A: Most people who file bankruptcy do not lose any property. This is because each state has Bankruptcy Exemptions, which allow you to protect certain property from your creditors when you go through a bankruptcy.
Colorado’s bankruptcy exemptions make it possible for Chapter 7 personal bankruptcy filers to protect their propertywhen filing. Most of Colorado’s Bankruptcy exemptions come from C.R.S. § 13-54-102.
With careful pre-bankruptcy planning, Wink & Wink can help you maximize your exemptions, enabling you to keep your property and wipe out much of your debt through bankruptcy. Pre-bankruptcy planning is an important part of what you get with experienced and effective legal representation. Most people who lose property when filing for bankruptcy find themselves in that position because they did not have quality legal advice before filing.
A: If you filed a Chapter 7, you must wait 8 years from the date of filing to be eligible for another Chapter 7 discharge. You only have to wait 4 years until you can file a Chapter 13 after a prior Chapter 7.
If you filed a Chapter 13 bankruptcy, you must wait 6 years from the date of filing until you are eligible to file a Chapter 7 bankruptcy. You only have to wait two years to file another Chapter 13.
A: Yes, filing for bankruptcy entitles you to powerful legal protection called the automatic stay. Once you file for bankruptcy, all foreclosure proceedings come to a halt. If your goal is to save the property, you can file a Chapter 13 bankruptcy and make up missed mortgage payments (arrears) over a five-year period. If your goal is to get a mortgage modification, you can pursue that option while in the protection of a Chapter 13 bankruptcy. If your goal is to simply buy time in the current property, Chapter 7 filed at the right moment can buy you six months or more in the property to give you breathing room to figure out your next steps.
In general, bankruptcy is a powerful tool if you have mortgage debt, pending foreclosure or just to get in front of a few missed payments.
However, you must file for bankruptcy before the foreclosure sale to take advantage of the automatic stay. Please contact us as soon as possible for a free consultation if you are facing foreclosure. Time is of the essence.
A: Yes. Filing for bankruptcy starts the automatic stay, which halts any foreclosure proceedings against your home for months or even years. This time may take the pressure off, enabling you to make your payments in the future.
If you will be able to make your mortgage payments in the future and simply need time to catch up, a Chapter 13 bankruptcy will give you 3 to 5 years to cure any arrears on your mortgage and keep you in the home. However, if your financial situation is such that you will not be able to make future mortgage payments, then filing for Chapter 7 bankruptcy can give you three to five months to get your finances in order while your case proceeds. You will likely be able to live in your house without making any mortgage payments for most of this time (you must continue to pay any Homeowner’s Association dues). This will give you time to save money to put toward your next living situation.
In some cases, a second mortgage can be completely removed in Chapter 13 bankruptcy. This is only possible if the home is worth less than the balance on the first mortgage. If you don’t qualify for a “strip-off”, and you are behind on second mortgage payments Chapter 13 can allow you to make the payments up over time.
The application process for mortgage modifications can be complicated and frustrating. Often, having your attorney handle the paperwork and deal with the lender gets better results than attempting the modification process on your own. We have had success helping clients get mortgage modifications as part of the bankruptcy process.
A: No. There is no requirement that you have a certain amount of debt to file bankruptcy. Sometimes it makes sense to file bankruptcy with a relatively small amount of debt because the creditor has a judgment against you and will garnish your wages, making it difficult to impossible to pay for your necessities. If the amount of debt you have is more than you are able to pay off in a reasonable amount of time or is making it hard to pay your regular bills then you should look into whether bankruptcy is a good fit for your situation.
Yes, in Chapter 13 only. In Chapter 13 you are only allowed to file if you have less than $383,175 of unsecured debt and less than $1,149,525 of secured debt. There is no debt limit for Chapter 7 bankruptcy.
YES! Once you file for bankruptcy an automatic stay legally protects you from all credit collection activity. This includes foreclosure proceedings, auto repossessions, wage garnishments, IRS collection efforts and even most lawsuits. The automatic stay is powerful legal protection extended to you under the federal bankruptcy laws and one of the main benefits of bankruptcy.
Additionally, once you retain a bankruptcy attorney, you can direct your creditors to call your attorney while you are preparing to file.
A discharge in Chapter 7 or Chapter 13 bankruptcy provides powerful debt relief by wiping out your unsecured debt. This includes credit card debt, medical bills, many judgments against you and most taxes that are over four years old. You can also use bankruptcy to walk away from contracts and secured debts such as oppressive auto loans and gym memberships.
Bankruptcy cannot get rid of: student loan debt (except in special circumstances, see below); debts incurred by fraud (such as lying on a credit application; domestic support obligations (such as child support or alimony); debts for personal injury caused by driving under the influence; court fines and most restitution orders. However, it can make it easier to comply with these obligations by wiping out your unsecured debt and relieving financial pressure so you can repay the debts that will not go away with bankruptcy.
Yes, bankruptcy will stop a lawsuit in its tracks. If you are being sued for a dischargeable debt, the bankruptcy will stop the lawsuit and get rid of the underlying debt no matter where in the process the lawsuit happens to be.
Yes. Bankruptcy will stop a garnishment as soon as the petition is filed and you have a bankruptcy case number. If the underlying debt is dischargeable there can be no garnishments in the future and bankruptcy will get rid of the debt and garnishment problem completely.
Student loans are not dischargeable in bankruptcy except in very limited circumstances. You can get out of student loans in bankruptcy via a separate (very expensive) proceeding to prove “undue hardship”, which is a very high standard and odds of success are very, very low.
Chapter 13 bankruptcy can offer some relief, especially if you are being sued and/or garnished by your student loans. It also can stop the collection efforts and force creditors to accept minimal or no payments for up to five years. If your student loans are aggressively collecting from you, bankruptcy can offer relief.
Many back taxes can be discharged in bankruptcy, and tax debt for recent years that cannot be wiped out can be repaid without interest in a Chapter 13 bankruptcy. In general, unsecured (meaning no lien has been filed) income taxes that were first due more than three years before you filed for bankruptcy, where you filed a timely and non-fraudulent tax return, can be wiped out completely in either Chapter 7 or Chapter 13 bankruptcy.
Tax liens are different, they are secured by your property and require special consideration. Often you can file a Chapter 13 and pay them off at a much lower amount than the amount of the lien. Additionally, the IRS will occasionally release liens after a Chapter 7 filing.
A: Chapter 11 Bankruptcy is often confused for Chapter 13 Bankruptcy. Chapter 11 bankruptcy is usually used for corporations to reorganize their debt structure, or by high net worth individuals who have too much debt or too much income and do not qualify for Chapter 7 or Chapter 13 bankruptcy. It is very lengthy and expensive and is not used for typical consumer debt discharge. Usually, when people think of Chapter 11 bankruptcy they are really thinking of the debt relief offered by Chapter 13 bankruptcy.
A: Chapter 7 Bankruptcy is usually called “liquidation” bankruptcy. It is the most used chapter of bankruptcy and is usually over quickly, often within 5 to 6 months of filing your case. In Chapter 7 you must meet the income qualifications set out for your estate and family size, called the “means test”. You will keep all property that is “exempt” and if you have “non-exempt” property it can be liquidated for the benefit of your creditors. Hiring a bankruptcy attorney, such as Wink & Wink, can help minimize your non-exempt property and ensure the process goes smoothly and that you lose little to no property at all. Chapter 13 Bankruptcy is a repayment plan bankruptcy. Most Chapter 13 bankruptcies are filed by people who earn too much money to qualify for Chapter 7. They will repay debts in Chapter 13 based on a mathematical formula called the “long-form means test” where certain deductions are taken off the household income and the end result determines how much debt must be repaid over a 5-year period. This formula can result in you paying back a small percentage of your debt over five years without interest accruing, without creditors harassing you, and with a full discharge of all eligible debts at the end of the repayment period.
Chapter 13 can also allow you to strip off a second mortgage, lower the interest rate on certain vehicle loans and cram tax liens to the value of your personal property. It can also help you protect your non-exempt property for liquidation.
A: Yes, some choose to file a repayment plan under Chapter 13, even when they qualify for Chapter 7 when: they owe debts not dischargeable in Chapter 7 (such as taxes, child support, student loans, fraud judgments) and Chapter 13 will allow them relief from collection activity on these debts; they have a second mortgage that they are able to remove or “strip off” in Chapter 13; they are behind on car or house payments, want to keep the property, and will use the repayment period to get current on the loan/”cure the arrears”; their assets are worth more than the available Chapter 7 bankruptcy exemptions and they want to protect them by paying the value over three to five years without fear of liquidation; they filed a prior Chapter 7 bankruptcy within the last 8 years and are therefore locked from filing another Chapter 7 bankruptcy. You can file a Chapter 13 four years after a previous Chapter 7, based on the filing date of the first case.
A: Bankruptcy cannot wipe out any debt related to child support, alimony or other domestic support obligations. However, there are some cases where property division orders are dischargeable in a Chapter 13 bankruptcy. Attorney’s fees owed to the other side are sometimes dischargeable, but sometimes held to be a domestic support obligation, for example if they were awarded during a custody battle. This is a legal issue that requires the advice of an attorney
A: No. Why? These organizations are basically collection agencies working for or controlled by the credit card companies. Many of them are outright scams where the company pockets your money (they require that payments go directly to them, not to your debts) and does nothing for you. Additionally, they can only help you reduce the interest payments on your credit card debt (not your medical bills, tax bills or other debts that can be wiped out by bankruptcy). This still leaves you with a lengthy repayment obligation and not a fresh start.
A: Debt settlement is where you seek to settle a debt, such as a credit card bill or medical bill, for a fraction of the full balance. Wink & Wink represents many clients in debt settlement and can weigh the option along with the bankruptcy option with you so that you can make an informed decision on which is the best way to handle your debt. For more information, see our Debt Settlement section under Services.
A: No. Your 401(k), pension plan, deferred compensation plan, IRA and ROTH IRA are protected from bankruptcy. You will not be required to use any of your retirement funds to pay your debts in a bankruptcy proceeding. In fact, the biggest mistake people make is liquidating retirement funds to repay debt that could be included in bankruptcy without getting a professional opinion first.
A: No. Cashing out your 401(k) or other retirement account is usually a terrible idea for people with debt problems. Your 401(k) is safe in bankruptcy, but once you pull the money out it becomes fair game for creditors and is counted as taxable income by the IRS. Filing bankruptcy is usually a better option to cashing out your retirement accounts. After bankruptcy you can have a debt-free future WITH the benefit of your retirement savings.
A: Your credit report will reflect your bankruptcy filing for up to 10 years, but many credit reporting agencies will remove it after 7 years. However, if your credit was in bad shape prior to filing for bankruptcy (which is the case for most everyone considering bankruptcy), your credit score can actually improve after a bankruptcy discharge. This is because the credit reporting agencies reclassify you with other people who have filed bankruptcy, and also because many lenders will you as less of a risk because you have improved your financial situation by wiping out debt through bankruptcy and you are unable to wipe out future debt in another bankruptcy for four to eight years.
A: Yes. Credit will still be offered to you after your bankruptcy. These offers may be at higher interest rates and for lower limits, but you will be able to get credit. There is also the option of a secured credit card (where you supply the bank with an amount of money and draw down from that), which is usually offered at a lower rate than an unsecured card.
A: You should consider enrolling in the Seven Steps to a 720 Credit Score program. This program has been around for 10 years and delivers excellent results when the lessons are followed. Please see more information on this program at our 7 Steps to a 720 Credit Score Section under Services. Wink & Wink offers this program to our clients for a steep discount.
A: A co-signor is 100% liable for the loan if you do not repay it, either by default or by discharging the debt in bankruptcy. This means that the creditor will seek to collect the debt from the co-signor. There are certain protections for co-signors in Chapter 13 bankruptcy that an attorney can advise you on. Often, though, the co-signor will need to continue paying the debt or look into their own bankruptcy options.
A: Yes you can file bankruptcy without your spouse. However, you will have to account for their income on your means test. This is because your spouse’s income is part of your “household income” and must be disclosed in your bankruptcy. Their separate assets, belonging only to them, do not have to be disclosed.
A: If you are legally married but separated, you can file without your spouse OR with your spouse, if that is advantageous. This can be complicated and you will want to look at both choices before deciding which is best for your situation. Again, “household income” includes any payments your separated spouse makes to help support your separate household. This is the type of case where legal representation is very important!