Bankruptcy FAQs

[ShyTownDva]

@maddy1001

I am new to myFico and have found a lot of useful information &  thought I should share my experience with you as I was in a similar situation.

Yes, you  MUST have the financial counseling or your case can be dismissed.  This can be completed on line.  I  was advised by my legal Aid rep to file an emergency petition as she was sure that her office could not get my case filed in time to advert a garnishment of my wages. 

The emergency petition was only 5 or 6 pages that asked general information about your household, income, budget & creditors (I only listed creditors that were currently threatening me)  I filed Pro Se & completed a form asking the court to waive filing fees. (Which in my case was granted)  I was  immediately protected under the automatic stay.

There was also a bankruptcy assistance desk available to help me at the court house.  Legal Aid assisted me with filing the complete petition  which had to be filed within 14 days of the emergency petition.  If time is of the essence,  I would suggest you contact legal aid office right away and also maybe the bankruptcy assistance desk in your area to find out the about their hours of operation.  The assistance desk usually takes only a certain amount of people each day (10 at my court house), no appointments, first come first served and the slots typically fill up fast.

This was just my experience.  You should definitely seek legal advice.

Good Luck & I hope all goes well for you.

[Anonymous]

ShyTownDva:  Thank you so much!  At least I now have a direction to follow.  I'm totally ignorant of how these things work, so your information is very valuable.

I'm sure lots of others will also be grateful for this info.

[tayra03]

i have the same problem to, but i was never last w any of my cc and loans. it very fustrating! I was told that it would be including in my bk, and not show up. Now not only does it show up but its state that i was late w my payment.

[muncie]

I've decided not to complete Chapter 7 and pay my creditors, so I should now contact the creditors and say what?

[sgtm7]

Have you already filed?   If you have, then the bankruptcy will be dismissed.   It will still be on your credit report under public records for as long (or longer) than if you had went through with it.  It might take a while to have your creditors change what they are reporting as well. 

If you haven't actually filed yet, then there is nothing to tell your creditors.   They wouldn't get notified until it is filed.  The only way they would know is if you contacted them to tell them you were going to file.  I am assuming you wouldn't have done anything like that?

[sgtm7]

Just thought I would comment on applying for home equity/mortgage after bankruptcy, and how your decision to do a Chp 7 or a Chp 13 will affect you.  

I was told by two different financial institutions that they would only approve a loan if it has been 2 years since the bankruptcy discharge.    In my situation, I had a Chapter 13 that was a 4 year plan.  I completed the plan and was discharged.  So I basically wouldn't be eligible for a loan with these companies until 6 years after I filed for bankruptcy.  I pointed out to one company (USAA), that if I had filed a Chapter 7 (which is usually discharged within 6 months of filing) I would be eligible for a loan 4 years sooner than if I had not paid my creditors back 70% of what I owed them through a Chapter 13 repayment plan.   

Now keep in mind that I have NO mortgage on the home I was requesting an home equity loan for, and that I have NO bills other than utility bills.   I was also only requesting 50% of the value of my home, in a market that never saw crazy appreciation, so never really went through the massive downturn other places saw.   If I were to default, my home would sale easily and quickly for more than the amount I wanted the loan for.   In other words, a pretty much risk free loan for any creditor.

Bottom Line:   Since many creditors for home/equity loans go by the 2 years after discharge rule, it is in your best interest to go with the Chapter 7.  

[muncie]

No, I have not signed the final documents, although the filing fee has been paid.  No, I have not contacted the creditors and said anything.   So, I will still be listed as bankrupt, my credit score will still suck, the automatic stay will remain in effect, my creditors will not pursue action, and there's nothing further that I should do unless contacted by my creditors?

[sgtm7]

You need to check with your lawyer and see if it has already been filed.   If it HAS been filed, if you stop it now, the court will have to dismiss the bankruptcy.   If a bankruptcy is dismissed, you lose the protection of the bankruptcy court, and NO the automatic stay will not remain in affect.  Your creditors are free to go after you again.   On top of that, it will be reported as a dimissed bankruptcy on your credit report.   A bankruptcy can be dismissed for various reasons, such as failure to adhere to court rules/procedures (hiding assets, not making Ch 13 payments, etc.), or in your case, changing your mind about going through with it.   The problem is, that the credit report will not state the reason why it was dismissed.    Most of the credit bureaus report dissmissed bankruptcies for 10 years after the date of dismissal.   

I am not a layer, and you need to get advice from him.   In my opinion, unless you have just came into a lot of cash, and won't need to borrow any within the next 10 years, then getting the bankruptcy dismissed will be of NO benefit to you.  

[sgtm7]

Would like to add:   If you didn't suddenly come into a lot of cash to use to pay all your creditors off, then filing bankruptcy will probably enable you to get your scores up quicker than if you continue to struggle paying your bills.   Four years after my bankruptcy discharge, my credit scores are now just under 800.   Keep in mind though, that I filed a Chapter 13.   I  got used to paying cash for everything.  I only use credit cards for convenience, and pay them off in full every month.   

[muncie]

Thank you so much for responding. 
I'm sure it has not been filed.  My original BK firm was taken over by a new firm, the now attorney is a young, snarky thing, she suggested I contact my creditors and hear what they have to say!  She said I no longer qualify for a 7.
 I would pay the debts under a 13 via a repayment plan the same as I would pay them if I wait to be contacted by my creditors, except I wouldn't have the extra cost of the 13 and I wouldn't have a BK on my CR, right?   Although I have not suddenly inherited money, my financial picture has greatly improved, I am able and willing to pay my debts.   My debt is 20,000, if Ifile a 13 my total would be 25,360 over 60 months. Once I'm contacted don't you think I'd be able to set up a workable solution to paying off the debts?  Thanks.