Frequently Asked BK Questions | The Decisive Bankruptcy FAQ

bankruptcy faq about bankruptcies

Frequently Asked Bankruptcy Questions

The Decisive 7 / 13 Bankruptcy FAQ

We need a bankruptcy FAQ. Why? Because nothing is as mysterious and as misunderstood as bankruptcy. It’s just this vague thing, a process. We sense that something about it is super bad. But few people really understand what it is, how it works. That’s why we need a FAQ about bankruptcies.

So first, who am I? I’m a bankruptcy attorney who has done nothing but practice bankruptcy law through good economy and bad for two decades. I’ve helped thousands of people, and have seen lots of different scenarios.

I’ve heard it all, and some things start percolating to the top. I figure you’re thinking them too. Of course you want to avoid a trip to my office, are are curious about bankruptcy alternatives. These are frequently asked questions that get asked the most.

This bankruptcy FAQ, then, is to clear the air. I intend to provide information crucial for those trying to get informed when debt is overwhelming them. For those considering personal bankruptcy. You’ll need complete and helpful bankruptcy information. So I put together this, um, bankruptcy FAQ about bankruptcies.

However, before you get there, you may want to review the “Should I File Bankruptcy” page. It addresses some of the feelings of guilt or other issues you may be dealing with in this struggle.

FAQ about Bankruptcies

Some ‘cost of a bankruptcy attorney’ bankruptcy FAQ

Q: how much does a bankruptcy cost? Just tell me what is the cost for a bankruptcy attorney.

A – Two very common bankruptcy FAQ, and it’s often the first thing people ask. That is completely understandable, since people are terrified about debt, but fear that they can’t afford to get out of it.

A reputable lawyer doesn’t charge everyone the same fee. Let’s use an example. It’s like asking what it costs to build a web site. Will it be a static page with minimal work, 10 words and a picture, or a lot of time to produce another Amazon. It depends; every case is different.

Or how much does it cost to clean a house’s carpets? It depends. This isn’t coupon carpet cleaning where one price fits all (which they usually wiggle out of until they tell you the advertised price was just 2 rooms).

A single unemployed renter and a married employed homeowner with a family are different situations, and yes, will have a different bankruptcy cost because there’s a lot more in play in the latter.

The cost of a bankruptcy attorney will depend; we need to see what we’re getting ourselves into. Once we have a chance to talk and we find out what we’re getting into, we’ll give you a bankruptcy cost — a flat fee — in writing, and there won’t be any hidden costs or surprises later.

READ MORE: What is the 341(a) Meeting of Creditors and how do I Prepare?

Q – My case is easy, now can you tell me the bankruptcy cost?

A – It’s always charming when people self-assess their own bankruptcy. I’ve talked to thousands of people and see countless fact patterns. I’ve read questions from other bankruptcy attorneys who were surprised about what they thought were simple cases which turned out to be disasters.

Yet people who have no training or experience what creates a nightmare self-assess the only case they’ve ever handled as a piece of cake. It’s understandable you want the lowest bankruptcy cost. But a wise bankruptcy lawyer won’t give one until we meet and talk.

Oddly, everyone says they have the easiest case ever, but they don’t know the law and how it could really muck things up. But really, I promise that if your case really is the easiest one ever, we’ll give a very competitive fee since we want your business.

Q – How can I pay you if I can’t pay my debts?

A – Yes, we have a flexible payment plan. And we’ll accept a lot less than your credit card minimum payments will take. When you finish paying, we’ll finish working, then file your case.

We don’t charge interest. We’re patient. And affordable, especially when you consider the value you’re getting. We’ve stayed in business for years helping people who have no money. It’s totally doable. You got this!

Some basic bankruptcy FAQ

Q – What is the difference between Chapter 7 and Chapter 13 bankruptcy?

A – This is a bankruptcy FAQ that comes up a lot. A Chapter 7 means you can’t pay your debts, so you don’t have to… but beware, you can lose things. Chapter 13 means you keep all your stuff, but you can afford to make a debt consolidation payment that stops interest and lawsuits. (I’m working on a Chapter 13 bankruptcy FAQ)

Q – Why do a Chapter 13 if I can pay my debts myself?

A – The magic of interest, and my ability to stop it. A Chapter 13 bankruptcy freezes interest accrual, so you’re not spinning on the treadmill forever paying minimums. In Chapter 13, you make a set number of payments for a set time, and the rest is forgiven. It’s for people with cash flow.

Q – Do I pay all my debts in Chapter 13 bankruptcy?

A – Usually, no. You don’t pay all debt in a Chapter 13 bankruptcy, unless you can. In most cases, clients pay one set monthly payment for a set time, and after that time the unpaid credit cards go away forever. So no, most don’t pay all debt in a bankruptcy.

Q – Why would someone choose Chapter 13 again?

A – Lots of reasons. The simplest is: it’s a way to make affordable payments on the debts without paying interest forever. There’s a finish line. And the payment amount is (grossly oversimplifying) often determined based upon what you can afford to pay.

Also, It’s a way to force your mortgage lender to stop foreclosure while you pay back the lates. Spread over a longer period of time than they’d ever allow you.

Further, it’s a way to stop the IRS and Franchise Tax Board from hounding you while you pay back your tax debt.

Also, it’s a way to lien-strip a second mortgage, if the stars are aligned. This means it can remove a second deed of trust and turn it into a big credit card and you back all get the equity. (Some liens can be removed in other ways)

Or sometimes it’s your only option as a debt consolidation to repay what you can afford without getting sued.

There are other reasons, which avoid some of the problems of Chapter 7, which has very strict rules about repaying and transfers and gifts.

READ MORE: Learn about Chapter 13 bankruptcy

Some Bankruptcy FAQ about Chapter 7 and the Means Test

Q – Hey, you’re a bankruptcy lawyer who talks in a way that I can understand! Who wrote this bankruptcy FAQ?

A – Glad you asked. I did.

Q – Can anyone qualify for Chapter 7?

A – No, you have to be eligible to qualify for Chapter 7. It’s mostly based on income. You can’t choose Chapter 7 if you make too much money.

The higher your income is, the harder it is to qualify for Chapter 7. The bankruptcy means test helps decide who is eligible and qualifies for Chapter 7 bankruptcy.

Q – I’m married and my spouse doesn’t want to file bankruptcy. Will this affect them?

A – That’s always the word: “affect.” Will it affect them? Sure, probably. In what way, I can’t predict. I’ll never need to meet them or have them sign anything, if that’s what you’re asking. On the other hand, because of California’s community property, their income is yours, their stuff is yours, their debt is yours, and you need to list it all in your bankruptcy. Will listing your spouse’s debts in your bankruptcy ‘affect’ them and their credit? Probably. On the other hand, you’ll both be completely out of debt when this is all over.

Q – What is this bankruptcy means test?

A – A very common bankruptcy faq. The bankruptcy means test is a long form that reminds some people of a tax form. It calculates things based on a mixture of your actual expenses and others that the Department of Justice and IRS allow to you spend.

If you’re close to the borderline of income, you can retain us just to run your numbers to see if you qualify before you commit one way or the other.

A related bankruptcy FAQ is that “I did my own means test now will you agree I qualify for a 7? I’ve attended all-day seminars how to complete the bankruptcy means test, and done thousands of them. It’s not a clear-cut form.

Well it looks like it is, but even the most basic term is confusing: what is current monthly income? This month? Last month? Does it count gross or net? What about my spouse and if I get a divorce? What about my roommate’s job and Etsy business? And that’s just “income.” Sorry, but we’ll need to do the means test ourselves to make any clear conclusions.

READ MORE: The Ultimate Chapter 7 Bankruptcy Guide

Q – Is your bankruptcy office still over on Sierra Highway and Soledad Canyon in Canyon Country by Boot Barn?

A – We were in the Boot Barn Plaza for over ten years. We added a second office as the economy got worse in 2008-2010. However, as the economy has been recovering, bankruptcy filings nationwide have decreased for about 8 years in a row now. This is a great thing, but caused us to make some of the tough decisions we’ve counseled clients over the years.

So, to manage expenses and cut overhead, we kept the Palmdale office, and closed the Santa Clarita one, as storefront office space in the SCV isn’t cheap. We still consult with potential clients in the SCV by having casual chats in a coffee shop, or of course at our AV office.

Halfway Point of the Bankruptcy FAQ

Q – I’ve saved money. Will I keep it or have to lose it to bankruptcy?

A – Maybe. That depends on how much, which Chapter of bankruptcy, and if you have a home with equity, and a few other things.

Q – Will I keep my car and house in Chapter 7 bankruptcy?

A – Yes, most of our clients keep their car or home when they file Chapter 7 bankruptcy. Typically it involves staying current on payments, reaffirming the car. But beware of having too much home equity because they can take your house!

Q – I have payday loans. Will they be discharged?

A – Maybe. There are rules about getting debt shortly before filing bankruptcy. They call it fraud. That’s bad.

Q – Does student loan debt go away in bankruptcy?

A – At this point in 2021, generally no. There’s a need for student loan reform.  There’s a bill in the Senate which may change everything.

Q – What is the Los Angeles County median home value?

A – At this point in early 2021, bankruptcy attorneys aren’t sure exactly home prices to use for the Los Angeles County median home price. The law just changed, and a lot of things need to sort themselves out before we can have real clarity.

READ: “How much is the California homestead exemption?”

Q – What is your success rate?
A – Our track record is a 99% success rate on Chapter 7 cases, and our success rate for getting Chapter 13 bankruptcy cases confirmed is much higher than the national average. What we can assure you is that we’ll try our best to answer your questions in a way that’s easy to understand, while treating you with dignity, compassion, and respect.

Q – Do I have to go to court? Does your fee include full service?
A – Yes, and yes. You have to testify that the papers you signed under oath are true.

And don’t worry, you’ll be totally prepared for it, and the same attorney you consulted with and who signed your papers with you will be by your side. That’s part of the full service. Most attorneys here in Santa Clarita don’t go. You meet a stranger.

But I go.

Our one flat fee covers all the services covered in a typical bankruptcy. There are no hidden fees or surprises.

ALSO SEE: “What type of debt do you have, and will BK eliminate it?”

Q – Will I be able to reestablish credit after I file bankruptcy?
A – Yes, to the surprise of many. You’ll find that the credit card applications start arriving within 6 months. BE CAREFUL and only take on what you can afford. You will have a fresh start with your debt. Don’t blow it, because you cannot file BK chapter 7 again for another 8 years.

Read my ultimate article about credit after bankruptcy.

The Frequently Asked BK Questions Home Stretch

Q – Can I keep or save my home in a bankruptcy?
A – Maybe. See the above link.

Q – That reminds me – I’ve filed bankruptcy before. Can I file again?
A – Yes, it just depends when. This is a common FAQ about bankruptcies. In short, Chapter 7 bankruptcy requires you wait 8 years between filings.

Don’t worry: even if it hasn’t been eight years, you may still be eligible for other kinds of bankruptcy. For example, there are fewer restrictions on Chapter 13.

Q – Do I have to pay taxes (1099c form, etc) on discharged debt in bankruptcy?
A – Generally, no, but talk to your tax preparer.

Q – Isn’t it better than filing bankruptcy to hire a debt consolidation or debt management company?
A – No. Debt consolidation hardly ever works and it usually ends up in a lawsuit, and tears.

Q – Can you tell me how to file bankruptcy without a lawyer?
A – Hey now. That’s my job!

Q – Will I have to give back my computer and stereo?
A – Probably not. A good bankruptcy lawyer can help you with California’s bankruptcy exemptions for personal bankruptcy.

Q – During this COVID pandemic, do I have to travel to my 341(a) meeting of creditors?
A – During the coronavirus pandemic, the hearings are being done remotely, either by telephone or if it’s a Zoom court hearing, and I’m with you either way, or even in person, which very few bankruptcy lawyers in the 661 do.

Q – How do I stop my creditors from harassing me at work or calling me at home?
A – Once you retain us as your bankruptcy attorney and have half the fee paid, refer your creditors to us. This will be the very first benefit you see from having a bankruptcy lawyer. Also, once you file bankruptcy, all attempts to collect on debts must stop.

It’s against federal law for your creditors to do anything to collect a debt after you file. Filing the bankruptcy case and getting protected is where all the magic happens.

Q – What if I’m about to have my car repossessed, or want to stop a house foreclosure. In fact, I’m being sued by some law firm by my creditor, or a lawsuit has already turned into a judgment and a wage garnishment. How to stop all of this?

A – Once you file your bankruptcy papers, all collection activities stop. Don’t waste time. Contact a bankruptcy attorney who is also a Santa Clarita bankruptcy lawyer right NOW.

Q – What does a “simple” bankruptcy cost of a bankruptcy attorney?

A – Didn’t we cover this already? All cases are different. Please contact us and let’s meet and assess your situation, and then get a quote. We accept payments, and are flexible.

Q – When you give me my quote, is that a flat fee, or will it change?
A – Great bankruptcy FAQ. Simple answer: when we’ve had a chance to evaluate your case and we write down our quote, that includes all the usual services that come up in a Chapter 7 bankruptcy.

Once we learn about your situation in detail, we’ll put it in writing with a flat fee for all services in a typical case. It covers everything. No nickel and diming.

Q – How am I supposed to afford that? I’m filing bankruptcy, remember?
A – Yes, of course. Ask about our flexible payment plan. All our clients are struggling. Yet, we can make a living helping people who don’t have money by being flexible with an affordable payment plan. We’ll work as you pay, with payments as low as $250 a month. This is how we make it easy.

Q – How much is pi?
A – 3.1415

Q – How does the process work?
A – You submit a contact form, we contact you, we learn about your situation, we provide a flat fee and contract, you sign the contract and return it with your payment. After we’re paid in full, we file your Bankruptcy Petition & Schedules at the bankruptcy court. (I’m funny that way, but I don’t want people who are about to file bankruptcy to owe me money!)

Q – This bankruptcy FAQ has me excited to start over. What’s the next step?
A – Easy. Just contact us, and we’ll call you ASAP to arrange a no-pressure consultation with an attorney. We’ll explain how it works, go over your options. Then we give a quote for our fee. And then you go home and talk to people you trust, and then, when you’re ready, return to hire us. And then the ball is rolling!

Q – But wait, how do I contact the bankruptcy lawyer and start the process?
A – Glad you asked. Just fill out the form below .. right now!

    Hale Andrew Antico was chosen by his bankruptcy attorney peers to be President of SoCal's largest consumer debtors lawyers' association two times, and has been voted best Santa Clarita bankruptcy attorney by our SCV neighbors four times. Arrange a no-obligation consultation by Zoom or in-person to learn your options for a fresh start.

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