Questions I frequently get from clients


Question: Can I still file bankruptcy after I’ve been sued or after a creditor has a default judgment against me?
Answer: Yes. You can almost always still file bankruptcy and a judgment creditor will be in the same postiion often times as your other unsecured creditors. A bankruptcy will stop a wage garnishment so if you are about to get garnished or a lien is about to get filed on your property, now is the time to file for bankruptcy.

Question: What is the automatic stay?
Answer: The automatic stay is put in place upon the filing of a bankruptcy case. It stops all creditors from continuting to try to collect while your case makes its way through the bankruptcy court. If you have a legal case in court against you, it will stop that case as well. Its an extremely powerful tool and creates an injunction from any creditor moving forward. The bankruptcy court is charged with equally distributing any non-exempt assets to creditors so to allow one creditor to move forward or try to collect would stop the purpose of the trustees role in a bankruptcy case.

Question: Where is my case filed?
Answer: Your case is file where you have lived for the previous 90 days. That is your domicile. The exemptions that you use are dependent on various factor, but you are typically entitled to use California exemptions if you have lived in California over the last two years. You still file in California sometimes but you use another states exemptions if you do not meet the residency requirements.

Question: Do I have to list all my debts?
Answer: Many clients think they should not include debts that the do not want to file bankruptcy on. AKA the assets they want to keep. This is not the case. You have to list everything. You list all your assets and all your debts which is required by the bankruptcy code. The things you want to keep, you either do so by reaffirming or if they are exempt. Sometimes you can also just retain and pay for example on a car that was financed more than 910 days ago. You do not have to reaffirm debts and sometimes its better not to as it becomes a new contract and obligation.
For example if you wreck your car after you file and you’ve reaffirmed then you owe on it. Or if you can’t pay your bill 6 months after filing, as long as you haven’t reaffirmed then you can turn it in and they won’t be able to come after you for a deficiency. Also, don’t leave creditors out. Even though you plan on paying back a friend or family member back you list them and then you voluntarily pay them back.

Question: Are all my debts discharable in bankruptcy?
Answer. No. Some debts will not go away such as alimony, child support and student loans.

Frequently Asked Questions: Debt Consolidation in California
How does debt consolidation affect credit scores?

Initially, it might cause a slight dip due to credit inquiries. However, consistent payments can improve your credit score over time.

What is the difference between debt consolidation and debt settlement?

Debt consolidation involves taking a new loan to pay off debts, while debt settlement is negotiating to pay less than you owe. Settlement can negatively impact your credit score.

What are secured vs. unsecured debt consolidation loans?

Secured loans require collateral (like a house or car), usually with lower interest rates. Unsecured loans don't require collateral but typically have higher rates.

Is debt consolidation right for me?

It depends on your total debt, interest rates, credit score, and payment capability. It's suitable if you can pay off your debt within five years and secure a lower interest rate than your current debts.

Should I consider long-term financial planning?

Yes, debt consolidation should be part of a broader financial strategy including budgeting, cutting expenses, and building an emergency fund.

How do Chapter 7 and Chapter 13 bankruptcies in California differ?

Chapter 7 involves liquidating assets to pay off debts, while Chapter 13 allows debt restructuring over a set period, usually three to five years.

Can my spouse's bank account be garnished for my debt?

Bankruptcy laws offer protections against such actions, but specifics depend on individual cases and state laws.

How can I learn more about my options?

Consulting a California bankruptcy attorney can provide clarity. Firms like The Law Offices of Christopher Hewitt offer free consultations to explore debt relief paths.

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