Frequently Asked Questions About Bankruptcy-Part Four

29 Sep Frequently Asked Questions About Bankruptcy-Part Four

I’ve been posting about bankruptcy questions asked most frequently by my clients, and I’ve dealt with questions about the pre-bankruptcy process, procedural issues, and Chapter 13 issues. But almost all my clients want to know about life after bankruptcy. Once again, I cannot over-emphasize the importance of consulting your own bankruptcy lawyer because circumstances can differ and change these answers.

1.How long will my bankruptcy appear on my credit report? A bankruptcy can be reported for 10 years. The length of reporting in individual cases can differ, though, because your creditors don’t have to report for that long.

2.When will I be able to get credit again? This is one of those questions that depends on the type of bankruptcy as well as other factors such as whether you continue to pay mortgage or car loans, your income, and a host of other factors. It also depends on what kind of credit you are looking for and what you are willing to pay for it. Rather than focus on when you’ll be able to get credit again, ask yourself why you care. If you have a home you want to keep, and you are driving a vehicle that will last you a few years, maybe your focus should be on saving so that you won’t need credit. If you are living on a fixed income, you probably shouldn’t be planning on using credit at all. If you are planning on purchasing a new home, I understand that you will need credit, but your savings will still have an impact on your eligibility for a mortgage in the future. Many people are eligible for credit fairly soon after bankruptcy, within a few years, but it really should be approached with thoughtfulness and planning. One other important step to take is to monitor your credit report to make sure that your credit report properly reflects the bankruptcy discharge, instead of write-offs or accounts in collection.

3.Will I be able to keep my bank accounts? One of the first things I advise most of my clients to do is to close bank accounts if they owe the bank any money, including overdraft protection accounts, and open an account somewhere else, where you have not borrowed. That’s because banks who are creditors can set off the money in your accounts. If you don’t owe the bank any money, I don’t know of any reason you can’t keep your bank accounts open during and after bankruptcy.

4.Can I pay the debts I owe my doctor, or my family members? Yes, you can. After your bankruptcy is over you can pay anyone you choose to pay. The point of the bankruptcy discharge is that your creditors cannot try to make you pay. You can pay anyone you want to pay if you choose to do so. But note that I said after banrkuptcy. Don’t think that you can pay those folks just before bankruptcy. That’s called a preferential payment and it will buy the folks you pay a lawsuit by your trustee.

5. What will I have to pay after bankruptcy. That’s another of those “it depends” questions. To give you an idea, if you are going to keep your house or car, you’ll have to make those payments. If you owe many types of taxes, those will survive the bankruptcy discharge, as will almost all student loans, child support and alimony payments. There are certainly other types of debts that can survive bankruptcy, but that’s what your experienced bankruptcy attorney is for–to advise you what will be discharged, what will survive discharge, and what may have to be decided by the court.

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