In our prior article, Solomita Law answered three frequently asked questions about bankruptcy. This article addresses other common queries.
Must I include every one of my debts in a bankruptcy filing or may I elect to pay off certain debts without applying for a discharge?
All debts must be included in the bankruptcy petition. Certain debts such as student loans and child support (among others) will not qualify for discharge. Other debts, like mortgage and vehicle loans, can be repaid during the bankruptcy and after the discharge is entered as well.
Can a creditor file a new claim after I have filed a bankruptcy petition? What happens to new claims?
When you file for a bankruptcy judgment, the courts issue an automatic stay that will prevent additional creditor actions during the time of bankruptcy. This can buy you valuable time to stay in your home while exploring your financial options, finding a new place to live, preparing your belongings for a move, conducting your move, and/or applying for a mortgage modification.
An automatic stay also stops creditors from harassing you for payments and/or making claims during that time. However, creditors may elect to pursue you for debts that were not discharged during bankruptcy. During bankruptcy, the judge may discharge non-secure debts in full or in part (depending on circumstances and rules of the bankruptcy chapter under which you qualify). If debt remains, the judge also may establish a plan and order you to continue paying secured debts and non-dischargeable debts. Generally, the plan will be based on what the court determines you can afford to pay based on the total you owe and will establish a three-to-five year payment plan.
Will I lose my home if I file bankruptcy?
The answer depends on your mortgage history, the state in which you reside and the bankruptcy chapter under which you file. If you file under Chapter 13 in the State of Florida where Solomita Law operates, you have a good chance of keeping your home. The bankruptcy court’s Mortgage Modification Mediation Program has proven to be very successful for debtors in the Central Florida area. This program can help make your payments more affordable so you can stay in your home—particularly if you continued to make regular, on-time mortgage payments before filing for bankruptcy.
Will I be allowed to keep my furniture, car or other personal property?
The court provides each debtor with exemptions that they can use to protect their assets. If the exemptions used do not shield the full value of your assets, as the debtor, you will have to repay the unexempt amount to the Court or surrender possession of the unprotected asset. Please contact Solomita Law for further information on this topic.
Can I sell or transfer property before filing bankruptcy?
The courts will look at your financial transactions over the year prior to your bankruptcy to ensure those transactions did not occur with intent to commit fraud. If, for example, you sold a car six months earlier, and used the money to pay attorney fees or to purchase or repair an old car and use the remaining money to continue paying your bills, the court may consider those transactions an appropriate part of your debt management plan.
If you are considering a bankruptcy petition, speak to an attorney who can help you protect your assets and your standing in court. It’s important to make informed decisions before selling or transferring property so you do not jeopardize your opportunity to discharge debts through bankruptcy proceedings.