

 Bankruptcy is not a personal, emotional decision, it's a financial decision based on your amount of debt, your income, and your present ability to repay debts.

When the expected time period for the repayment of creditors, in full, exceeds the time it would take to rebuild credit, bankruptcy should be given serious consideration. Legally, credit is fully restored in 7-10 years, however in many cases borrowers can obtain attractive credit offers within two years of filing bankruptcy.

A good bankruptcy attorney or lawyer an help out with this process. Instead of struggling with minimum payments for months or years and ending up in the same place you are today, you can use that time to rebuild credit and save money for the future. Learn more about California bankruptcy law and consider retaining the services of a California bankruptcy attorney to assist you.

If you are in a situation in which you have accumulated more debt than you will be able to repay in the foreseeable future, then you probably will benefit greatly from filing bankruptcy and taking a debt-free fresh start.

By filing bankruptcy with qualified attorneys, you give yourself a chance to rebuild and re-establish credit and staying in line with the law. Many people get too caught up in worrying about how they're going to incur future debt, when the focus should be on the best way to deal with the debt they have now.

When you're debt-free, the future will take care of itself. Learn more basic bankruptcy information and think about consulting a good bankruptcy lawyer.

For qualified bankruptcy lawyers in California, turn to National Loan Auditors for bankruptcy assistance. We are here to work with you and assist you in any way we can. Contact us today and one of our bankruptcy attorneys will follow up with you on how to proceed and let you know what documents are needed.

Bankruptcy Laws

Chapter 7 Overview

Chapter 7 is the most common type of bankruptcy, it is sometimes referred to as "liquidation bankruptcy," or "straight bankruptcy." The basic purpose of chapter 7 is to provide you with a fresh start by wiping out all qualifying debts including credit cards, medical bills, repossession deficiencies, law suits as well as a variety of other debts. Bankruptcy lawyers can help with the process. In chapter 7 there is no repayment required for most unsecured debts, your debts are wiped out completely and permanently. In about 99% of chapter 7 cases, the consumer keeps all property, and eliminates most debts. The entire process usually takes less than 4 months to complete. After the bankruptcy is over, the consumer may choose to selectively pay back debts, such as debts to family members, however repayment is not legally required.

The Chapter 7 Process

In chapter 7 the typical consumer only has one meeting with the bankruptcy trustee. The purpose of the meeting is to give creditors a chance to ask questions, although it is very rare that a creditor shows up; it is mostly handled by attorneys. The trustee may also ask you questions about particular items on your petition usually focusing on assets or income. Most meetings take only a few minutes. Some consumers feel some level of anxiety or fear leading up to the meeting with the bankruptcy trustee, but there is no reason to fear the trustee. The trustee is looking for people who are hiding assets or trying to defraud the system, they don't want to harass or scare the common consumer. The meeting will take place in an ordinary conference room, and the trustee is not a judge; the setting is informal. After the meeting, the first thing most people say is "...that's it?...that was easy." Once the meeting with the trustee is done, the only thing left to do is keep your address current with the court, and wait for your discharge to come in the mail.

Chapter 13 Overview

Chapter 13 provides consumers with a way to consolidate debt under federal law and repay creditors a portion of what is owed over time. The idea behind chapter 13 is that the consumer makes sufficient income to pay all current living expenses (rent, food, car, utilities, etc.), but not enough to pay off all debts in full or comply with creditor's demands. In chapter 13, living expenses are paid first, then whatever is left over goes into the consolidation plan. The plan is not based on what you owe (in most cases), it is based on your ability to repay creditors. The calculation of your plan payments involves many variables, but most importantly it is based on your income and expenses. Whatever is left at the end of the month goes into the plan, even if it only pays creditors pennies on the dollar. Chapter 13 can be particularly useful for consumers with assets over the exemption amounts, or non-dischargeable debts.

The Chapter 13 Process

In chapter 13, you must submit a plan in which you set out a budget detailing your take-home pay and monthly living expenses. Any excess income is paid to the bankruptcy trustee who then distributes money to creditors on a pro-rata basis. The plan lasts for 36 to 60 months, unless your debts are fully repaid in a shorter period of time. At the end of the chapter 13 plan, any amounts still owing on your unsecured debts are forgiven. Chapter 13 payments can be automatically withdrawn from your bank account by the trustee if you choose.

Mortgage Problems

Another benefit of chapter 13 specifically for homeowners is back mortgage payments can be put into the chapter 13 plan and paid off over the plan period, rather than all at once. So long as you can continue to make regular post-petition mortgage payments, the bank can't foreclose on your house because you chose to put mortgage arrearages into a chapter 13 plan. In fact, chapter 13 was originally designed for this purpose, to prevent foreclosures.

Tax Debt Information

Typically government debts are not dischargeable, however there are great benefits to putting tax debt into a chapter 13 plan. Chapter 13 freezes interest and penalties on taxes. This gives you a chance to budget out a repayment plan in real dollars, the payments you make go directly to reduce the principle. Most people trying to repay back taxes are fighting an uphill battle with interest and penalties working against them, but in chapter 13, you get a break from the government and pay off just what you owe on the day you filed the case.

Chapter 11 Bankruptcy Information

Chapter 11 works for businesses similarly to chapter 13 for individuals. One of the main differences is the business owner or president becomes the trustee in a chapter 11 called the "debtor in possession." This carries with it a plethora of responsibilities and duties to maintain the business for the benefit of creditors. Also, in chapter 11 the United States Trustee is intimately involved in the operation of the business until the case is complete. The bankruptcy court takes debtor in possession fiduciary responsibilities very seriously. Chapter 11 is a major commitment on the part of the business owner or president, and the attorney involved. The complexities of chapter 11 are beyond the scope of this website, but can be explored in a free consultation with a bankruptcy attorney.

Bankruptcy Principals

Your Property

When you file bankruptcy, your property becomes subject to administration by the bankruptcy court, referred to as your "bankruptcy estate." However, because something is part of the bankruptcy estate does not mean you will have to give up this property, National Loan Auditors and our California bankruptcy attorney’s, can help. The bankruptcy court's representative, the "bankruptcy trustee" will not take from you any property which is "exempt." For California residents, the exemptions available in bankruptcy are quite generous and in over 90%of the cases filed, nothing is ever taken by the bankruptcy trustee. Property recently given away to friends or family members is also considered property of the bankruptcy estate. People considering bankruptcy often are tempted to simply give their property away, or pay "favorite" creditors to avoid going into bankruptcy with property. This technique is never a smart idea according to bankruptcy lawyers. Property given away shortly before filing is still part of your bankruptcy estate, and the trustee has legal authority to recover the property. If you have already given property away, the property simply needs to be listed on the petition. It is always better to deal with asset problems straightforwardly, than to hide assets in bankruptcy.

Community Property Information

It is also part of the bankruptcy estate. All property either spouse earns during marriage is owned jointly by both spouses and should be included in the bankruptcy petition. Similarly, most debt incurred by either spouse during marriage is considered "community debt" even if it is in only one spouses name. However, there are some situations where it is perfectly acceptable for a married person to file individually. Retirement accounts are often not even considered part of the bankruptcy estate. Property outside the bankruptcy estate is not subject to administration by the bankruptcy trustee. The bankruptcy court recognizes that you will someday need this money to survive, and there is no future in punishing you by taking your future income away.

Exemption Information

California law (Read more California bankruptcy law basic information) provides generous exemptions to both homeowners, and non-homeowners. "Exempt" property is property that the bankruptcy court protects for you. The bankruptcy trustee may not administer, or sell, exempt property, it is property of which you stay in possession, and keep, after your case is completed. The application of exemptions to property can vary greatly between cases, but certain generalizations can be made to give you an idea of what to expect. If you have assets over the allotted exemption amounts discussed below, don't worry, your case will simply need to be a chapter 13 instead of a chapter 7.

Homeowners Information

Under the California exemption system designed for homeowners, your home's equity is exempt up to $50,000 for an individual with no children living at home, $75,000 for a married couple, or individuals with minor children living there, and $125,000 for disabled individuals unable to work. To claim an exemption on property however, you must live in the house as your principle residence. If you do not live there, you may not claim a homestead exemption. Consumers claiming a homestead exemption are not eligible to also claim the wild card exemption discussed below.

Non-Homeowners

Under the alternative system of exemptions in California, a consumer may claim a "wildcard" exemption in any property up to an amount of approximately $18,000. You can use the exemption on any property, even cash or money on deposit.

Additional Exemption Information

In addition to the homestead and wildcard exemptions, there are also separate exemptions (which apply in either system discussed above), for other types of property. A list of property that can qualify as exempt includes: a car, furniture, clothing, government benefits, jewelry, hobby equipment, tools used on the job, earnings on deposit, qualified retirement plans, health aids, and much more.

The Discharge

The bankruptcy discharge is very powerful, it is the legal excuse you need to make a fresh start. Once the bankruptcy attorney reviews your case including your assets, debts, income, expenses, and is satisfied you have come to the bankruptcy court to follow the law and make a full disclosure of your financial affairs a discharge will be issued to you relieving you of the responsibility to pay all qualified debts. The discharge comes in the mail from the bankruptcy court approximately 2-3 months after your meeting with the trustee. The issuance of the discharge formally concludes you bankruptcy case and begins your new post-bankruptcy liberation from debt. Bankruptcy attorneys in California can help you out through all processes involved.

 The New Bankruptcy Law Change

Major changes that will affect those filing Chapter 7 or 13 include:

Before someone can file bankruptcy for either Chapter 7 or Chapter 13, they must complete credit counseling with an agency approved by the United States Trustee’s office. Before their bankruptcy case is over, they must attend another counseling session, this time to learn personal financial management.

Only after a person submits proof to the court that they fulfilled this requirement can they get a bankruptcy discharge, preventing most of their creditors from collecting debts incurred before the filing of the bankruptcy petition.

A person’s income is a factor in determining whether a person files for Chapter 7 or Chapter 13. The higher their income, the more likely they will have to file for Chapter 13. A means test will be used to calculate their “disposable income”.

Don't wait any longer, please Contact us today to advise you on your bankruptcy options.

There are fewer “Automatic Stay” protections under the new law. Protections designed to delay or stop eviction actions, legal actions, or divorce proceedings have been narrowed under the new law.

Under the new law, a person must live in a state for at least two years prior to filing in order to use that state’s exemption laws. Otherwise, they must use the exemptions available in the state where the person used to live for the greater part of 180 days prior to filing.

Chapter 13 filers have to hand over all of their disposable income, but now they have to calculate their disposable income using allowed expense amounts dictated by the IRS — not their actual expenses — if their income is higher than the median in their state. A person looking to file Ch. 7 or 13 must provide proof of their income in the form of federal tax returns and pay stubs. A chapter 7 debtor cannot receive a discharge if a prior discharge was received within 8 years of the new filing.

Bankruptcy Alternatives

Credit Counseling in California

There are a number of services offering credit counseling that are available to consumers today. It is usually best to use a local credit counseling organization as out-of-state organizations may not be familiar with the laws which apply to you and can cause problems for their clients.

Credit counselors typically try to negotiate more favorable terms with unsecured creditors (like credit cards) in the form of reduced interest rates, however payment of the full amount of the debt is still required.

Sometimes credit card companies will agree to these types of terms if a credit counseling service is involved. However, some creditors are unwilling to work with credit counseling services and the credit counseling services have no way to force them to do so. Be cautious when working with a credit counseling firm because if their attorneys or lawyers do not remit your payments on time or underpay a creditor you will be the one who suffers.

Debt Consolidation Information

Debt consolidation outside of bankruptcy usually involves using a valuable asset, like your house, as collateral for a new loan. In debt consolidation, you often use one loan to pay off another, but the new loan is secured instead of unsecured. That means if you fall behind on the new loan for some reason, the creditor can take or sell the collateral. You may be able to lower your cost of credit through a new loan, but the principle (total debt you owe) remains the same, and often it's your home at risk.

In most cases, debt consolidation does nothing more than turn unsecured debt into secured debt. If you can't make the required payments, you could lose your home as well as the equity you've built up.

Debt Negotiation Information

Debt negotiation has become a very popular business recently, however, it rarely provides the consumer with any meaningful relief. In debt negotiation, a "negotiator" simply solicits settlement offers from your creditors on you behalf. If the attorney is successful, the creditor will expect a lump sum payment in the range of 50% of the total debt upon settlement. In addition, the negotiator will also expect a handsome reward for his "settlement."

Debt negotiation can facilitate lawsuits if the lawyer is unable to reach a settlement under the "get it while you can" theory used by many banks and lenders today. Debt negotiation works best when there is just one or two old debts to "clean up" on your credit report. Keep in mind, however, you need readily available cash with which to settle debts because most creditors will not keep a settlement offer open for long.

Bankruptcy Can Have a Positive Impact 

Many people who file bankruptcy don’t understand what a positive impact it will have on their lives. Bankruptcy is a powerful federal law designed to protect you from abusive and predatory debt collectors. Bankruptcy can protect assets, give you leverage with creditors, and provide peace of mind immediately.

Bankruptcy offers you ways to actually solve bill problems by immediately stopping creditor phone calls, collection letters, wage garnishments, lawsuits, bank levies, repossessions, foreclosures and all other types of harassment, intimidation and scare tactics by creditors. Once the harassment is stopped, debts may be “discharged” or legally excused, under Federal Law.

As we have stated, the most common types of bankruptcy for consumers are Chapter 7 and Chapter 13. Chapter 7 is often the best choice for because it can eliminate debts completely and permanently. You get relief right away, and the opportunity to start fresh immediately. There is no repayment plan in Chapter 7.

The other common way to file is Chapter 13, or debt consolidation. Chapter 13 is not a loan, but a federal law which requires your creditors to accept only what you can afford to pay them as payment in full. In many cases that means just a few pennies on the dollar. In Chapter 13 all your necessary expenses are paid first including rent (or mortgage), food, car, insurance, gas, utilities, child care, clothing, etc. Once those necessary monthly expenses are paid, only what’s left over goes into your consolidation plan. Nothing you can’t afford.

You may think that after you file bankruptcy, you’ll never be able to finance a car or buy a house again. Well, that’s simply not true. You may not realize, one of the most important items on a credit report is your debt-to-income ratio, and as you can imagine, once your debt is wiped out, that ratio improves dramatically. Without the burden of debt you’ll also be more able to save for a down payment which further enhances your standing with lenders.

There are even home mortgage programs available for consumers right after bankruptcy.

Recovering From Bankruptcy - How To Get A Loan After Filing Bankruptcy

Q: I'm making Child support payments, but I still owe plenty in back support, does chapter 7 help?

A: Child support is one of the few things that can not be discharged in chapter 7. 

Q: Hi, My husband and I make good money and have two young children. As of right now, my husband alone is in a $30k debt in credit card bills. I owe approximately $6k. If you add our car, that's an additional $15k that we owe. I'm currently going to school and this does not include my upcoming student loans. We don't own our home, and we are not behind in any of our bills. We manage (somehow) to make minimum payments on everything. We don't have perfect credit, but we also don't have poor credit. I know it will take decades for us to pay everything off, is bankruptcy the right solution for us in order to get a fresh start?

A: You have up to five years to catch up on the arrearages. It gets creditors off your back, and gives you some time to decide what to do. You can also sell your house out of the chapter 13 voluntarily rather than having it sold for you by the bank.  If the goal is to have no debt and serviceable credit as soon as possible, it certainly sounds like bankruptcy would be the quickest way to get there. Making only minimum payments each month is a dead end because you'll never get out of debt that way, you're just putting off the inevitable. You could find yourself in the exact same position, with all the same debt two years from now. Bankruptcy does damage your credit, but more importantly it gives you a chance to start over with no debt.  Once you're debt free, you can concentrate on rebuilding your credit and saving money for a down payment on a house. In two years, you can have your credit rebuilt, and enough money saved to get into a house. Bankruptcy is the quickest way to get there for most people because a lender won't consider you for a mortgage until most unsecured debt is paid off.

Q: Hi, just a quick question...my brother got into financial problems with a credit card and he went to legal aid who filled out the papers for him to file for bankruptcy, my brother stated he wanted 3 things...(1)TO DO NOTHING THAT WOULD GET HIM INTO TROUBLE (2)TO NOT HAVE HIS HOUSE INVOLVED IN ANY WAY (3)TO HAVE SMALL PAYMENTS WHEN IT WAS ALL DONE. They said "not a problem" filled out what they needed to, my brother took the papers to the right place, filed them and then waited for the meeting. At the meeting he was told he is not allowed to say anything and they proceeded to have the meeting during which they said "yes you can have the chapter 7 and the debtor will take the equity in the house." His house is worth$310,000.00 (upon which he only owes $45,000.00) and the credit card bill is only $10,200.00. He said "your taking my house?" and they said "no...just the equity" so he said "I don’t want to file for bankruptcy anymore" and they said "oh well, there is no backing out now, you already filed!" NOW my question is this...Isn’t there some way for this poor guy to get out of this? Surely there is some way to stop a bankruptcy once it is started? He has another meeting on the 26th for which they 'suggested he get a lawyer.

A: Unfortunately it is not possible to simply voluntarily dismiss a chapter 7 without the trustee getting the opportunity to object.  At this point, since the trustee is now aware of the equity in the house, there is very little chance of getting out of the bankruptcy.  I know you don't need me to tell you, but it is so dangerous for people to file bankruptcy without a lawyer.  Bankruptcy is a legal process, it is not simply filling out forms.  Programs like legal aid or document preparation programs or paralegals are not attorneys and can not give legal advice.  They make it sound like they've done it before and it's easy, but it's the consumer taking the risk.  The best option now, is probably to convert the case to chapter 13 sell the house through that process.  It gives you a chance to remain in control, rather than have the trustee just sell it for you.

Q: How much does it cost to file for bankruptcy? I have been off work off and on for the last two years due illness. I signed on with a credit repair company in 2002, who ended up ripping me off and at the end one year of payments I owed my creditors more than when I started.  I can't pay and I can't pick up the phone anymore. No one will take a portion of the payment, all my creditors want the full amount per month and with the late pay and overage fees I will never pay these bills.  I'm on disability! I live on half my salary right now!  I want to pay, I just don't have it! HOW MUCH DOES IT COST TO FILE AND COMPLETE THE PROCESS?

A: The cost for filing bankruptcy varies with the complexity of the case.  However, most chapter 7 cases can be handled for a flat fee of $800 plus a filing a fee (charged by the court) of $209 for a total of $1009.00.  If you like, you can make payments on that amount, but we can't file the case in court until the full $1009 is paid.  During the time it takes you to pay it off you can refer creditor phone calls to us.  Telling them you've retained a bankruptcy attorney and give them a special number we've set up for creditors.  Please call us and we'd be happy to discuss the details of getting started. Thanks.

Q:My bankruptcy was discharged in 1996. At the time I was told the negative impact on my credit report would be 7 years. Apparently the reporting guidelines changed and now its 10 years. Can you tell me if the 10 year change was only for filings after the change...i.e. is there a grandfather clause in the reporting change? Thanks.

A:The credit reporting agencies reporting period varies.  I believe public record filings, like bankruptcy or lawsuit judgments, stay on for 10 years.  However, every consumer should monitor their credit closely.  I would suggest a credit repair company for anyone coming out of bankruptcy because there are so many opportunities for mistakes after a bankruptcy.  Thanks for your question.

Q: Can you avoid having your vehicle repossessed by filing bankruptcy? And can you be forgiven of your debt of your vehicle to be able to keep it after filing bankruptcy and what is the quickest amount of time taken to file bankruptcy?

A: Bankruptcy will slow down the repossession process, but not prevent it from happening.  Since the vehicle in questions is secured collateral, the creditor always has a right to come get it because they are the legal owner.  In bankruptcy, you'll have the choice to surrender the vehicle, and owe nothing more, or continue to make payments and stay current and keep the vehicle. 

Q: I have a creditor that was not included in my chapter 7 bk from 1999. I was unable to make payments to him as of last year and they have now sold my account to another firm for collection. I offered to make payments last year but the company wanted at least $5000 lump sum or they would not accept payments. I did not have that amount to give them. And I still don't. For the most part, I have made payments to my other creditors in a timely manner and it shows on my credit report as such. I have now received summons that was literally left at my front porch without an envelope or anything to protect the nature of my privacy while I was out of state. It is to be heard at our local superior court and is listed as a "limited liability case" for the credit card company I had tried to make payment arrangements with. I still own a residence out of state, two cars over ten years old, but no stock, bonds, retirements or savings. I am now on workers compensation with a very limited income and am not able to pay at this time. When I return to work I could start the payment offer I made before and repay the debt but my attempts as I said were thwarted last year. I did not owe any money to this creditor when I filed the bk but I transferred monies from my mom's credit account to mine because it was money I owed to her. I have not bought any large ticket items since before my bk. Is there anything I can do to try and negotiate further since this is now going to court and my financial resources are even more restricted due to my work injury?

A: It sounds like you had the account open prior to the filing of the 1999 bankruptcy. If that's the case, you may have an argument to make. I would say your best bet is to go to court on the day listed on the summons with a copy of the cover sheet of your 1999 bankruptcy. There is some case law to support the position that even if an account is not listed on the petition, it is still discharged because you had the opportunity to discharge it. When you get in front of the judge just give him the facts and let him make the determination. Tell him you filed bankruptcy in 1999 and this account was open prior to that filing. Make sure to bring a copy of the 1999 bankruptcy cover sheet to give to the judge.

Q: I moved here 7 yrs ago from another state. Recently I was contacted by a collection agency in another state saying that I had 14k in debt owed. I asked them what this was in regards to and I was told to "just pay my F****** debt." I asked them to please send me what it was they were trying to collect for and I never received anything. ( They did read back to me my current mailing address, and I am not hard to find ) Now I just received a notice that they are garnishing my wages via a court order, and I was never informed of this and quite frankly I barely make ends meet as it is being a single parent. Can filing BK get rid of this?? I don't have any other debt other this. I have one credit card that I use sparingly and pay off every month.

A: If the judgment is for a credit card, medical bill, or other unsecured, non-priority debt then it is dischargeable in bankruptcy. Dischargeable means it is no longer enforceable against you.

Q: I've built up around $35K in credit card debt as a result of some entrepreneurial ventures over the last 4 years. in addition I have student loan payments coming due soon which had been in deferment. By robbing Peter to pay Paul I've kept all but one of my credit cards from being sent to collection - about $6600. I have just accepted a new job that I will start soon but when I look at the combination of my living expenses (truly not extravagant), student debt, and credit card debt I am still up to my eyeballs with no real end in sight. Three questions.
1. Is Chap. 7 or 13 my best option given the amount of unsecured debt and do I have a choice as to which one or is that simply based on income?
2. My wife and I have been married for 2 years but most of the debt was racked up before we were married. Would it be better and is it an option for me to file separately?
3. Does it make more sense to start the process before or after I've started my new job?

A:  It sounds like you're in good shape to do a chapter 7, which is the quickest, easiest and least expensive way to go.  Chapter 7 would allow you to discharge the credit card debt with no repayment plan.  The money you would have spent on credit card payments over the next few years can go into savings for a down payment on a house.  After about two years, you can have your credit rebuilt to the point of qualifying for a good mortgage interest rate, and a down payment to close the deal. Without the bankruptcy, you'd have to pay off the $35K in full, and then start saving for the down payment.  This would set you back..  The objective for everyone should be getting into a house and building equity as soon as possible; bankruptcy provides the clearest path.   The student loans are not dischargeable in bankruptcy, however mortgage lenders don't count student loans against you like credit  cards. 

Q: I don't have any credit cards or owe any car loans. The only debt I have is court fines and recently a judgment against me for 2500.00. I have no job and live with my grandmother. I cannot pay any of this, I have been making small payments to the other fines working with friends but in June I cut my hand off with a table saw and its only now starting to heal. I can't even move what fingers I have left. Can someone give me some advice here?

A: Generally, court fines are not dischargeable in bankruptcy.  This means even if you filed bankruptcy the court could still come after you for the money after the case was finished.  One option you do have is a chapter 13.  This is a repayment plan.  You'd end up paying the court fines in full, but you'd get five years to do it.  However, chapter 13 requires regular income.  You'll have to wait until you have predictable monthly income to get into a chapter 13.  I wish I had a better solution for you, it's a tough situation. 

Q: How long does it take to file chapter 7?

A: For a chapter 7, from the time the case is filed, it takes about 4 months to complete. However most of that time is just waiting for the court to process the discharge paperwork. Your responsibilities (as the debtor) are usually over in about one month.

Q: I received a letter from my finance company for my car. They asked if I plan to reinstate and resume making post-petition payments as agreed in my contract. If so, I need to pay the past due amount and all subsequent payments. If not, they want to file a Motion for Relief from Stay. Can you explain to me what all this means?

A: Anytime you fall behind on car payments, the creditor can repossess the car. Bankruptcy doesn't really change anything because the property is "secured." The creditor has the same rights in bankruptcy as they had before the case was filed, the only difference is they have to ask the Bankruptcy Court for permission to repo the car once you file a Bankruptcy case. A Relief from Stay motion is just that. The creditor asking the court for permission to go recover their secured collateral. If you are current on the car payments in Bankruptcy, however, the creditor can not repossess the car because the court will not allow them Relief from Stay.

Q:What type of questions are asked at this meeting by the trustee and creditors?A: The trustee will ask you the following questions: What's your name? , What's your address? Is this your signature on the petition? Did you read it when you signed it? Did you understand it? Did you list all your assets? Did you list all your debts? Do you want to make any changes? Creditors may also ask questions, however it is rare for a creditor to show up.

Q: If a law firm is granted confirmation of an arbitration award through the court, that was originally awarded to them through an arbitration forum, can they then take that judgment confirmation and get a legal hold on bank accounts?  Can they just go in to a bank and withdraw funds from a persons account without notice?

A: The arbitration award allows the creditor to shorten the "default judgment" process.  The arbitration award by itself does not have legal effect, but it does allow the creditor who holds it to very quickly turn it into a default judgment if you don't immediately respond once they file it with the court.  Once the default judgment is entered, then the creditor can begin enforcement, which can include wage garnishment and bank levy. The creditor still has to give you notice and an opportunity to respond before the court will enter the default.  You can file bankruptcy at any point in the process to make the arbitration award/judgment unenforceable against you (so long as it is for a qualifying debt).