Can I keep my house or car after I file bankruptcy?
Yes. If you still owe on your mortgage or car loan, you will have to agree to continue paying. If you are behind, you will probably have to pay the accumulated arrearage, but banks are generally willing to work out a payment plan that will get you caught up.
What effect does filing have on my credit score?
After filing a chapter 7 or 13 case, your score will be around 520. In several cases I have worked on, there are often numerous late pays, charge offs and lawsuits that have already significantly lowered a client’s score so a bankruptcy filing may not make much difference. My advice is to concentrate on taking on as little debt as possible after your case, and to not worry so much about your credit score at first. It will go back up eventually. After ten years, a bankruptcy falls off your credit report completely.
What can I do to stop creditors from calling or writing me?
All attemps to collect debt have to stop once a case has been filed. This is called the automatic stay, and it is an order from the court to stop contacting you while your case is pending. Clients have often told me that filing has brought them peace and quiet for the first time in a long while. Filing a case is the only way to stop creditors from harassing you. They do not have to stop contacting you, even if you demand that they do so.
Will I ever be able to get a loan after my case is over?
Yes. Some creditors will try to scare you by claiming that you cannot get a loan again if you file bankruptcy. This is absolutely not true. You may have to pay a higher interest rate, and you may have to wait a few months after your debts have been discharged, but you can get a loan. I advise my clients to avoid taking on debt as much as possible to avoid the situation that got them into bankruptcy. Yet I know that cars eventually die, or you may need to relocate for a job, and you will want to buy a house. You will be approved for credit. In fact, you will probably receive credit card solicitations in the mail after you file your case precisely because banks are counting on you going out and racking up a lot of debt as soon as your case ends. Don’t take them up, but it goes to show that you will be able to borrow again.
My relative/coworker/neighbor knew someone who filed a chapter 7 ten years ago and he told me that [fill in the blank] happened. Will this apply to me?
Be very careful when listening to others talk about someone else’s prior experience, whether obtained first, second, or third hand. For one thing, the statutes that apply have changed over the past few years, and will likely change again. What may once have been true, may no longer hold. Further, realize that everyone’s situation is different whether because of geography (what works in Florida may not necessarily apply in Indiana), or assets, or income, or any of a number of other factors. People may mean well, but you may not be getting the best advice from persons who have little current or applicable knowledge about the workings of bankruptcy.