Can Filing A Bankruptcy Delay Eviction
If you are facing an eviction, filing a bankruptcy case may delay the eviction for a few weeks or up to several months. Because the automatic stay goes into effect upon the filing of a bankruptcy case, the landlord is prohibited from taking any action to collect a debt, including but not limited to an eviction action, without prior approval of the bankruptcy court. Therefore, if your landlord chooses to do nothing, the automatic stay will prevent him from evicting you until your case is closed . However, if the landlord files a motion to lift the automatic stay, in the absence of evidence why the court should not grant his motion, the bankruptcy judge will likely grant the motion and allow the landlord to proceed with an eviction action in state court. Even if this occurs, you will have a few weeks to find a new place to live and move your belongings before the stay is lifted and the eviction process begins.
What Is Personal Bankruptcy
Personal bankruptcy is a legally binding agreement under the Bankruptcy and Insolvency Act, which is designed to provide financial protection to individuals who can no longer repay their debts. If you are facing financial challenges, you are within your rights to ask for debt forgiveness.
Filing for bankruptcy is sometimes a necessary solution to a debt problem.
For people who need immediate relief from unmanageable debt, personal bankruptcy can be an important step towards financial recovery. However, it is always a last resort option. A Licensed Insolvency Trustee will only recommend bankruptcy after all other debt relief options have been explored.
When you decide to file for bankruptcy, a stay of proceedings is issued, and you receive immediate protection from your creditors. This means that all collections activities will stop. Creditors are prohibited from contacting you or pursuing legal action against you. Your LIT will now deal with your creditors on your behalf.
The bankruptcy process usually takes nine months. At the end of your bankruptcy, you are legally discharged from your debts.
Bankruptcy Court Filing Fees
The bankruptcy court charges a fee when you file your paperwork. If you can’t afford the fee, you can ask the court to waive it if:
- you’re filing a Chapter 7 case
- you’re an individual , and
- your family income is less than 150% of the federal poverty guidelines.
If you can pay over time, you can ask to pay the filing fee in installments over 120 days, instead. The clerk’s office of your local bankruptcy court can show you how to make either request.
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Alternate Ways To Afford An Attorney
Your attorney won’t file a Chapter 7 case until you’ve paid in full. Why? Because the bankruptcy would wipe out the fees still owed to your attorney. A debtor who doesn’t have the fee will often start by asking friends and family for help.
If that isn’t an option, qualified Chapter 7 debtors will stop making bill payments if the obligation will be discharged in the case. Then they use the money for legal fees. While this might seem sketchy, rest assured that the court understands and expects filers to use this approach. But it’s essential to be sure that you’re qualified because it can be difficultif not impossibleto catch up on bills if you find out you don’t qualify later.
It isn’t as challenging to finance a Chapter 13 case. Many attorneys will take a downpayment upfront. The remaining amount gets paid in your repayment plan, thereby allowing you to pay a small part of your legal fees each month.
Find out more about how bankruptcy lawyers get paid.
Should I File Bankruptcy
Many people have a lot of debt. Trying to pay off debt can often feel scary or frustrating. But, bankruptcy is not for everyone who feels this way. Bankruptcy should be considered only when it can help you change your financial situation for the better. There are several types of bankruptcy including Chapter 13 and Chapter 7 . The type of bankruptcy you qualify for may depend on your individual income and/or the amount of debt you have.
Things to consider:
- Sometimes, your income and/or property already is protected from creditors WITHOUT filing bankruptcy. Therefore, there may be no reason for you to file bankruptcy.
- On the other hand, if you are in danger of having your wages garnished or property seized, bankruptcy may be the best solution.
What kinds of income are protected from creditors WITHOUT filing bankruptcy?
Certain income is protected from creditors WITHOUT filing bankruptcy. These protections come either from D.C. law or federal law.
If your only income is from one of the following sources , you may NOT need to file bankruptcy:
- After-tax wages from work of $217.50 each week or less
- Social Security benefits
What kinds of property are protected from creditors WITHOUT filing bankruptcy?
Certain property is protected from creditors WITHOUT filing bankruptcy. These protections come from D.C. law.
If your only property is one of the following , you may NOT need to file bankruptcy:
What if I’ve been denied employment or housing because of my poor credit?
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Don’t Go On A Spending Spree Or Drain Your Retirement Account
Even though it’s tempting to do so, don’t rack up new debt during the 70- to 90-day period before filing for bankruptcy. Your creditors can object to your request for a bankruptcy discharge on the basis of bankruptcy fraud.
The bankruptcy trustee may also try to recover money or property by setting aside certain transfers that you’ve made within 90 days before filing bankruptcy. The trustee can also undo security interests and other pre-filing transfers that weren’t done properly. For example, transferring your property to a relative before filing bankruptcy can be treated as a fraudulent conveyance and undone by a trustee.
Don’t drain your retirement account before filing bankruptcy, either. Most retirement funds are protected in bankruptcy. In fact, think carefully before using any of your retirement accounts to pay bills, since filing bankruptcy could potentially wipe out much of that debt anyway.
There Is A Stay Of Eviction Because My Tenant Filed Bankruptcy What Can I Do About It
A Landlord can file a Motion for Relief from the Automatic Stay, which asks the court to lift the stay as to your eviction action and allow it to proceed. The court may be persuaded to lift the stay if your tenant is very far behind in rent and/or is damaging your property.
We have helped many Pennsylvania clients to make arrangements with their landlord. Give us a call at 625-9600 and we can get started right away with helping you.
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Can Bankruptcy Clear My Utility Bills
Upon the filing of bankruptcy your gas, electricity, water, and other utility bills are reset to a zero balance. If you are facing a utility shutoff, the filing of the bankruptcy prevents the shutoff. The reason for this treatment is that utility services are considered necessary services. If a lien on your house has already been filed by the utility, the lien can remain on the property until the house is sold. In a Chapter 13 plan, some liens can be paid back before any other creditors get paid.
Do The Courts Ever Deny A Chapter 7 Bankruptcy
It can happen. Most individual debtors receive a discharge under Chapter 7.
However, if the courts find that an individual concealed money or other assets, fraudulently transferred assets that should have been used to pay off debts, or otherwise broke the law, the entire bankruptcy case may be denied.
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What Happens When I File Bankruptcy
Filing for bankruptcy after youve defaulted can protect your assets from being seized by the lender or creditor.
In a Chapter 7 bankruptcy, the court will decide which of your assets to sell in order to repay your creditors. Any remaining debt will be discharged, except for student loans, child support, taxes and alimony. This type of bankruptcy will stay on your credit report for 10 years.
If you file for Chapter 13, you may be able to keep more of your assets while discharging some of your debts. The debt that is not discharged will be put on a three- to five-year repayment plan. This will stay on your credit report for seven years.
Your credit score will likely go down significantly if you file for bankruptcy by at least 130 points, but sometimes by as much as 200 points or more. If you work in an industry where employers check your credit as part of the hiring process, it may be more difficult to get a new job or be promoted after a bankruptcy.
Jay Fleischman of Money Wise Law says that if you have credit cards, they will almost always be closed as soon as you file for bankruptcy. Getting another loan or credit card will also be very difficult in the early stages after bankruptcy. But as time goes on, the bankruptcy will affect your score less and less if youre responsible with your credit.
Dealing With Your Car Loan
If you own a car that you still owe on, youâll have to let the bank and the court know what you want to do with it one one of your bankruptcy forms.
If you want to surrender the car to the lender and discharge the debt, you donât have to do anything other than stop making your payments. The bank will either file request with the bankruptcy court to ask permission to retake the car, or wait until your discharge is granted before picking it up.
If you want to keep the car, you can either reaffirm the loan or redeem the car. If youâre reaffirming your loan, the bank will send you a reaffirmation agreement after your case is filed. You have to complete and sign the agreement and return it to the bank within 45 days from your 341 meeting. The bank files the signed agreement with the court for approval.
To redeem the vehicle you have to file a motion with the court and, once granted, buy the car from the bank for its current value. This gets you out of having to pay the amount left on the loan, but payment has to be made in one lump sum.
Filing for bankruptcy takes some preparation. Hiring a good bankruptcy attorney is one way to file. But if you can’t afford the attorney fees to hire one and you need a fresh start, Upsolve may be able to help. If you’re eligible, our free web app will walk you through the process and help you prepare your forms for filing with the court.
Check out the video below â¬ï¸ to see how it works!
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If I Can Fight The Lawsuit Why Wouldnt I Do That Instead Of Filing Bankruptcy
If youâre sued for an unpaid debt, whether thatâs a credit card or a car loan, fighting the lawsuit typically just delays the inevitable. If you borrow $2,000 and then donât pay it back, you donât have much in the way of defenses. If you donât think the debt collector is owed the money, definitely make them show their proof.
Keep in mind that as long as the debt collector can show that you incurred the debt thatâs owed to them, there arenât many legal defenses to non-payment. If thereâs no reason to believe that the debt youâre being sued for is invalid, itâs probably more effort than itâs worth.
Getting A Lawyer To Help You With Your Bankruptcy
Bankruptcy is a specialized area of law that is very complex. And the issues are not always apparent or simple. The bankruptcy laws changed in October 2005 to discourage many people from filing for bankruptcy. So the law became more complicated. And there are more situations where a mistake can result in your case getting dismissed. If your case is dismissed, the bankruptcy court often imposes a penalty of 180 days before you can refile, and in this time period a lot can happen. This is why it is so important to have a lawyer advise you and help you with your bankruptcy.
Find a lawyer who can help you work through the issues, alternatives you may have, and consequences of your choices.
- Pick a lawyer with whom you are comfortable, one who will allow you to ask questions and give you responses that you can understand.
- Pick a lawyer who either specializes in bankruptcy or does a large part of his or her practice in the field.
- Ask questions until you understand what your choices are.
- Don’t be afraid to interview a lawyer and leave without hiring him or her.
If you decide to represent yourself in bankruptcy court, read a guide for Filing for Bankruptcy Without an Attorney.
To find a good bankruptcy lawyer:
- Check state bar groups and specialization/certification programs for bankruptcy lawyers in your community.
- Ask other lawyers or tax preparers you know for recommendations.
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Most Back Taxes And Customs
This generally includes income taxes, Social Security taxes and penalties you owe, or unpaid withholding tax for your employees.
Although most back taxes cannot be discharged in bankruptcy, you may be able to have taxes discharged if they are for a return due 3 or more years ago and you meet certain other qualifications.
If you owe significant back taxes you cannot pay in a reasonable period of time, you may want to ask a tax attorney or other professional about an Offer in Compromise, or OIC, or other alternatives.
Write A Letter Of Explanation
Your lender takes a careful look at your finances when you apply for a mortgage. Every time a lender issues a mortgage, they take a risk. Lenders need to know that youll make your payments on time every month. Of course, a bankruptcy on your record is a major red flag.
You can increase your chances of getting a mortgage after bankruptcy by writing a letter of explanation. A letter of explanation tells your lender more details about your bankruptcy and why you needed to declare bankruptcy.
You might want to include details on the circumstances that led to your filing and how your financial life has changed since then. Also, explain the steps youve taken to prevent a future bankruptcy as well like paying off debt and building an emergency fund.
A letter of explanation isnt a requirement to get a mortgage after bankruptcy, but it can help your lender see the bigger picture instead of just a set of numbers. Include your letter of explanation with your mortgage application when you request a preapproval.
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Can I Hide My Assets Before Filing Bankruptcy
Some people who have debt problems incorrectly believe that if they transfer a house or other asset into someone elses name that no one can go after the asset. Intentionally transferring valuable assets out of your name and not getting paid the fair market value can be considered a fraudulent transfer that can be undone by the Bankruptcy Court. In addition without having transferred the asset, you may have even been able to exempt the property in the Bankruptcy case from any creditors. It is very important to have the correct bankruptcy information if you are considering filing bankruptcy.
Filing Without An Attorney
Individuals can file bankruptcy without an attorney, which is called filing pro se. However, seeking the advice of a qualified attorney is strongly recommended because bankruptcy has long-term financial and legal outcomes.
Filing personal bankruptcy under Chapter 7 or Chapter 13 takes careful preparation and understanding of legal issues. Misunderstandings of the law or making mistakes in the process can affect your rights. Court employees and bankruptcy judges are prohibited by law from offering legal advice.
The following is a list of ways your lawyer can help you with your case.
- Advise you on whether to file a bankruptcy petition.
- Advise you under which chapter to file.
- Advise you on whether your debts can be discharged.
- Advise you on whether or not you will be able to keep your home, car, or other property after you file.
- Advise you of the tax consequences of filing.
- Advise you on whether you should continue to pay creditors.
- Explain bankruptcy law and procedures to you.
- Help you complete and file forms.
- Assist you with most aspects of your bankruptcy case.
Bankruptcy Forms are available to the public free of charge.
- Use the forms that are numbered in the 100 series to file bankruptcy for individuals or married couples.
- Use the forms that are numbered in the 200 series if you are preparing a bankruptcy on behalf of a nonindividual, such as a corporation, partnership, or limited liability company .
- Sole proprietors must use the forms that are numbered in the 100 series.
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When Should I Declare Bankruptcy
When asking yourself Should I file for bankruptcy? think hard about whether you could realistically pay off your debts in less than five years. If the answer is no, it might be time to declare bankruptcy.
The thinking behind this is that the bankruptcy code was set up to give people a second chance, not to punish them forever. If some combination of bad luck and bad choices has devastated you financially, and you dont see that changing in the next five years, bankruptcy is your way out.
Even if you dont qualify for bankruptcy, there is still hope for debt relief. Possible alternatives include a debt management program, a debt consolidation loan or debt settlement. Each one of those choices typically require 3-5 years to reach a resolution, and none of them guarantees all your debts will be settled when you finish.
Remember that bankruptcy carries significant long-term penalties. It is stuck on your credit report for 7-10 years, which can make getting loans in the future very difficult.
The flip side of that is there is a great mental and emotional lift when all your debts are eliminated, and youre given a fresh start.
