Bankruptcy FAQs
It's common to have a lot of questions when considering bankruptcy. Below are a few of the most common questions we are asked, but please feel free to contact us with any additional question or clarifications. We're happy to help in any way we can.
Or give us a call at (208) 433-9882
- Who can file a chapter 7 bankruptcy?
Almost any individual, partnership, or corporation may file a chapter 7 bankruptcy petition if he or she resides, has a domicile, a place of business, or property in the United States. If you filed a prior chapter 7 bankruptcy petition and the prior proceeding was dismissed (meaning you did not get a discharge) within the last 180 days, you may not be able to file a second petition.
If you pass the "means test" and complete the required credit counseling within six months prior, most people can file a Chapter 7
If you pass the "means test" and complete the required credit counseling within six months prior, most people can file a Chapter 7
No! Retirement accounts and pension plans can be protected when filing bankruptcy.
Garnishments stop only when the bankruptcy is filed with the court. Garnishments do not stop when you contact, retain, or give paper work to an attorney. However, the sooner we receive your paper work and documents, the sooner we can file the bankrutpcy and stop your garnishment.
Yes, you should continue making the fee payments. You will be personally responsible for the HOA fees as long as you are living in the home even if it is after the bankruptcy. The same counsel goes for space rent when dealing with mobile homes. Each situation is different and you are welcome to schedule a free consultation to talk about your case.
You are correct, the foreclosure will be stopped if a bankruptcy is filed before the foreclosure auction date. Once a bankruptcy is filed there is an “automatic stay” put into effect which means your bankruptcy estate (which is everything you currently own) is put on hold, including the house. You are not able to purchase a new house or sell a house during the bankruptcy. To do so would violate the “automatic stay.” The answer to your question is you should NOT sell your house during the bankruptcy.
You have three options in a chapter 7 bankruptcy: 1: Walk away from the car, surrender it to the bank and you never have to pay or worry about the loan. (It sounds like this is not a good option for you and your family, which is fine.) 2: Keep paying the car payments and stay current on the loan but do not resign or reaffirm the loan. If you do this you will keep the vehicle and when the vehicles are paid off you will receive the title to the vehicles. The only issue with not reaffirming the loan is that the lender will likely not send you statements and payment notices. You will be required to make the payments on your own. 3. Sign a reaffirmation agreement. By signing a reaffirmation agreement you reinstate your legal obligation to pay for the auto loan. This option makes it as if you never filed bankruptcy as to your auto loans. If your some reason in the future you are not able to make your auto loan payments, the lender can repossess the vehicle and sue you for any remaining balance owed after the car is auctioned off.
Call Peterson Zeyer Law for any needed clarification!
Call Peterson Zeyer Law for any needed clarification!
- What happens during a Free Consultation?
Peterson Zeyer Law offers a free consultation where you will sit down with Mr. Zeyer to discuss your specific situation. Consultations usually take 20 to 30 minutes. Mr. Zeyer will ask questions about your assets and debts and then explain your options and discuss a plan of action for you to get a fresh start. Mr. Zeyer will take the time to answer any and all of your questions. You will be provided with information on how to proceed and if you are facing any timelines. Clients often express how relieved they feel after Mr. Zeyer explains their options and once they have a clear plan to mover forward toward a fresh start.
- A Common Cause of Bankruptcy: Job Loss and Income Reduction
Often I am asked how I get paid if my clients are all filing bankruptcy. Well, contrary to popular belief, the average bankrupt person is not unemployed. In fact most bankruptcy clients are working or have some form of income. There is only a small number that are unemployed when they file bankruptcy.
Although many bankruptcy clients are employed, one of the main underlying causes of bankruptcy is job-related. At some point, they may have lost their job or experienced a drop in income due to economic conditions or illness. Many turned to the use of credit to pay the bills not covered by unemployment or disability insurance. While their debt was affordable before, once they returned to work, the at-risk debtor found themselves with newly acquired debt that could no longer be serviced on their new income.
Anyone can experience a sudden drop in income. Even if your job is secure, you may get into a car accident or become ill, necessitating some time off work. The best protection against having to use credit during this period is to set aside an emergency fund. It’s also a good idea to cut back sooner, rather than later, on unnecessary expenses in these circumstances, as you may not know how long you will have to survive on a reduced income.
However, if you find yourself in the situation where you are getting back to work after a job loss or reduction of income and are not able to meet all your financial obligation, please call and schedule a free consultation. Bankruptcy is the legal way to for the honest and hard working to receive a fresh start.
Although many bankruptcy clients are employed, one of the main underlying causes of bankruptcy is job-related. At some point, they may have lost their job or experienced a drop in income due to economic conditions or illness. Many turned to the use of credit to pay the bills not covered by unemployment or disability insurance. While their debt was affordable before, once they returned to work, the at-risk debtor found themselves with newly acquired debt that could no longer be serviced on their new income.
Anyone can experience a sudden drop in income. Even if your job is secure, you may get into a car accident or become ill, necessitating some time off work. The best protection against having to use credit during this period is to set aside an emergency fund. It’s also a good idea to cut back sooner, rather than later, on unnecessary expenses in these circumstances, as you may not know how long you will have to survive on a reduced income.
However, if you find yourself in the situation where you are getting back to work after a job loss or reduction of income and are not able to meet all your financial obligation, please call and schedule a free consultation. Bankruptcy is the legal way to for the honest and hard working to receive a fresh start.
- Guns and Bankruptcy - Will I Lose My Guns?
Guns and Bankruptcy
Guns are assets and must be listed in bankruptcy
The federal bankruptcy code requires that a person who files bankruptcy provide a list of all their assets. Over the years as we have helped folks prepare and file for bankruptcy, we have seen that one of the most often overlooked assets are guns and related equipment.
Guns and related items, including hunting equipment, are one of the most common recreational items that Idahoans possess.
Will I lose my guns if I file bankruptcy?
Because guns and hunting equipment are such valued possessions for many clients, they are very afraid that they could lose these items if they file for bankruptcy. Of course, most of the time, the Idaho Firearm Exemption is large enough to protect the guns a majority of folks would have. It is still a relevant fear when contemplating bankruptcy.
Disclose and Protect
Idaho does have exemption protection for guns but the only way to utilize the exemption protection is to disclose the assets first and then apply the exemption. If an gun is not disclosed and an exemption not claimed, there is no protection which means the bankruptcy trustee has the legal right and ability to take the gun and sell it for the benefit of the creditors. It is important to note that transferring or simply giving guns to a family member or friend just prior to filing bankruptcy, does not mean you don’t have to list them in your bankruptcy filing.
To help our clients, we include materials for them to fill out that include questions about guns and hunting equipment. In addition, we are careful to ask about any transfers of items that folks may have made to anyone in the past 2 years.
Often my clients tell me that they are so relieved to know that they will not lose their guns and that there are exemptions to protect their guns when the guns are listed as an asset in the bankruptcy.
Guns are assets and must be listed in bankruptcy
The federal bankruptcy code requires that a person who files bankruptcy provide a list of all their assets. Over the years as we have helped folks prepare and file for bankruptcy, we have seen that one of the most often overlooked assets are guns and related equipment.
Guns and related items, including hunting equipment, are one of the most common recreational items that Idahoans possess.
Will I lose my guns if I file bankruptcy?
Because guns and hunting equipment are such valued possessions for many clients, they are very afraid that they could lose these items if they file for bankruptcy. Of course, most of the time, the Idaho Firearm Exemption is large enough to protect the guns a majority of folks would have. It is still a relevant fear when contemplating bankruptcy.
Disclose and Protect
Idaho does have exemption protection for guns but the only way to utilize the exemption protection is to disclose the assets first and then apply the exemption. If an gun is not disclosed and an exemption not claimed, there is no protection which means the bankruptcy trustee has the legal right and ability to take the gun and sell it for the benefit of the creditors. It is important to note that transferring or simply giving guns to a family member or friend just prior to filing bankruptcy, does not mean you don’t have to list them in your bankruptcy filing.
To help our clients, we include materials for them to fill out that include questions about guns and hunting equipment. In addition, we are careful to ask about any transfers of items that folks may have made to anyone in the past 2 years.
Often my clients tell me that they are so relieved to know that they will not lose their guns and that there are exemptions to protect their guns when the guns are listed as an asset in the bankruptcy.
- Do’s and Don’ts: 5 Things You Should Not Do Before Filing for Bankruptcy
Do’s and Don’ts: 5 Things You Should Not Do Before Filing for Bankruptcy
Deciding to file bankruptcy is tough. A great deal of preparation and planning go into a bankruptcy filing, far beyond filling out all of the paperwork. What happens just prior to filing bankruptcy can have a negative impact on how you make it through the bankruptcy process. Here are five things you should not do in preparation to filing for bankruptcy:
If you are thinking about filing bankruptcy, avoid making these mistakes. If you've already made one or more of these mistakes, call and schedule a FREE consultation to talk about your options and how to move your case forward so you can still enjoy a fresh start.
Deciding to file bankruptcy is tough. A great deal of preparation and planning go into a bankruptcy filing, far beyond filling out all of the paperwork. What happens just prior to filing bankruptcy can have a negative impact on how you make it through the bankruptcy process. Here are five things you should not do in preparation to filing for bankruptcy:
- Do Not Rack Up New Debt: It’s tempting, but don’t do it. If you rack up debt in the ninety (90) days prior to filing for bankruptcy, your creditors have the ability to object to your bankruptcy discharge. Creditors may argue that you used the money without the intention of paying it back and that you shouldn't be allowed to discharge that debt. Creditors and the bankruptcy trustee will be looking at credit card usage just prior to a bankruptcy filing for this purpose.
- Do Not Ignore A Pending Summons and Complaint (lawsuits): A summons and complaint is the legal way of letting you know that you are being sued. You will be given 20 days to respond. If you do not respond, the court will enter a default judgment against you and the creditor then has the ability to garnish your wages or levy your bank account or even put a judgment lien on your house. Of course the bankruptcy will stop all of this but do not wait until it’s too late. As your bankruptcy attorney, I will need time to evaluate your case and prepare your petition before I can file your case to stop the judgment or garnishment. We can move quickly to get your case filed, even do everything in one day, but it comes with a price.
- Do Not Forget to File your Taxes: The bankruptcy code requires that all your tax returns be filed with the tax authorities (federal and state) before filing bankruptcy. Failure to file your taxes before filing for bankruptcy can lead to a dismissal of your claim. The bankruptcy court and trustee use your tax returns to help determine your current and past earnings and whether you are able to pay back your debts. If you have not filed your taxes and file bankruptcy your case will likely get dismissed and your debts will not be discharged.
- Do Not Move Your Assets: It's tempting to want to get rid of your assets prior to filing for bankruptcy so you don't have to list it in your bankruptcy paperwork, but doing this can have negative consequences. Moving or transferring assets right before filing makes it appear that you are hiding an asset which is labeled as a Fraudulent Transfer in the bankruptcy code. It’s not the type of fraud that lands you in jail but it does make it so you are not able to protect the asset that was moved.
- Trustees are well aware that people may be tempted to move assets so they pull title searches through the Idaho DMV for every case filed. They look for vehicles that may have been transferred right before filing. If you do engage in this behavior, you may be denied a discharge or be subject to criminal penalties. Please don't put yourself in this position. It is not worth it. My experience is that most of the time there are exemptions to protect the items that were moved or transferred and my client has to go through all the trouble of getting the item back into their name so it can be properly listed and protected.
- There are ways to sell or transfer assets prior to filing bankruptcy. Please call and we can talk about how you can avoid a fraudulent transfer.
- Do Not Play Favorites with Paying Off Debts: A Payment to one creditor while not paying others is called a preferential payment. The bankruptcy code allows the trustee to demand the payment from creditor who was paid and then turn around and give that payment amount to all the creditors in equal amounts. The bankruptcy code is trying to make sure all creditors are treated fairly and equally leading up to the bankruptcy filing. This rule often comes into play when the person filing bankruptcy pays back a family member right before filing bankruptcy. The trustee has the ability to go after the money by sending a demand letter to the family member requesting the money back.
- Depending on who the creditor is that is paid, there are different time limitations in which the trustee is able to go after the payments. In some situations the trustee is able to go after payments made 12 months prior to filing the bankruptcy.
If you are thinking about filing bankruptcy, avoid making these mistakes. If you've already made one or more of these mistakes, call and schedule a FREE consultation to talk about your options and how to move your case forward so you can still enjoy a fresh start.
- How does the CARES Act Stimulus Payments affect my Bankruptcy
The CARES Act signed March 27, 2020, modifies the United States Bankruptcy Code for Chapter 7 and Chapter 13 bankruptcy the following ways:
- The CARES Act economic stimulus payment will not count as income when calculating a debtor’s income to determine eligibility to file Chapter 7 and Chapter 13, coronavirus-related payments from the federal government are excluded from the analysis.
- These payments are not considered in determining a debtor’s disposable income for a Chapter 13 plan of reorganization.
- The CARES Act allows Chapter 13 debtors who have already confirmed a plan to modify the plan based on a material financial hardship caused by the pandemic, including extending their payments for seven years after their initial plan payment was due.
- The changes are applicable for one-year from the date the CARES Act was signed.
- The act does not specifically exempt or otherwise protect coronavirus-related payments received during a chapter 7 bankruptcy. The chapter 7 bankruptcy trustee could legally demand these funds. The National Association of Consumer Bankruptcy Attorneys reported in a Webinar on March 30,2020 that a “clean-up” bill is being processed that will include an exemption; however, currently there is no legal protection.
- REALITY - The chapter 7 bankruptcy has been instructed not to pursue or demand turn over of the stimulus funds. Current clients who have received these funds have been able to keep them. The trustee has instructed Peterson Zeyer Law that he will not be seeking turn over of ANY stimulus funds.