Hicks & Alhejaj, P.C. is pleased to provide the answers to questions that are frequently encountered in our bankruptcy practice. We help consumers and businesses in Omaha and throughout Nebraska and Iowa find debt relief through Chapter 7, Chapter 11 and Chapter 13 bankruptcy. We hope that this information is helpful to you. We also offer free first visits where we can answer your questions in greater detail.
If you have any further questions regarding bankruptcy or debt issues and don’t see an answer on this list, please contact our office at 402-401-4916 or online.
Will filing for bankruptcy ruin my credit?
There is no easy answer to this question. If you are behind on your bills, your credit may already be suffering. In all likelihood, filing for bankruptcy will not make things any worse, and in the long run, it may significantly improve your credit. An important factor in your credit rating is “debt to income ratio.” The smaller the debt and the higher the income, the better. Bankruptcy improves your debt to income ratio almost instantly. Many times, credit rebuild happens within months of your bankruptcy discharge.
How long does bankruptcy stay on my credit report?
Chapter 13 bankruptcy stays on your credit report for seven years. Chapter 7 bankruptcy stays on your credit report for ten years. Despite what some “credit repair” companies may advertise, you cannot remove Bankruptcy from your credit report before the allotted time. If you file for bankruptcy, the attorneys at Hicks & Alhejaj, P.C. can help advise you on the steps to take that may immediately begin restoring your credit.
Will I lose my house (even if it’s in foreclosure)?
NO. In general, if you are current on your house and you can continue to pay for it, you can keep your home. If you are behind on your house payments-even if it is in foreclosure- filing for bankruptcy can give you the opportunity to catch up on your house payments. However, there are specific limitations in the law on how much value you can keep when you file for Bankruptcy. We have helped thousands of people save their homes. The best thing to do is call and ask us about your specific situation.
Will I lose my car (even if I’m behind on payments)?
In general, if you are current on your car payments (or other vehicle) and you can continue to pay for it, you can keep your car. If you are behind on your payments, in certain cases filing for bankruptcy can give you the opportunity to catch up and handle the repayment. However, there are specific limitations in the law on how much value you can keep when you file for Bankruptcy. The best thing to do is call and ask us about your specific situation.
Can I get my car back from repossession?
YES. Even if you are behind on your payments, or your car has been repossessed, filing for bankruptcy can give you the opportunity to get the car back in certain cases, but you must act quickly! Once Bankruptcy has been filed, you will then need to begin making payment again, if you want to keep the vehicle. The best thing to do is call and ask us about your specific situation.
Will I ever be able to get a credit card?
In most cases, YES you will receive offers from credit card companies once your bankruptcy is over. This can be a good way to help rebuild your credit score, if used properly. Our attorneys can help you develop a plan to ensure you develop proper financial habits to keep your feet on solid ground after filing for bankruptcy.
Can I buy a house after bankruptcy?
YES, you definitely can. Typically lenders will allow you to finance a home purchase 2 years after your discharge. It is always up to the lenders to decide if you are qualified for a loan. However, many of our former clients have successfully purchased homes after their bankruptcy. It also can be a good way to help rebuild your credit score. Our attorneys can help you develop a plan to ensure you develop proper financial habits to keep your feet on solid ground after filing for bankruptcy.
Can I buy a car after bankruptcy?
YES, you definitely can. Typically lenders will allow you to finance a vehicle purchase as soon as you have your discharge. (This is only about 3 months after filing Chapter 7 bankruptcy). Some lenders even let you finance a vehicle after you have had your meeting of creditors (about 4-6 weeks after filing). It is always up to the lenders to decide if you are qualified for a loan. However, many of our former clients have successfully purchased vehicles immediately after their bankruptcy. It also can be a good way to help rebuild your credit score. Our attorneys can help you develop a plan to ensure you develop proper financial habits to keep your feet on solid ground after filing for bankruptcy.
What is the difference between Chapter 7 and Chapter 13?
Chapter 13 is a 3 to 5 year repayment plan for your debts, even though most of the time you will not have to repay in full. Chapter 7 eliminates some or all of the debts entirely. Obviously, this makes Chapter 7 more attractive in most people’s eyes, but you have to qualify for a Chapter 7. If your income is too high or you have enough monthly disposable income left over after expenses, you may not qualify for a Chapter 7 filing. Chapter 7 also cannot help you get caught-up on delinquent payments to your home or car. Sometimes you can lose property under a Chapter 7 that you can keep if you file a Chapter 13. The attorneys at Hicks & Alhejaj, P.C. will help you determine which filing is the best strategy in your particular situation.
Creditors are constantly harassing me. How can I stop them?
If you are being harassed by creditors and bill collectors, you can tell them you have a lawyer, the minute you retain us and have made a down payment. After that, they will typically communicate through us as your attorneys and leave you alone. Also, from the moment you file for bankruptcy, the Court enforces a stoppage (also known as an “automatic stay”) of any collection efforts, which includes foreclosures, garnishments and repossessions. The Federal Fair Debt Collection Practices Act and Nebraska law also give you tools to put a stop to unlawful creditor harassment.
How long does it take to file a Bankruptcy?
This depends on what type of case you are filing, but once you have provided the required paperwork and paid the fees & costs, your case is typically filed within 3-5 days, unless there is a same day emergency. Then, in a Chapter 7 case you are in Bankruptcy for about 3 months. In a Chapter 13, you are in Bankruptcy repayment plan for 3-5 years. The time you have to put in includes gathering your paperwork (this varies), meeting with the attorney at least two times (about 2 hours), a meeting with your trustee after filing (about 30 minutes). We work very hard to make the process as stress-free as possible.
How much does it cost to file a Bankruptcy?
This depends on what type of case you are filing. A Chapter 13 case can be filed for very little down, but you would need to, at minimum, pay your court costs and the costs of pulling a credit report. Chapter 7 rates vary depending on your individual situation. Our fees are very competitive and we invite you to call us and get a free estimated fee quote from an attorney over the phone, or set up a free first visit with an attorney in the office.
Does my spouse have to file with me?
Married couples do not have to file Bankruptcy together. Although it may be cost effective to have both spouses file one case, it is not always the best answer to your financial problems. Even if one spouse does not file with the other, if you are living in the same home as your spouse and share finances, both spouses’ incomes will need to be analyzed for qualifications in Bankruptcy, the spouse who doesn’t file will keep their property and their bills. It is best to have an analysis done by an attorney to see if it is best in your specific situation to file together or have only one spouse file for Bankruptcy.
Do Taxes go away in Bankruptcy?
This is not an easy question. The answer to this will vary. It depends on whether or not taxes owed are older or newer and whether or not tax returns were filed on time. In some cases, taxes owed can be discharged (eliminated) in Bankruptcy. If the taxes that are owed cannot be discharged, they can be repaid through a Chapter 13 Bankruptcy instead of being subject to wage garnishments and administrative tax refund set-offs.
Do Student Loans go away in Bankruptcy?
Typically, NO. In some cases, student loans can be discharged (eliminated) in Bankruptcy when there is an undue hardship to the debtor. In order to discharge student loans in bankruptcy, an adversary proceeding (similar to a lawsuit inside the bankruptcy) must be filed to attempt the discharge of this debt. This adversary proceeding can be filed in either a Chapter 7 or a Chapter 13 case. There are additional legal fees to file an adversary proceeding in addition to the fees charged for your Chapter 7 or Chapter 13 Bankruptcy.
What if I have a co-signer?
You can pay on debts even if there is someone who has co-signed for you. Your co-signer does not have to file Bankruptcy with you. You can sometimes pay back this co-signed debt before other debts in a Chapter 13. All debts you owe, included co-signed debts must be listed when you file for Bankruptcy. We can give you detailed advice based on your particular situation.
What is a secured debt?
A secured debt is one that has some type of property attached to the debt, common secured debts are motor vehicles, real estate, and Nebraska Furniture Mart. The property attached to a secured debt is called collateral. If you do not pay on a secured debt, the lender you owe can take the collateral back to pay on the debt. You also owe on the debt, so even if they take the collateral, you would still owe the balance of the loan that was not paid by the sale of the collateral. Owing the balance remaining is known as having a deficiency (the difference between the sale value of the collateral and the total amount of the loan).