Frequently Asked Questions About Bankruptcy

The following bankruptcy FAQs page is intended to answer basic questions some of our clients have had in the past. Leinart Law Firm provides legal solutions for debt in the Dallas-Fort Worth area and with more than 15 years of experience, we have the knowledge and expertise that are required for you to gain real financial solutions. If you don’t find the answers you’re looking on this bankruptcy FAQs page, we are only a call away from an appointment.

What is bankruptcy?

Bankruptcy is a proceeding under federal law that grants partial or complete relief from the payment of your debts. Upon filing the bankruptcy petition all creditor collection activities are stopped. The Bankruptcy Court enters an order relieving you from responsibility for paying certain debts.

What are some situations helped by bankruptcy?

If you are experiencing financial difficulty, our firm may be able to help you. We can help if you are:

  • Harassed day after day by creditor calls
  • Behind on mortgage payments or facing foreclosure
  • Behind on car payments or facing repossession
  • Overwhelmed with credit card debts and never ending minimum payments that barely make a dent in the total balance
  • Having your bank accounts, or wages garnished by judgment creditors
  • In debt because of a failed marriage or co-signed loans
  • Overwhelmed with high interest rates on finance company or personal loans
  • Stuck in the “pay check advance” cycle
  • Have back taxes that require a payment plan

What are the different types of bankruptcy?

For individual consumers and most businesses, the two types of bankruptcy proceedings available are Chapter 7 and Chapter 13. Chapter 11 is filed by businesses; normally larger corporations that are seeking to reorganize debts and continue operations.

What does it cost to file bankruptcy?

The filing fees paid to the U.S. Bankruptcy Court are $274.00 for a Chapter 13 filing and $299.00 for a Chapter 7 filing. It is very difficult to determine the amount of attorney fees until we meet with you to go over your specific information, but our fees are competitive with other attorneys in the area. The Court caps Chapter 13 fees and most of the fees can be placed into your three to five year payment plan. With Chapter 7 fees, a convenient payment plan can be set up to meet your needs.

Do I have to go to court?

Yes. All filers must attend a hearing that occurs approximately 30 to 45 days after the case is filed. However, it is nothing to be nervous about. It does not take place in a traditional “courtroom” and there is no judge present. The hearings normally are held in office building cubicles or other offices. In virtually all Chapter 7 cases this is the only appearance that must be attended and in many Chapter 13 cases there are also no other appearances needed.

Will bankruptcy wipe out all my debts?

While it is true that most debts are wiped out in a bankruptcy, there are some debts that are not. Examples of debts that are not wiped out are student loans, child support, some back income taxes, property taxes, and traffic tickets or government fines. Secured debts such as cars and homes are not wiped out if you want to keep the property.

Will I lose my personal belongings?

In the vast majority of consumer bankruptcy cases, debtors keep all of their personal and household belongings. Therefore, it is very unlikely that any of these items will be lost.

Will I lose my home equity or retirement funds?

No. All home equity and retirement plans such as 401ks, IRAs, and pension plans are considered exempt property and fully protected.

Can I keep my house if I file bankruptcy?

In a Chapter 7, if you are current on the mortgage payment you will continue making your payments as usual. If you are behind on your mortgage payments, filing Chapter 13 will allow you to keep your home. You will resume making the regular payment and you will be able to catch up the mortgage payments by placing the past due amount in your Chapter 13 payment plan.

Can I keep my car if I file bankruptcy?

In a Chapter 7 case, if you are current on the vehicle, you will continue making your payments as usual if you sign a “reaffirmation agreement” stating that you want to keep the vehicle and continue making payments. In a Chapter 13 case it may be possible to reduce the payments to a more affordable amount. This is because in some situations the interest rate can be lowered, and also the amount paid back can be either the current Blue Book value of the vehicle or the amount owed on the vehicle, whichever is lower. This is very helpful for someone who owes more on the car than it is worth (“upside-down”).

How will I reestablish credit?

The first step is to make sure that your credit report is as clean as it is supposed to be. This may take writing the three major credit card bureaus to dispute or provide documentation (such as all of the debts that were discharged in the bankruptcy) to include on your credit report. The second step is to establish a good payment record and have that properly documented on your credit report. A good payment record can be accomplished by making on time payments on your house and cars and by obtaining one or more secured or unsecured credit cards. Even though a major part of bankruptcy is to wipe out credit card debt and keep it that way, it can help reestablish credit to charge small amounts and pay the balance in full each month.

When is bankruptcy necessary?

If you are burdened with debts you will never be realistically able to repay, ignoring the problem won’t make it go away and bankruptcy may be the only way to turn your life around and get a fresh start. Bankruptcy will stop creditor harassment and lawsuits and is often the only way to stop foreclosure on your home or repossession of your automobile.

Can I file bankruptcy if I am going through a divorce?

Yes. The divorce court can still award custody, visitation, child support and alimony, but the divorce court must wait to divide marital property until the bankruptcy court gives approval.

Can bankruptcy help if I owe back income taxes?

In a Chapter 13 case, you can pay off your taxes in your payment plan, normally without interest or penalties. There are also instances where the back taxes can be discharged. There are numerous tests that must be met in order for back taxes to be discharged, and they begin with the requirement that the taxes must be at least three years old.

What can I do to stop foreclosure?

The filing of a Chapter 13 case will stop a foreclosure proceeding immediately. The amount you are behind on your mortgage payments will be placed in your payment plan and paid back over a manageable three to five year period.

What can I do to stop my car from being repossessed?

The filing of a Chapter 13 case will stop a vehicle from being repossessed and can return a vehicle that has already been repossessed if the case is filed quickly (normally 10 days, but the sooner the better). The vehicle payment will then be paid through your monthly Chapter 13 payment. The payment allocated for the vehicle is often more manageable because the interest rate can often be lowered and if you owe more on the car than it is worth, the car can be paid back based on the current Blue Book value.

Does bankruptcy eliminate student loans?

There are rare exceptions, but in most cases filing either a Chapter 7 or Chapter 13 bankruptcy case will not eliminate student loans. Many debtors have their student loans deferred during their bankruptcy, but they are not eliminated.

What is a Chapter 7 bankruptcy?

Chapter 7 bankruptcy can discharge (get rid of) most unsecured debts, for example, credit cards, repossession debt, eviction or broken lease debt, some taxes, past due utilities, and medical bills. Chapter 7 stops wage garnishments, liens, levies, and lawsuits. Most individuals experiencing financial difficulty will qualify. You will be required to continue making payments on your secured debt (house and car payments, for example).

What is a Chapter 11 bankruptcy?

Corporations, partnerships, and sole proprietors that want to remain in business and reorganize their finances can file a Chapter 11. A Chapter 11 restructures the debt, either by reducing the debt or by extending the time to repay. A liquidation of all or a portion of the debtor’s assets may occur.

What is a Chapter 13 bankruptcy?

In Chapter 13, some debts may be repaid in an affordable manner. Chapter 13 allows you to modify some loan agreements and even eliminate significant portions of unsecured debt. Chapter 13 allows for the repayment of only what an individual or family can reasonably afford. If your home is in foreclosure a Chapter 13 will stop the foreclosure immediately. You will be provided the opportunity to get caught up on your mortgage payments over a three to five-year period, with reasonable monthly payments. Chapter 13 protects your car from repossession and may also reduce the amount you owe. Even if your car has already been repossessed, your car lender may be ordered to return the car to you if you act quickly. Chapter 13 also stops garnishments, tax levies, and lawsuits. Back income taxes can be paid through Chapter 13 without further interest or penalty and in many cases less than the full amount of the taxes must be repaid. Some back property taxes can also be put into your payment plan.

What about credit counseling?

Many of our clients find themselves in a worse financial situation after trying credit counseling. There are reports on a regular basis in the media of unscrupulous people entering this unregulated industry. Recently there have been hearings in Congress about this potential consumer fraud.

Will creditors continue to call after filing bankruptcy?

Filing of the bankruptcy petition serves as an automatic order to all creditors to stop all collection activity. If your creditors are calling day and night, you may want to consider bankruptcy.

Which types of bankrupcty does Leinart Law Firm handle?

We represent businesses and consumers with Chapter 7 and 13 bankruptcy proceedings.

How will the Leinart Law Firm work with you?

If you would like more information about the Leinart Law Firm we are happy to provide it. There is never a charge for an initial consultation and you will pay no legal fees unless you hire us. Our legal and support staff strives to satisfactorily meet client objectives and goals by focusing on your case. Should you choose to have us represent you, we will do the following:

  • Meet with you in our office to learn all the facts relating to your case.
  • Explain to you all of your important legal rights and options.
  • Review your financial records in order to obtain a full understanding of your case.
  • Answer all of your questions regarding bankruptcy.
  • Keep you advised and informed about the progress of your case.

Contact Us in Dallas, Fort Worth, or Plano

Contact us at the Leinart Law Firm at 800-518-3328 to schedule a free, no obligation consultation and evaluation, or complete our online bankruptcy evaluation form if your questions were not answered on the bankruptcy FAQs page .