Chapter 7 Q & A’s
Q: I’ve already filed a Chapter 7 before. Can I do it again?
A: Yes, but you cannot file a Chapter 7 case until at least eight years after the filing of your prior Chapter 7 case. If you are still in the eight-year window, you may have other good options, such as Chapter 13 or Debt Settlement.
Q: Can I keep my house?
A: California has very generous laws when it comes to allowing debtors to protect their assets. Unless you have a significant amount of equity in your home, you can generally keep your home as long as you make your mortgage payments. When you meet with an attorney at PERALTA LAW, INC., we will discuss the specific exemptions that apply to your situation. In addition, we are happy to discuss alternatives to keeping your home, including short sales, foreclosures and deeds in lieu of foreclosure.
Q: Can I keep my car?
A: Generally, if you want to keep your car, you can do so. If your car is paid off, protecting the equity is typically not a problem. However, there are limits on what you can protect in a Chapter 7, so if your car has a lot of equity, you will need to discuss with an attorney whether there is any exposure. If you still owe money against your car, you will have to continue to make payments if you want to keep your car. Often, it is advisable to reaffirm the car loan to ensure that the car cannot be repossessed if payments are current. A reaffirmation agreement re-obligates you to the original contract. Therefore, before signing a reaffirmation agreement, you should make sure that you can comfortably afford the payments. One benefit to reaffirming a car loan is that the lender will typically continue to report payments to the credit bureaus, therefore making it easier to reestablish credit.
Q: Will Chapter 7 hurt my credit score?
A: A bankruptcy stays on your credit report for 8 to 10 years, but you are generally able to re-build you credit much sooner than that. In fact, many of our clients receive credit card offers within months. Also, based on today’s lending standards, it is possible to qualify for a mortgage within two years of the bankruptcy discharge. It is impossible to predict exactly how a bankruptcy may impact your credit score, but it is important to note that a bankruptcy is often what is needed to allow you to rebuild your credit.
Q: How much does a Chapter 7 cost?
A: PERALTA LAW, INC charges a reasonable and competitive fee that can vary depending on the complexity of the case. We offer a free thirty (30) minute consultation. During our consultation, we will explore your options and discuss the fees associated with each option. For those who cannot afford to pay our fee up front, we offer affordable payment plans.
Chapter 13 FAQ
Q: Is Chapter 13 right for me?
A: There are a number of factors that go into deciding whether Chapter 13 is right for you. First, Chapter 13 becomes a clear option if you do not qualify for Chapter 7 bankruptcy. Chapter 13 also makes sense if you are a homeowner who is looking to keep your home but need to make up arrearages or want to extinguish your 2nd mortgage, or both. The Chapter 13 process is long, however, lasting between 3 and 5 years. It also you requires you to pay your monthly disposable income to your creditors. We are able to carve out plenty of living expenses from this payment, however sometimes new expenses arise, and we would need to get court approval to change those payments. Chapter 13, however, can also be very rewarding because it is the surest way to save your home if you are falling behind on payments and possibly facing foreclosure. Please give our office a call for a free consultation on whether Chapter 13 is right for you.
Chapter 13 Q & A’s
A: As mentioned above, after we get your case filed, we will help you through a 3 to 5 year process that involves monthly payments to your creditors.
Q: What if something happens to me financially during my case?
A: This is why it’s crucial you come to us and feel comfortable communicating with us. We understand that in three years things happen. You could lose your job, you could transfer, or hey, you could win the lottery! There are always solutions and options during your Chapter 13 case. We have the knowledge to guide you through anything that comes up (unless you win the lottery, you’ve probably given that one some thought on your own!).
Q: Where does my money go in the payment plan?
A: The payment that you make each month goes to the Chapter 13 Trustee. The Chapter 13 Trustee then distributes it to your creditors. This payment usually only adds up to a small percentage of what you owe, and at the end, any outstanding debt is discharged, so you save a significant amount of money by going through the process.
Q: Can I keep my car?
A: Yes, as long as you continue to pay for it. Many people include their car in their Chapter 13 case, which allows you to make your car payment to the Chapter 13 Trustee, who in turn deals with your car lender. Others pay their car outside the plan. It’s up to you but we will probably have some guidance about how to handle that decision during your free consultation.