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Bankruptcy FAQs

The Sweeney Law Firm, P.C. Jan. 30, 2023

How often can I file for bankruptcy?

You can file a Chapter 7 Bankruptcy every eight years with the time starting at discharge (the end of your case) as opposed to the filing date. You can file for Bankruptcy Chapter 13 four years after receiving a discharge from a Chapter 7. If you previously received a Chapter 13 discharge, you cannot get another Chapter 13 discharge within two years. If you filed a Chapter 13 and want to file a Chapter 7, the wait time is six years from the Chapter 13 discharge.

Do you have to have a certain amount of debt to file?

In a Chapter 7, you do not need a certain minimum amount of debt to file a bankruptcy. In a Chapter 13, there are debt ceilings for unsecured and secured debt that you must not exceed.

How long does a bankruptcy case take?

A Chapter 7 case normally takes three to four months from filing to discharge. Cases can stay open longer if the bankruptcy estate recovers any assets, but the discharge will still arrive around the same period. The average for the length of a Chapter 13 bankruptcy is three to five years.

How does bankruptcy stop my creditors from harassing me?

As soon as your case is filed, creditors are not allowed to contact you for the duration of the bankruptcy unless they receive permission from the court. If you are in the process of filing a bankruptcy and have an attorney, then you can tell any creditors who are contacting you that you are going to file and give them your attorney’s information so they can verify that you are indeed going to file bankruptcy soon.

Under what circumstances can I discharge my student loans in bankruptcy?

You must show that the payment of the student debt “will impose an undue hardship on you and your dependents.” Typically, this test requires you to show that you cannot maintain even a “minimal” standard of living if you have to pay your loans and this situation is likely to continue for a significant part of your repayment term. Outside of these extremely unique circumstances, you will be unable to discharge student loans in bankruptcy.

Can I eliminate back income taxes by filing bankruptcy?

Yes, some back income taxes can be eliminated in a bankruptcy proceeding. Certain requirements must be met:
• You must have filed a tax return for the taxes in question at least two years before you filed for bankruptcy.
• The return must have been due at least three years before you filed.
• No fraud or intentional wrongdoing can be associated with the tax debt.
• The IRS or state tax authority cannot have assessed the taxes in the last 240 days from the date you filed for bankruptcy.
If the taxes are discharged, the taxing authority cannot go after your wages or bank account. But if it placed a lien on your real estate, the lien will remain and will need to be paid off when the property is sold.

Can bankruptcy help me if I am behind on my mortgage or my home is in foreclosure?

Both Chapter 7 and Chapter 13 offer advantages depending on individual circumstances.

Filing a Chapter 7 bankruptcy may be the best option as immediately upon filing, the bankruptcy creates a freeze (called an automatic stay) which stops creditors from continuing their foreclosure efforts. Many debtors wait until their house’s sale date to file their bankruptcy, which can substantially extend their time in the house.

If you are behind on mortgage payments, you might be best served by filing a Chapter 13. A Chapter 13 reorganizes your debt and prevents creditors from collecting immediately upon filing. You then must come up with a repayment plan to catch up on the late payments, as well as make your current mortgage payments in a timely manner.

Can bankruptcy help if I am behind on my car payments or if my car has already been repossessed?

Chapter 7 bankruptcy can eliminate that debt and help you recover. If bankruptcy is not filed in this situation, your creditors can get a judgment against you and will start trying to collect on it by garnishing your wages or seizing your bank accounts.

Chapter 13 is also an option for the debtor who is behind with car payments. The filing will freeze the creditors before they are able to seize the car and you could propose a repayment plan that if accepted by the court and not objected to by the creditor, could save the vehicle. Chapter 13 can also, in certain situations, lower the balance owed or interest rate on the vehicle.

Can bankruptcy help me if my wages have been garnished?

If you file for bankruptcy Chapter 7, the wage garnishing will stop immediately and, at the conclusion of the bankruptcy, the debt should be discharged.

While wage garnishing will also cease in a Chapter 13 bankruptcy, some of the debt might have to be paid as part of the debtor’s repayment plan. There are not many options outside of bankruptcy that can stop a wage garnishment. It would be smart to consider bankruptcy in these situations so no more monthly income is wasted on an old debt.

If I file for bankruptcy, does my spouse have to file for bankruptcy as well?

No, you are not required to file bankruptcy if your spouse files bankruptcy. However, it could be in your best interest to do so. If you share multiple debts with your spouse or have debt issues of your own, it might better to file with your spouse than to file later on your own.