What If I Forget To Include A Debt In My Bankruptcy
If you forget to include a creditor in your bankruptcy, that creditor is a general unsecured creditor, and that creditor would not have had a basis to object to discharge had it had notice of the bankruptcy, then the discharge of debts you received from the Bankruptcy Court is good against that creditor as well.
Your House And Other Real Property After Bankruptcy
Here are answers to some common questions about homes and mortgage loans after bankruptcy:
What should I do if I want to keep my home after bankruptcy? Make timely payments if keeping your house. If you did not reaffirm your home mortgage loans in Chapter 7 but are current and plan to keep your property, just continue to make your house payments on time. The bank still has a lien on your home and can foreclose if you fall behind on the payments. Note, as mentioned above, if you did not reaffirm the debt, your payments will not be reported to the credit bureau.
Can I walk away from my home after my Chapter 7 bankruptcy? If you did not reaffirm your mortgage loan in Chapter 7, you have more options than if you reaffirmed the loan. If you do not reaffirm your mortgage loan and decide later that you no longer wish to keep your home, you can simply stop making the payments. Eventually, the property will go into foreclosure, but the bank will not be able to obtain a deficiency judgment against you.
Can I walk away from my home after my Chapter 13 bankruptcy? It depends. Chapter 13 does not discharge your secured loans in most cases unless you surrender the property in your Chapter 13 plan. If you surrendered the property in your Chapter 13 plan, then you can treat it the same as if you had discharged the debt in Chapter 7.
Quick Note: In most instances, modifying a loan that was not reaffirmed will not cause the payments to show on your credit report.
How Bankruptcy Helps Your Debt Issues
The entire goal of claiming;personal bankruptcy;is to get debt relief when your debt reaches a point where you will never pay it off on your own.
The good news is bankruptcy eliminates almost all unsecured debts, including credit card debts, lines of credit, payday loans, bank loans, installment loans, and tax debts.
However, doesnt wipe clean all your debts. What happens when you apply for bankruptcy in Canada depends on the types of debt you have.
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The Trustee May Sell Some Of Your Property
If you filed Chapter 7, the trustee may liquidate some of your non-exempt assets and distribute them to creditors according to the priorities stated in the bankruptcy laws. You will get to keep many of your assets like some household items, your car, and items of clothing. You can learn more about this on our page about bankruptcy exemptions.
When Can I Start To Build Credit Again After Bankruptcy
You can begin to rebuild your credit as soon as you are discharged from your bankruptcy. This signals to lenders that you can manage your finances and are creditworthy.
You can apply for a credit card after you have been discharged from bankruptcy. Your financial institution may require that you apply for a secured credit card. With a secured credit card, you have to put down a deposit on the credit card amount. After paying your balance regularly for a period of time determined by your financial institution, you can get your deposit back and apply to have an actual credit card.;The decision to give you a credit card is made by the bank or other company issuing the credit card.
Additionally, after your discharge, you should;review your credit report;and address any errors. For example, any debts discharged during bankruptcy cannot be reported on as debts you still owe, or are outstanding, etc. If they appear on your report, you should contact the credit agency and have them correct the information. Going forward, you can check your credit report on a yearly basis.
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Discharge How Do I Find Out Which Debts Were Included
The discharge order sent by the Clerk’s Office will contain a general statement about the categories of debts that are discharged. The individual debts that are discharged will not be listed on the discharge order. Instead, the discharge order will provide that debts are discharged UNLESS there has been a separate order denying a discharge of a specific debt. If there are no such orders, the debtor can assume that it received a discharge of all debts which fall into the categories indicated in the discharge order. See Bankruptcy Code Sections 523, 727, 1141 and 1328 and consult a bankruptcy attorney for more information on categories of debts that qualify for a discharge in chapter 7 or chapter 13 bankruptcy cases.
What Happens Once I’ve Been Discharged From Bankruptcy
Bankruptcy can be an extremely stressful time. Hasib Howlader of Hudson Weir explains what happens when you are discharged from bankruptcy 12 months after receiving a bankruptcy order.
Officially you will get discharged from bankruptcy 12 months after getting the bankruptcy order, but the day you receive your bankruptcy order can feel like an opportunity to make a fresh start and begin approaching your finances differently.
However, while the debts you take into bankruptcy will no longer be hanging over you and youll also be free from the restrictions laid out in your bankruptcy order, this doesnt mean all of your finances will go back to normal immediately.
Your trustee or official receiver should explain everything to you, but it is helpful to know what to expect once youre discharged from bankruptcy.
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Not All Debts Are Released
Bankruptcy deals with unsecured debts. Credit card debts, personal loans, payday loans, unpaid bills are common examples of debts cleared by bankruptcy.
There are certain debts and financial obligations that are exempt from discharge under bankruptcy law.
- Spousal support and child support payments
- Fines and penalties imposed by the court
- Debts that arose due to fraud
- Student loans if you have been a student within the last seven years
Can A Debt Be Added To A Bankruptcy
Its important to understand that any debt that is not claimed on your bankruptcy will not be discharged. Therefore, paying the fee to add a creditor to the bankruptcy is probably going to be worth it. So long as the debt was incurred before the date that you filed bankruptcy it can be added to a current Chapter 7 bankruptcy.
Congress made laws to stop this activity, and the laws were added to the Bankruptcy Code. These laws set penalties for creditors trying to illegally collect discharged debt. Courts can order a creditor to pay attorney fees, compensation to the bankruptcy filer, and penalties for discharge violations.
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How To Find The Date A Bankruptcy Was Discharged
Finding your bankruptcy discharge order is the simplest way to find the date your bankruptcy was discharged. When a person files for bankruptcy, they eventually receive a bankruptcy discharge that signifies the end of the process and releases the debtor from personal liability for their debts. All debts involved in the bankruptcy case are no longer legally enforceable. The discharge is a permanent order prohibiting any creditors listed in your bankruptcy petition from making any contact with you or taking any action to collect the discharged debts.
If you plan on applying for credit after completing bankruptcy, new lenders may require you to provide proof that your discharge has taken place. If you are uncertain of the date of your bankruptcy discharge, there are a few different ways to find it.
What If Ive Already Been Discharged But Havent Received Notice
It is free to obtain a confirmation of discharge from the Insolvency Service. This will then be sent you in the form of a written letter that you can keep and share with creditors in the unlikely case that they should chase you again for payment in the future.
Alternatively, you can print off your listing on the insolvency register featuring your discharge date as informal proof, although your listing is removed after three months so this may not be an option if you are past this time period.
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Talk To A Bankruptcy Lawyer
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What Can The Debtor Do If A Creditor Attempts To Collect A Discharged Debt After The Case Is Concluded
If a creditor attempts collection efforts on a discharged debt, the debtor can file a motion with the court, reporting the action and asking that the case be reopened to address the matter. The bankruptcy court will often do so to ensure that the discharge is not violated. The discharge constitutes a permanent statutory injunction prohibiting creditors from taking any action, including the filing of a lawsuit, designed to collect a discharged debt. A creditor can be sanctioned by the court for violating the discharge injunction. The normal sanction for violating the discharge injunction is civil contempt, which is often punishable by a fine.
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Planning For A Better Financial Future
Set up a savings plan. In other words, pay yourself first. Even if it is only a few dollars per pay period, try to put aside a little for emergencies as soon as you are able. For many people who have been out of work or are otherwise financially devastated, it can be hard to imagine being able to save again. Still, a small amount can add up over the long run.
Ideally, you should eventually save six months of living expenses. However, having even a modest amount set aside in savings can help when the unexpected comes up. Start small and aim for a month’s salary in savings, then work up from there. Arranging for this money to be transferred directly from your paycheck to your savings account, so you never see it, will make it easier to save.
Quick Note: Never rely on credit as an emergency fund: If you have a savings plan, you can avoid one of the most destructive financial habits: using credit as an emergency fund. It is better to take a little money out of savings to replace the flat tire or the washing machine that died suddenly than taking on new debt.
Contribute to a retirement plan. If you already have a 401k or other retirement plan, try to contribute as much to it as possible. At the very least, kick in as much as your employer matches. Of course, if you can max out your contributions, so much the better. However, as with general savings, even small contributions add up over time.
How Does The Debtor Get A Discharge
Unless there is litigation involving objections to the discharge, the debtor will usually automatically receive a discharge. The Federal Rules of Bankruptcy Procedure provide for the clerk of the bankruptcy court to mail a copy of the order of discharge to all creditors, the U.S. trustee, the trustee in the case, and the trustee’s attorney, if any. The debtor and the debtor’s attorney also receive copies of the discharge order. The notice, which is simply a copy of the final order of discharge, is not specific as to those debts determined by the court to be non-dischargeable, i.e., not covered by the discharge. The notice informs creditors generally that the debts owed to them have been discharged and that they should not attempt any further collection. They are cautioned in the notice that continuing collection efforts could subject them to punishment for contempt. Any inadvertent failure on the part of the clerk to send the debtor or any creditor a copy of the discharge order promptly within the time required by the rules does not affect the validity of the order granting the discharge.
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Fans Of Nbcs The Office May Remember An Episode In Which Michael Scott Yells To His Office I Declare Bankruptcy Unfortunately Theres A Lot More To Fixing A Heap Of Debt Than Making A Loud Proclamation Filing For Bankruptcy Is A Complex Legal Process That Might Save You Money But It Also Comes With Serious Consequences Youll Want To Consider
The first step in determining whether a bankruptcy is right for you is defining what it is. Here are a couple important terms to know:
- Bankruptcy is a legal means by which someone with a large burden of debt can get out from under it. In a 1934 case , the U.S. Supreme Court defined the purpose of bankruptcy as giving a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt. In other words, its an opportunity for a financial do-over.
- If bankruptcy is the end goal, a bankruptcy discharge is a tool used to accomplish it. A bankruptcy discharge is a court order that releases a debtor from personal liability for specific debts. It legally prohibits a lender or creditor from taking any action to collect the debt in question.
Sound too good to be true? In several important ways, it is. For one, the bankruptcy shows up on your credit reports for seven to 10 years, depending on the type of bankruptcy you file, and will almost surely harm your credit scores. It also only applies to certain specific types of debts, so its not a catch-all remedy.
Follow along to learn more about discharged debt and whether a Chapter 7 or Chapter 13 bankruptcy might make sense for you. If in doubt, work with a qualified or bankruptcy lawyer to ensure you make the best decision for your needs.
Do you really need to talk to a credit counselor if youre considering bankruptcy?
Can Bankruptcy Discharge Be Denied
A court can deny a discharge in Chapter 7 for a number of reasons, including, among others, the debtor’s failure to provide tax documents that have been requested, destruction or concealment of books or records, violation of a court order, or an earlier discharge in an earlier case that began within eight years before the date the second petition was filed, and failure to complete a course on personal financial management. In addition, a creditor, trustee in the case, or U.S. trustee may file an objection to the debtor’s discharge.
A discharge may also be denied in Chapter 13 if the debtor doesn’t complete a course on personal financial management or if they’ve gotten a prior discharge in another Chapter 13 case within two years before the filing of the second case, with a few exceptions. A court may even revoke a discharge under certain circumstances, such as allegations that the debtor obtained the discharge fraudulently or fails to provide documents or information requested in an audit of the case.
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Mortgage & Secured Loans Are Excluded In Bankruptcy
The approach to secured debt differs from unsecured debt. A secured debt is a loan that has an asset or collateral involved, a mortgage or car loan, for example.
Secured debts are an exception to debts you can discharge through bankruptcy.
Here is what you need to know about secured debts and bankruptcy:
First, no secured lender is permitted to cancel your loan based on a declaration of bankruptcy alone.
As long as you continue to make your monthly mortgage or car loan payment you can keep those assets. If you are current on your mortgage, you should also be able to renew your mortgage with your existing lender, although that decision is ultimately up to your lender.
If you are drowning in other types of debt, you may find filing bankruptcy helps improve your finances enough to be able to keep up with your monthly car and house payments.
Home equity is an asset in your bankruptcy. If you have a significant amount of equity in your home, then bankruptcy may not be the right solution to eliminate your debt. You may want to use that equity to consolidate or restructure your debts through a consumer proposal instead.
A consumer proposal is a way to keep your assets and still eliminate debt. Book a free consultation for a review of your debts and situation today.
May An Employer Terminate A Debtor’s Employment Solely Because The Person Was A Debtor Or Failed To Pay A Discharged Debt
The law provides express prohibitions against discriminatory treatment of debtors by both governmental units and private employers. A governmental unit or private employer may not discriminate against a person solely because the person was a debtor, was insolvent before or during the case, or has not paid a debt that was discharged in the case. The law prohibits the following forms of governmental discrimination: terminating an employee; discriminating with respect to hiring; or denying, revoking, suspending, or declining to renew a license, franchise, or similar privilege. A private employer may not discriminate with respect to employment if the discrimination is based solely upon the bankruptcy filing.
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