What Happens To My House If I File For Bankruptcy
If you put your house up as collateral for a business loan or line of credit, and you default on that loanor if you stop making mortgage payments on the housethe lender can foreclose. Bankruptcy can delay the foreclosure for a while, but ultimately, if you dont make the payments, youll lose your house.
Learn The Basics About Chapter 7 How It Works And What It Can Do
By Cara O’Neill, Attorney
COVID-19 Updates: Retirement and Stimulus Fund Protections Safe Filings.
If you’re one of the millions laid off due to COVID-19, bankruptcy can erase bills while keeping most retirement accounts intact. And you don’t need to worry about losing your stimulus fundsthe new bankruptcy “recovery rebate” law protects stimulus checks, tax credits, and child credits. Bankruptcy lawyers will consult with you virtually, and courts continue to hold 341 creditor meetings telephonically or by video appearance unless an in-person meeting is necessarysee the U.S. Trustee’s 341 meeting status webpage for details.
Streamline your researchtake our bankruptcy quiz to identify potential issues with your bankruptcy case.
Chapter 7 bankruptcy is the type of bankruptcy most people prefer to file because it’s quick and filers aren’t required to pay back any debt. In this article, you’ll learn about the basics of Chapter 7 bankruptcy, including who can file, the forms you’ll need, how the process works, and what happens to your property and debts.
For step-by-step guidance through the bankruptcy process, read What You Need to Know to File for Bankruptcy in 2021.
Filing Chapter 7 Bankruptcy In Florida
Chapter 7 Bankruptcy is the legal procedure where the debtors unsecured debt is discharged after the debtors non-exempt assets have been liquidated. To file a Chapter 7 bankruptcy in Florida, a person must be a permanent Florida resident or own property in the state. Florida has three bankruptcy districts , and each of Floridas counties is assigned to one of the three bankruptcy districts. People must file bankruptcy in the district and local division where they reside.
What Is Chapter 7 Bankruptcy
Chapter 7 bankruptcy, also known as a straight or liquidation bankruptcy, is a type of bankruptcy that can clear away many types of unsecured debts. If you’re far behind on your bills and don’t have the means to afford monthly payments and living expenses, filing Chapter 7 bankruptcy could be a last resort to help you reset your finances. However, you may have to give up some of your possessions, and it will have a long-lasting negative impact on your creditworthiness.
How Long Does A Chapter 7 Bankruptcy Stay On Your Credit Report
A Chapter 7 bankruptcy is a major derogatory mark that can hurt your credit for years to come. The Chapter 7 bankruptcy record can stay on your credit reports for up to 10 years from the filing date, and a completed Chapter 13 bankruptcy can remain on your credit report for seven years from the filing date.
The accounts that were included in your bankruptcy may fall off your credit report earlier, as most negative marks get removed after seven years.
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How Soon Can You File For Chapter 13 After Chapter 7 Bankruptcy
In order to get debts discharged through Chapter 13, you must wait four years after filing a Chapter 7 bankruptcy.
You can file for Chapter 13 before four years if no debts were discharged in the Chapter 7 filing, but if you had debts discharged in Chapter 7 and want to have debts discharged in Chapter 13, you must wait four years.
What Happens To Your Mortgage When You File Chapter 13
Chapter 13 Bankruptcy is more like a structured repayment plan than a wipeout of all debts, and thus a very different species from Chapter 7 Bankruptcy. With Chapter 13, you file a plan with the bankruptcy court detailing how you will repay your creditors. The bankruptcy trustee reviews the plan, ordering some debts to be paid in full, some to be paid in part, and possibly a handful to be forgiven.
Chapter 13 Bankruptcy does not affect your home mortgage, so you can file for bankruptcy and keep your house in Texas. You continue to make your mortgage payments during and after the bankruptcy, ie., there is no Chapter 13 discharge of mortgage debt in the traditional sense.
If you have fallen behind in mortgage payments, you have the option of paying mortgage late while in Chapter 13 and you can add the arrearage to the Chapter 13 repayment plan, which typically lasts from three to five years. Chapter 13 and mortgage payments thus have a different relationship than Chapter 7 and mortgage payments, which does not allow for the accumulation of arrears and allows for the discharge of mortgage debt.
Do You Have to Reaffirm a Mortgage in Chapter 13?
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How Filing For Chapter 7 11 Or 13 Protection Will Affect Your Financial Future
Bankruptcy isn’t something most of us want to consider, even when we’ve dug ourselves into a significant financial hole. But in some circumstances, bankruptcy can provide the financial protection and relief we need.
Perhaps the most difficult part of bankruptcy is determining whether it’s the best option for your financial situation. Talking to a financial professional like a credit counselor or a bankruptcy attorney can be a helpful if not necessary step in making that determination. More on that in a bit.
First, let’s review what happens when you file for bankruptcy protection:
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.
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What Happens After Filing A Chapter 7 Bankruptcy
Youve met with a bankruptcy attorney, reviewed all your assets, and decided that a Chapter 7 Bankruptcy is the right option for you. Now what? What happens after filing a Chapter 7 Bankruptcy? Find out what you need to know, and how your bankruptcy attorney can help.
This blog post will walk you through the steps of what happens after filing a Chapter 7 bankruptcy. It will cover the automatic stay on collections efforts and the trustees job in distributing your assets. It will also explain how having an experienced bankruptcy attorney can help you protect more of your property through careful use of exemptions.
If You’re Leasing A Vehicle
If you’re leasing a vehicle you must decide upfront whether you plan to keep the car or return it to the dealership. You have 30-days from filing to fill out your paperwork stating your intention. You can choose to either assume your lease or reject your lease.
To assume your lease means you agree to keep it and make all your lease payments throughout your bankruptcy. If you miss one you forfeit the deal and your lessor can repossess the car.
If you reject your lease you return the car and are free from all liability and the responsibility to make up any payments after your Chapter 7 is discharged.
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What Happens After Filing For Bankruptcy In 2021
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In a Nutshell
Knowing what happens after you file bankruptcy can make it seem less intimidating. Read on to learn about filing Chapter 7 bankruptcy, the meeting of creditors, keeping your car, and why creditors must stop contacting you after filing.
Knowing what happens after you file bankruptcy can make it seem less scary. Read on to learn about filing Chapter 7 bankruptcy, the meeting of creditors, keeping your car, and why creditors must stop contacting you after filing.
Do You Need To Hire A Foreclosure Attorney
Legally speaking, you donât need to hire an attorney to represent you for your foreclosure. Many homeowners go âpro se,â which means they represent themselves without an attorney. Often, they make this choice because they canât afford to hire an attorney. Other times, itâs because they donât feel itâs worth the money. But in the following cases, itâs a good idea to consider hiring a foreclosure lawyer:
Youâre on active duty in the military. Being an active duty member of the United States armed forces doesnât prevent your home from being foreclosed. But servicemembers on active duty have special rights under the Servicemembers Civil Relief Act . This law aims to reduce some of the legal and financial struggles someone on active duty might have to deal with. Itâs an intricate law thatâs difficult to fully understand, so itâs good to have an attorney to ensure your lender is following it.
You want to do everything you can to keep your home. Whether you want to keep your home because itâs been in the family for several generations or because youâre in a great school district for your kids, itâs a good idea to hire a lawyer to help you prevent foreclosure.
If none of these situations apply to you, you may be better off not hiring a foreclosure lawyer. For example, if youâve accepted the idea of losing your home or you know that there arenât any valid defenses you can use to stop the foreclosure.
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Why A Judgment Lien May Not Be Troubling
A judgment does not last forever. In the event that the judgment is considered a lien against your property, you may not be concerned if you dont intend to sell the property before the judgment expires.
Judgments expire in 10 years under both California and New York laws. In both states, however, the creditor can apply for an extension of the judgment to get 10 more years to collect the debt.
In addition, if youre in New York you have the option of going back to state court to seek a discharge of the judgment after a certain amount of time has passed since your bankruptcy discharge. Learn more about that here.
If you go through Chapter 7 bankruptcy and have a judgment but dont expect to need to sell your property within the time thats left for enforcement, you may decide to do nothing. Its a decision you need to make with your bankruptcy lawyer.
How Long Does Chapter 7 Bankruptcy Take
Most people can file their bankruptcy forms within one week if theyâre organized. The 341 meeting with the trustee who oversees your case takes place about one to two months after you file.
If all goes well, two to three months after your meeting with your trustee, youâll get a letter in the mail that your debt is officially discharged. This means that that Chapter 7 bankruptcy from beginning to a discharge of your debts takes about 3-5 months.
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Chapter 7 Notice Of Bankruptcy Case Filing
Your Notice of Bankruptcy Case Filing is an important form the court issues after we have filed your bankruptcy petition. This Notice contains your case number, district information as well as the date the petition was filed and often, your Trustees information. You can use this document to prove to anyone that you have filed bankruptcy and are under the protection of the Automatic Stay, which prohibits any creditors from contacting you or continuing with any collection actions.
Your case number will be important when you go to register for the second online credit course.
The Court will mail the Notice of Filing to all the creditors you listed in your bankruptcy, but it does take a few days for them to receive that notice. In the meantime, if you get a phone call from a creditor after we file, just let them know you have filed and provide your case number and our offices contact information.
What Happens When You File A Chapter 11 Bankruptcy
With a Chapter 11 or Chapter 13 filing, reorganization is the goal. Debtors are required to pay debts according to a repayment plan the court sets up. Chapter 7 bankruptcy filing is quite different the business is shutting its doors permanently and individuals are given a fresh start by liquidating assets and discharging debts.
Bankruptcy Court Discharges Debt
The whole Chapter 7 Bankruptcy process can take approximately 3 months from beginning to end . At the end of that period, the court will receive a report from the bankruptcy trustee that all your non-exempt assets have been sold and the proceeds distributed to your creditors. At that point, the bankruptcy court will enter your order of discharge, canceling all but a few of your debts.
Once that happens, your Chapter 7 Bankruptcy will be over and you will be able to move forward without the burden of late payments and debt collectors. You can start to rebuild your credit and work back up to a financially stable situation.
What Happens When You File For Bankruptcy
No one plans to get into financial trouble. However, things happen in life, and sometimes you end up with more debt than you can handle, and you have to make tough choices. Thats when its essential to know what happens when you file for bankruptcy.
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Getting A Mortgage After Bankruptcy
You will not be able as a practical matter to get a mortgage during your bankruptcy. This is because all major lenders and mortgage investors require that the bankruptcy be either discharged or dismissed before considering your application.
You may, however, be able to get a mortgage after bankruptcy if you otherwise qualify. This depends largely on your credit score, which will sharply decline at the time of bankruptcy and for a little while after, then slowly begin to restore itself over time. Learn more about how long bankruptcy stays on your credit report on our blog. Its not impossible to move forward and get a mortgage down the line, but you may have some recovery to do. A secured credit card or credit builder loan can help in this regard.
Most reputable lenders will require a waiting period of at least two years after your Chapter 7 Bankruptcy discharge to consider you for a mortgage, and any who offer more favorable terms should be scrutinized. Certain types of loans like Federal Housing Administration loans may take less time, while jumbo loans may require up to seven years of waiting. Chapter 13 Bankruptcy waiting periods are generally shorter, requiring just four years from the filing of the Bankruptcy petition to be considered for a mortgage.
What Is The Downside Of Filing For Bankruptcy
Home » What Is the Downside of Filing For Bankruptcy?
Filing for bankruptcy protection is considered a statement on your ability to repay your debt to your creditors. The fact that you sought and received bankruptcy protection will remain on your credit record for as long as 10 years. Additional factors regarding what is the downside of filing for bankruptcy can include:
- Filing for bankruptcy can negatively impact your immediate financial future.
- Obtaining credit after filing for bankruptcy could mean increased interest rates.
- Obtaining credit after filing for bankruptcy might require security deposits.
Filing for bankruptcy can give you the opportunity to start over and create a new financial reality for you and your family. It can also come with many downsides that you should be aware of in order to make a fully informed decision.
In addition to these credit issues, certain bankruptcy filings will leave you with nondischargeable debt that must still be paid back. Nondischargeable debt can include property debt, tax debt, student loans, spousal support, child support, and criminal debt. While some bankruptcy chapters will allow you to manage many of these nondischargeable debts more readily, they will not be dismissed or discharged.
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Getting Your Bankruptcy Discharge Is Virtually Guaranteed
If youâve never filed bankruptcy before, pass the means test, and are honest in your dealings with the bankruptcy court and the bankruptcy trustee, you can get your bankruptcy discharge in as little as 3 months. As long as you make sure you meet all requirements before and after filing your bankruptcy case, itâs basically automatic.
Preparing For Chapter 7 Bankruptcy
Theres some protocol to follow in the months before filing for bankruptcy. Failing to follow these instructions could undermine your efforts.
Dont Pay Creditors It seems counterintuitive and you should definitely make routine payments. But any large or unusual payments could be viewed as preferential transfers. That means one creditor has benefited unfairly over others.
No New Debt A new creditor could claim you took out a loan or ran up the balance on a credit card without intending to pay it back. Legally, thats fraud and it will not be forgiven.
No Unusual Transactions Dont stray from the routine. Dont transfer titles of cars or homes. Dont buy luxury goods. Dont transfer your business or remove your name from it. They can all be classified as fraud.
Be Truthful You are required, while filing for bankruptcy, to provide full and complete information. You must disclose any debt, assets, accounts or other financial information. Failure to comply could lead to fraud and potential criminal charges.
Dont Touch Retirement Funds You are generally allowed to keep retirement plans and accounts, so keep them safe while considering bankruptcy and dont use those funds to pay down debt.
Never think you can get away with something sneaky or dishonest. Your bankruptcy lawyer is always a good resource for what you should and shouldnt do.
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