FAQ

Read below for some frequently asked questions about Bankruptcy and Real Estate.

Bankruptcy 

Who can file for bankruptcy?

With few exceptions, any person or business owing money to a creditor can file a bankruptcy petition.

How often can you file for bankruptcy?

In order to be eligible for a discharge, you must wait eight years between filing Chapter 7 bankruptcies. There is a four year limitation between filing a Chapter 7 and filing a Chapter 13 bankruptcy. There is a two year limitation between filing Chapter 13 bankruptcies.

Even if you fall between these time periods, you still may be able to file bankruptcy and get relief from your creditors.


What documents do I need to begin the process?

You need to compile a list of your current creditors, their addresses and, if possible, the associated account numbers. The petition in a bankruptcy filing includes schedules of assets and liabilities as well as a statement of financial affairs. These documents are filed with the bankruptcy court, along with payment of the filing fee. In order to complete these documents you will need to provide the following:

  • Six months of pay stubs and/or financial statements
  • Prior two to four years of tax returns
  • Divorce decrees
  • Bank statements
  • Any other lawsuits or litigation pending against you

How much debt do I need to file?

There is no minimum debt needed to file for bankruptcy. Some situations may not warrant filing for bankruptcy. During your consultation we will be able to determine what other options may be available to you.

What happens if only one spouse files?

It is not required for both spouses to file, however if a spouse is joint on any debt and does not join in the bankruptcy, they may be responsible for the debt.


Does a divorce protect me from creditors if my ex-spouse files?

No. If you are a co-signor with your ex-spouse on a debt, the creditor can require the entire payment of that debt from you even though the divorce decree assigns the debt to your ex-spouse. Your divorce decree may address any recourse you may have against your ex-spouse should he or she default on the loan obligations set out.

What types of debt cannot be discharged?

Generally, the following cannot be discharged:

  • Debts for taxes owed to local, state or federal agencies
  • Debts for money, property, services, or an extension, renewal, or refinancing of credit, which was obtained fraudulently
  • Debts which were neither listed nor scheduled or which the debtor waived discharge
  • Debts which are owed to a spouse, former spouse, or child of the debtor, for alimony, maintenance, or support of such spouse or child, in connection with a separation agreement, divorce decree or other order of a court of record
  • Debts owed for willful and malicious injury by the debtor to another person or property owned by another.
  • Debts for government-sponsored educational loans, unless it can be shown that repayment will cause an undue hardship
  • Debts for death or personal injury caused by the debtor's drunk driving or from driving while under the influence of drugs or other substances
  • Debts incurred after a bankruptcy was filed

What can I keep if I file bankruptcy?

Exemptions allow an individual to exempt, or keep, certain kinds of property. State law defines what assets are considered exempt. Your exemptions will be determined by which state you resided in during the two years prior to filing for bankruptcy.

How long does a bankruptcy stay on my record?

Bankruptcies can remain on credit reports anywhere from seven to ten years. Generally, the negative impact of a bankruptcy lasts about two to three years from the date of filing.

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Real Estate 

Do I need an attorney to buy or sell a home “by owner”?

When selling a home, a realtor normally helps you market the property and negotiate a contract. If you are willing to market the property yourself, an attorney can help you negotiate the contract and walk you through the closing for a fee that is usually much less than a realtor’s commission. In addition, an attorney may help you properly disclose any defects in your home to a potential buyer to help avoid future liability from the property.

When buying a home, an attorney can assist in making sure the buyer completes the inspection process for both the house and the property, in order to uncover any potential hidden defects or title problems. In addition, an attorney will review the mortgage documents prior to closing to make sure the terms of the loan you are promised is adequately reflected by the loan documents.

Should I consolidate high interest debts into a lower interest rate second mortgage if I am having financial problems?

You should consult an attorney before entering into a consolidation loan. While consolidation loans usually lower the monthly payment amount in the short term, the amount of interest paid long term can be substantially more. In most cases, any equity you have in your homestead is exempt from creditors' claims. If the underlying cause for the financial problems has not been resolved, some homeowners find they are forced to file bankruptcy at a later date, only to find out they could have avoided attaching the consolidated debt to their homestead.

What are my options if I have been served with a foreclosure?

If you have any defense to the foreclosure action, or any counterclaims to bring against the mortgage company, you must file a response within 20 days of being served. Even if you do not know whether you have a defense, you should contact an attorney to make sure the mortgage company has done everything required of them to enforce the loan. An uncontested foreclosure takes approximately 3-4 months to complete. This time period may be significantly lengthened during a contested foreclosure, depending on the nature of the defenses and/or counterclaims. There are a number of ways to prevent foreclosure prior to the foreclosure sale, including negotiating a repayment plan or loan modification, or filing for bankruptcy.

What is the difference between a repayment plan and a loan modification?

A repayment plan usually allows a borrower to catch up delinquent mortgage payments by making the regular payment plus an additional amount each month to go towards catching up the delinquent payments. The regular monthly payment amount, the interest rate and the length of the loan are usually not adjusted, and the mortgage company may or may not continue with legal action during a repayment plan.

A loan modification usually includes an adjustment to the regular monthly payment amount, by either modifying the interest rate or adjusting the length of the loan, or both. Most loan modifications will add the amount owed for delinquent payments to the balance of the loan, to be repaid over the life of the loan, so there is no “catch up” payment to make in addition to the regular monthly mortgage payment.

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