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Questions About Filing For Bankruptcy? Check Out Our Bankruptcy FAQs

Filing for bankruptcy is a big decision and certainly not something to be taken lightly. Please read some of our most frequently asked questions and contact us for a free consultation if your questions are not addressed here.

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  • How does bankruptcy work? I am thinking of filing but I am worried about it will ruin my life.

    Bankruptcy may easily be one of the most misunderstood areas of the law by non-attorneys. Many people believe if a person files bankruptcy their credit is ruined for life.  Others believe if you file bankruptcy, you would not be able to obtain credit for 10 years.  After 29 years of practice, I can tell you that none of this is true. 

    People worry about filing bankruptcy simply because they do not understand how it works.  Bankruptcy is a federal court process which protects debtors from their creditors.  Bankruptcy is a great tool to protect your home, car, money and to prevent your creditors from harassing you for past due payments.

    Bankruptcy does not ruin lives.  In fact, bankruptcy often gives a person back their life. Bankruptcy can put you back in control of your finances instead of allowing the debt collectors to control your destiny.  Bankruptcy is designed to provide people with a fresh start. And, it does just that.  For people who complete their bankruptcy cases, life gets better.  There is no shame in filing bankruptcy.

    Bankruptcy can eliminate your debt upon the discharge of your case. A discharge simply acts as a "forgiveness" of your debt.  If you are filing a Chapter 7 bankruptcy, your debts will be discharged in approximately 3 to 8 months.  Generally, the only debts that cannot be discharged are student loans, child support/alimony payments, some tax debts and debts related to criminal matters.

    In a Chapter 13 case, your debts are reorganized by forming a payment plan that will last from three to five years.  A Chapter 13 case is a great way to catch up past due mortgage payments.  Most payment plans under a Chapter 13 case will include your vehicle payment.  Therefore, you will have just one easy monthly payment.  You will not lose your home or car.  While student loans, child support/alimony payments, tax debts and debts related to criminal matters would not be discharged, these could be paid through a Chapter 13 case. Unsecured debt such as credit card debt, finance companies, and payday loan company debts will be completely eliminated.  You will also receive the title to your vehicle when your case is discharged.

    There is life while you are in a bankruptcy case and after you are discharged from bankruptcy.  After a Chapter 7 case - which usually lasts only 3 - 8 months, you can incur credit right away. Of course, the sooner you incur credit after a bankruptcy, the higher the interest rate will be.  If your income qualifies, most people can purchase a home about 2 years after their Chapter 7 case. You will also begin to be offered loans at competitive interest rates about 2 years after your case if over. Debtors filing for Chapter 13 protection can incur credit while they are in the bankruptcy plan provided they obtain court approval. For qualified Chapter 13 debtors, the purchase of a home is possible after they have made 12 months of timely bankruptcy payments.

    You will find instant relief by filing a Chapter 7 or Chapter 13 as creditors are not allowed to attempt to collect on their debt as soon as the case is filed.  As a result, you will not have to worry about receiving harassing calls from your creditors as they are not allowed to contact you in any way.

     

    The Law Office of Seymour & Associates, P.C.

    The legal info provided on this website should not be construed to be any type of formal legal advice, nor the formation of an attorney-client relationship. Any case results set forth here were dependent on the specific facts of that case and the results will differ from case to case.

  • Should I pay off creditors with my tax refund or filing bankruptcy?

    Unless you are able to pay off all of your unsecured creditors with your tax refund, you would be better off keeping the tax refund in your pocket and filing a bankruptcy to discharge your debts.

    Many people think the bankruptcy trustee will take their tax refund if they file for bankruptcy. This is simply not true in most case.  In bankruptcy, a debtor is allowed to keep a certain amount of money.  The laws that allow this are called exemptions.  The best option for someone considering bankruptcy is to hold on to their tax refund and seek a consultation with an experienced bankruptcy attorney before they make any decision about paying anyone.  The attorney will be able to tell you if any part of your refund is in jeopardy.  And, if any part of your tax refund is at risk of being taken, a smart attorney will be able to tell you things you can do to protect it within the bounds of the law.

    The worst thing a person can do is to repay "insiders" with their tax refund.  An "insider" is considered a friend of family member.  Again, the best option is to hold on to your tax refund and speak with a bankruptcy attorney about how to protect everything.  You do not have to lose your tax refund if you just follow the attorney's advice.

    The Law Office of Seymour & Associates, P.C.

    The legal info provided on this website should not be construed to be any type of formal legal advice, nor the formation of an attorney-client relationship. Any case results set forth here were dependent on the specific facts of that case and the results will differ from case to case.

     

  • How Will I Know When I Need To File Bankruptcy

    There are three common situations in which people decide to file for bankruptcy.

    1. A creditor has taken action to collect a debt that threatens the individual's livelihood.  Some examples include garnishment of your wages or bank account, repossession of your vehicle, foreclosure of your home or creditor harassment.
    2. A traumatic event has happened that has reduced the person's income or increased the person's debts and bankruptcy is often the best option to pick up the financial pieces.  Some examples include divorce, long- term employment, serious medical issues, or death of a family member.
    3. The person has become overwhelmed with debt and has no reasonable prospect of improving his or her credit and debt situation other the filing a bankruptcy.

  • Can couples in a same- sex marriage file a joint bankruptcy case?

    If your same-sex marriage is recognized under your state's marriage laws, then you may file a joint bankruptcy case. In the 2013 case of United States vs. Windsor, the U.S. Supreme Court held that Section 3 of  Defense of Marriage Act did not apply to same-sex marriages provided the marriage is recognized by the state.

    The United States Trustee has taken the position that if you were married in a state that recognizes same-sex marriages, you may, file a joint bankruptcy case even if you now reside in a state that does not recognize same-sex marriages. 

  • Q: Declare bankruptcy: I live in Florida and I have over $30,000 in Student loan debt. I made arrangements to pay $5/mo because that's all I can afford and I figure it's something. I am a single mother of 3 and working, but I am living paycheck to paycheck. Should I declare bankruptcy and how will it affect my future?

    If you have other debt that you are having difficulty paying, bankruptcy could be an option for that debt. While not impossible, discharging student loans in bankruptcy can be difficult and expensive. If the only debt you are worried about is federal student loan debt, I would try to find a non-bankruptcy solution. There are many income-based repayment plans that may be helpful. Also, depending upon where you are employed, you may qualify for Public Service Loan Forgiveness which could potentially eliminate your student loan debt in ten (10) years tax-free. Just know most, if not all, of the "forgiveness" programs, require a borrower to be making payments on the loans (income-driven) and you must have the "right" type of loans. Space in the Q&A section just really doesn't allow the attorneys to give you a great deal of information and without being able to ask you some pertinent questions, your best bet is to find an attorney in your area that practices student loan law and, if you have other debt, bankruptcy law. Many will offer a free consultation.  Good luck!

  • I am being sued for student loan that I co-signed for my daughter who defaulted on the loan. I do not work and my husband is retired.We live off my husband's railroad retirement. He also has IRA to supplement, in his name, which was once his work 401k. No other income. We have joint bank account that retirement goes into automatically. Can a joint account be garnished? Is retirement safe? Home is homesteaded in Massachusetts. Our vehicle in husband's name. What is the worst that can happen if I lose the lawsuit?

    If you have not already retained an attorney and filed a response to the lawsuit, you really need to do that quickly. If the only money that goes into the joint bank account is your husband's railroad retirement you should not have to worry about the bank account. Should a garnishment be served upon the bank just tell them to look at the source of funds and they should release the garnishment. However, if the IRA funds go into that account those may be garnished as they would lose their exempt status once they are withdrawn from the protected IRA account. So, make sure the bank account never contains anything except the railroad retirement. Then open an account in your husband's name alone for the IRA funds that he is withdrawing. If the vehicle is not in your name you don't have to worry. I really don't know about the home as that would be controlled by your state's law. Good luck!

  • What do I need for a Student Loan Consultation?

    We ask that before you come in for a consultation, you fill out our Student Loan Checklist. Once you fill it out, please email us the documents at [email protected]

  • I have heard that having your student loans in deferment is not a good thing. Is that true?

    Deferments can be useful in some situations; however, we do not recommend that a person use them to delay payments.  If you are trying to keep your student loans in deferment because you cannot afford the payment, you are missing a golden opportunity to start the forgiveness clock on your loans.  As long as your loans are in deferment or forbearance, time has stopped for you and you are not moving toward the forgiveness of your student loan debt. Also, deferments and forbearances are doing nothing but increasing your student loan balances.

    If you cannot afford your payment, our office can help you.  We can help you set up a repayment plan, often with a very, very low payment.  This will start your forgiveness clock so you can relax knowing this debt is being paid. 

     

  • Will my credit cards be paid with interest in a bankruptcy case?

    As a general rule, unsecured debt (credit cards, medical bills, finance companies, payday loans, etc.) will not be paid any interest in a bankruptcy case.  In a Chapter 7 case, your unsecured creditors will not receive any money.  As long as you complete your bankruptcy case and obtain a discharge, in most cases these unsecured creditors will not be paid at all.

    In a Chapter 13 case, your confirmed plan will control how the unsecured creditors will be paid.  In the majority of Chapter 13 cases, no interest is paid to the unsecured creditors.  The interest that you may see listed on your Chapter 13 plan is the amount to be paid to your secured creditors (car loans, furniture, etc.).  Your Chapter 13 plan will usually propose to pay your unsecured creditors in full with no interest or a small percentage of your debt.

    In Chapter 13 cases, if your income is exceptionally high, the Chapter 13 Trustee may require interest to be paid on your unsecured debt.  Such cases are not the norm.  Even if you are required to pay interest on your unsecured debt, it will be at a rate much lower than your credit card or loan interest.

  • I have calculated my Chapter 13 plan payments and it seems I am paying more than what I owe to my creditors.

    Your Chapter 13 plan payments can be hard to understand.  Your bankruptcy attorney can easily show you the breakdown of your payments.  Your payments will include any mortgage or rental arrearage you may owe.  They will also pay any secured debt that you wish to retain, such as, a car or furniture.  The secured debt that is paid through your Chapter 13 plan will be paid with interest.  Also, any priority debt (taxes, child support arrearage) will be paid through the plan.  Your unsecured debt will be paid as stated in your confirmed plan – either in full or a small percentage to this type of creditor.  In the majority of case, no interest is paid on unsecured debt.  In addition to your debt, your payment will most likely include the attorney fees and the court filing fees.  Finally, the Trustee will charge a percentage of your monthly payment to administer your plan. The Trustee fees vary by district and range from about 3% to about 11%.  While all of this seems like a lot, remember you will be out of debt soon and will not be paying the large interest rates on your credit cards.   And, this is usually much less expensive than paying interest on your credit cards and/or living with a garnishment of your wages.

  • What happens if my creditors do not file a claim in my Chapter 13 case? Will I pay out early?

    If a creditor does not file a claim in your case, you need to speak with your attorney to determine whether a claim needs to be filed on behalf of the creditor.  If the claim that was not filed is for an auto that you wish to keep or your past due payments on your mortgage, etc., your attorney will most likely advise that a late claim needs to be filed for the creditor.  These are debts that you want to see paid off in your Chapter 13 case.  However, if the claims that were not filed are for unsecured creditors (credit cards, medical bills, finance companies), your attorney will probably advise you that a claim does not need to be filed on behalf of the creditor.

    The second part of your question is tricky.Will you pay out early?Not necessarily.If your Chapter 13 plan proposes to pay all of your unsecured creditors at 100%, you will pay out early provided you make all scheduled payments to the Trustee.However, if you are a pro rata case (that is, a case that only pays a small percentage to your unsecured creditors, usually between 0% and 99%), you will not pay out early.In fact, in a pro rata case, unfiled claims can result in a higher dividend than necessary being paid to your unsecured creditors.In cases such as these, it would be wise to ask your attorney if your Chapter 13 plan could be modified to reduce the dividend paid to your unsecured creditors to the amount you are actually required to pay.

  • Why was I told that I should pay a little more than the minimum amount for my credit card?

    Let me start by saying that if you are in a current bankruptcy case, you were probably told not to make the credit card payments because more than likely, those cards are included in your bankruptcy.

    For those who are not one of my clients and you are in this situation, please contact me today for a FREE consultation.

    While you owe a debt, purchases you make actually cost more in the long run than what you would have paid the merchant.  Why?  The reason is simple.  Everytime you buy something, especially things you really don't need, you are making the decision to not pay down your existing debt.

    For a credit card, if your minimum monthly payment is $20 and you owe $1,000  with 20% APR, you will pay $1,168 in interest alone.  Paying $21 a month instead will cut that total interest down to $1,005.  Imagine paying $5 more than your minimum monthly payment.  That's why it it important to pay a little more than the minimum and not continue to incur debt.

     

    This answer does not create an attorney/client relationship and is for informational purposes only.  We are a law firm licensed in Georgia.   A consultation with a qualified attorney in your area is required to determine specific legal advice as to your situation and applicable law. We are a law firm designated by Congress as a debt relief agency. We help people file for bankruptcy relief under the bankruptcy code.

  • Do I have to report all my expenses to include food?

    Yes!  We have a form that we go through and ask all expenses during the initial consultation.  Then we double check that list with you during the signing of the paperwork before the case is filed with the Court.  

    All expenses must be accounted for.

     

     

    This answer does not create an attorney/client relationship and is for informational purposes only.  We are a law firm licensed in Georgia.   A consultation with a qualified attorney in your area is required to determine specific legal advice as to your situation and applicable law. We are a law firm designated by Congress as a debt relief agency. We help people file for bankruptcy relief under the bankruptcy code.

  • How can I tell if I am a victim of identity theft?

    I recently talked about how oversharing online can have serious consequences to your identity.  Many people do not realize that the things they post on social media sites make it very easy for people to steal your identity.

    If you are worried about identity theft, pull (or let us pull during your FREE consultation) your credit report.  Annualcreditreport.com gives you access to all 3 of the main reporting agencies and allows you to pull from each for free once per year.  

     

    This answer does not create an attorney/client relationship and is for informational purposes only.  We are a law firm licensed in Georgia.   A consultation with a qualified attorney in your area is required to determine specific legal advice as to your situation and applicable law. We are a law firm designated by Congress as a debt relief agency. We help people file for bankruptcy relief under the bankruptcy code.

  • Can I rent an apartment or buy a house or vehicle with a bad credit score?

    The easy answer is maybe.  The honest answer is debt is never easy.

    A bad credit score might keep a landlord from offering you a lease on an apartment or rental property.  A bad credit score will definitely increase the interest rate offered on a mortgage, if you even qualify for a mortgage at all.  Lastly, a bad credit score WILL hurt your ability to get a low priced auto loan and may even keep you from lowering your insurance rate.

    Lets say you do get a home or apartment.  You will need electricity and a phone.  The utility company and phone company could force you to pay a deposit to turn on the electricity or phone if your credit score is bad.

    I recently wrote a blog on this same topic which goes a little deeper into this question.  Like I said at the beginning of this answer, debt is not easy.  Let us help.

     

    This answer does not create an attorney/client relationship and is for informational purposes only.  We are a law firm licensed in Georgia.   A consultation with a qualified attorney in your area is required to determine specific legal advice as to your situation and applicable law. We are a law firm designated by Congress as a debt relief agency. We help people file for bankruptcy relief under the bankruptcy code.

  • How do you know if I am being honest in what I am reporting?

    Not only does everything we file with the Court need to be shown but effective March 10, 2014, the United States Trustee Program will resume the designation of cases for audit.  In March 2013, cases subject to audit were suspended due to budgetary constraints.

    The United States Trustee Program has established procedures for independent audit firms to audit consumer bankruptcy cases.  Information includes but is not limited to petitions, schedules, and all income as authorized by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.  The United States Trustee Program contracts with independent accounting firms to perform audits in designated cases.

     

     This answer does not create an attorney/client relationship and is for informational purposes only.  We are a law firm licensed in Georgia.   A consultation with a qualified attorney in your area is required to determine specific legal advice as to your situation and applicable law. We are a law firm designated by Congress as a debt relief agency. We help people file for bankruptcy relief under the bankruptcy code.

  • What do I need to do before filing bankruptcy?

    The first step before filing a bankruptcy case, is to come into our office for a FREE consultation.  Guy and I offer many years of experience.  We take the time to get to know you and your family and explain what your options are.  For the free consultation, there are required items you do need to bring and that list is found here.

    After the consultation, we will set up an appointment for the documents to be signed.  

    The main thing that needs to be completed BEFORE the case can be filed is the credit counseling.  This must be done with an approved credit counseling agency and needs to be done within 180 days BEFORE the bankruptcy case is filed.  Depending on the agency, they may offer counseling in-person, by telephone, or over the Internet.  We can not file the case on the same day as the certificate was received.  Please give yourself enough time before the appointment to sign to complete the credit counseling.  While any approved agency can we used, we recommend using Debtorwise or DebtorCC.

     

    This answer does not create an attorney/client relationship and is for informational purposes only.  We are a law firm licensed in Georgia.   A consultation with a qualified attorney in your area is required to determine specific legal advice as to your situation and applicable law. We are a law firm designated by Congress as a debt relief agency. We help people file for bankruptcy relief under the bankruptcy code.

  • How do I leave a remark or rate you?

    We value any kind of feedback here at Seymour and Associates.  If we are doing something you do not like, tell us.  We will try our best to improve upon it.  If we are doing something great, tell us that too.

    We have a suggestion/comment box in the office and it is checked often.  We read these, take them all into consideration, and post them on the site.  You can also email or call a member of our team with any comments.

    You can rate us on a number of different sites.  Again all the ratings are taken into account.  For more in-depth explanation of ratings and the sites you can visit to rate us, please click here.  

  • I live in Augusta, Georgia and I just filed my taxes and found out that my refund is going to be sent to pay my student loans. I never agreed to that. I was planning to pay off credit cards with my refund. How can this happen if I didn’t agree?

    Each tax season, many people in the Augusta, Georgia area find their tax refund taken for the payment of student loans.  Student loan debt is not like treated like a credit card or personal loan debt. If you default on a federal student loan, your student loan creditor is allowed by law to intercept or keep you tax refund.  This can be a big problem for your family when you have plans for your refund and suddenly find that you will not be getting it.  In addition to taking your tax refund, your student loan creditor may garnish up to 15% of your disposable income without obtaining a judgment.  Ignoring student loan debt is not a wise option.

    If you have already had your tax refund intercepted for this tax year, there is nothing that can be done to get the refund back for this year.  However, the good news is you don’t have to lose your tax refund next year!  Also, if your wages are being garnished for student loan debt, the garnishment can be stopped.

    If you had your tax refund garnished or intercepted last year and you believe it will happen again this tax year, the first piece of advice is do not file your taxes until you have had a free consultation with a bankruptcy lawyer.  At the Law Firm of Seymour and Associates, we can help you stop the student loan creditor from taking your tax refund.  By stopping this collection activity, you will be able to keep your tax refund for the needs of your family.

    While student loan debt is presently non-dischargeable, a Chapter 13 bankruptcy can help in the repayment of those loans.  A Chapter 13 bankruptcy will combine all of your short-term debt (car payments, credit cards, payday loans, student loans, etc.) into one affordable payment.   You will totally eliminate all of your dischargeable unsecured debt and you will be given the title to your car.  At the end of the bankruptcy, you will still owe the student loan debt BUT you will be in a better position to work out a future payment plan with your student loan creditor. 

    If you live in Augusta, Evans, Martinez, Hephzibah or any cities within the CSRA, you can come into our office to meet with an experienced bankruptcy lawyer.  At the Law Firm of Seymour and Associates, we routinely stop garnishments and protect tax refunds for student loan collectors.  Don’t lose another tax refund to a student creditor.  Call 706-868-1968 for the relief that you deserve.

     

    This answer does not create an attorney/client relationship and is for informational purposes only.  We are a law firm licensed in Georgia.   A consultation with a qualified attorney in your area is required to determine specific legal advice as to your situation and applicable law. We are a law firm designated by Congress as a debt relief agency. We help people file for bankruptcy relief under the bankruptcy code.

  • Why did AAFES/ Military Star start garnishing my wages without notifying me first?

    Most of the time, an individual has warning that their paycheck is about to be garnished.   In Georgia, an ordinary creditor would first obtain a judgment against you in court before garnishing your wages and/or bank account.  However, unlike ordinary creditors, AAFES and/or Military Star do not have to play by the same rules.  They may start garnishing your wages without court process and without warning.

    AAFES and/or Military Star have the authority to place an involuntary “allotment” on your wages.  Relief is available in the form of bankruptcy protection.

     

    This answer does not create an attorney/client relationship and is for informational purposes only.  We are a law firm licensed in Georgia.   A consultation with a qualified attorney in your area is required to determine specific legal advice as to your situation and applicable law. We are a law firm designated by Congress as a debt relief agency. We help people file for bankruptcy relief under the bankruptcy code.