Can a Person Filing Bankruptcy Exclude Debts They Want to Pay?

I am often asked whether a person filing bankruptcy can exclude debts that they want to pay.  When you file a bankruptcy petition, you must give the court a complete list of your debts.  You are not allowed to leave anything off.  However, it is possible to repay debts that you have listed in your bankruptcy.  You might not be required to repay the debt, but you still can pay it voluntarily if you wish.  For instance, if you have a car loan or home mortgage, you can continue to pay these debts in order to keep your home or car.  If you have a debt to a relative, you can repay them what ever is left owing to them after you complete your bankruptcy case.   Occasionally, a creditor might request that you sign a "reaffirmation agreement".  A reaffirmation agreement is an agreement that you will not discharge (eliminate) a debt in your bankruptcy case and that you will be legally bound to pay it. Your attorney can help you decide if a reaffirmation agreement is a good idea.

How Often Can I File Bankruptcy?

When a person has filed bankruptcy in the past, they may want to know how long they must wait to file bankruptcy again.   If a person has filed a Chapter 7 bankruptcy petition and received a discharge of their debts, they must wait 8 years before they can file another Chapter 7 petition.  However, the waiting period to receive a discharge in a Chapter 13 case after a previous Chapter 7 case is only 4 years.  Sometimes unfortunate circumstances create a need for a second bankruptcy in less than 4 years after the filing of a Chapter 7 case.   You can file a Chapter 13 case less than 4 years after filing a Chapter 7 case and receive court protection from your creditors, but you won’t receive a discharge of your debts.  It sometimes makes sense to file such a case to prevent foreclosure of a residence or to receive court protection from creditors.

The waiting period to file a Chapter 13 case after a previous Chapter 13 case is only two years from filing date to filing date.  Since the typical Chapter 13 case lasts for three years, there is rarely any waiting period for filing a Chapter 13 case after a previous Chapter 13 case.  The waiting period to file a Chapter 7 petition after a Chapter 13 petition is 6 years.

HOW TO PAY FOR BANKRUPTCY

One of the most common questions about bankruptcy is:  How do I pay for my lawyer?

Chapter 7 bankruptcy allows a person to eliminate most types of debts completely, while allowing a person to keep all assets that are exempt from creditors.   The court filing fee and attorney’s fee for Chapter 7 bankruptcy must be paid in advance.  If a person wants Chapter 7 bankruptcy and is not in a big hurry to file, in many cases it makes sense for them to stop making payments on their debts and use the savings to make monthly payments toward the attorney’s fee.  I can accept monthly payments and file the case when all of the fees are paid.  Sometimes a family member gives my clients a gift or a loan of the funds.  Sometimes my clients have enough in savings to cover the fee or they are able to borrow the funds from their 401k plan.

Sometimes, the funds cannot be borrowed from a family member, the person’s wages may be subject to garnishment or their money in the bank has been seized by creditors.    Should they need to file bankruptcy right away, they might consider a Chapter 13 case.  Chapter 13 allows a person to consolidate their debt and pay a fraction of the debt in monthly payments over three to five years.  The debt is not normally required to be paid in full, but only whatever is affordable in the person’s budget. For Chapter 13, I need the court filing fee paid in advance, but most or all of the attorney’s fee can be consolidated with the other debts and does not have to be paid in advance.  Chapter 13 can be a good way to get immediate protection from the bankruptcy court, even if you don’t have the funds for attorney’s fees up front.

An Attorney Is Is Abreast Of The Ever-Changing Bankruptcy Laws

There are a number of potential pitfalls and tricks in the ever-changing bankruptcy laws, so it is very important to consult with a knowledgeable bankruptcy attorney. If your case is filed wrong, it may be dismissed for not filing a required document and if you have to file a new case you may not be able to get the same protection from your creditors.

Attorney Wald is well-versed in the possible complications that might arise in what seems to be a simple and straightforward bankruptcy case, he is aware of recent changes in the law and of court decisions in the local courts; and usually find ways of making a bankruptcy case more productive and effective than it would be if the debtor tried to handle it without an attorney--ultimately saving the debtor many hundreds or thousands of dollars .

Divorce and Bankruptcy

Divorce is painful and can leave us in financial ruins. We are often clouded with emotion and are unable to make sound financial decisions that will protect us.

Make sure to hire someone who is thinking practically and not emotionally. If filing for bankruptcy is necessary, than proper means must be taken to make sure your debts are dischargeable. Divorce is ugly. Hurting the other party is also ugly. Your best means of protection is protecting yourself, your assets, and relieve yourself of shared debts.

 Call us today for a consultation.

Child Support Is Not Dischargeable

Child support is NOT dischargeable in any type of bankruptcy. The welfare of minor children is of primary importance throughout the state and federal court system.

But you still can get some benefit from declaring bankruptcy. Although you cannot erase child support payments, if you file for Chapter 7 protection and most of your other debts are erased, your budget will include new extra cash, which will make it easier for you to make your scheduled support payments on time.

Even choosing a Chapter 13 wage earner plan will lower your monthly payments to creditors, leaving you with more available cash to meet your support commitments.

Hiding From Debt Won't Make It Go Away.

Ignoring or evading your financial troubles will only make them worse. Nobody-ever-forgets-a-debt. Especially not creditors. If you are facing legal action do not procrastinate.

Often, even when people are in danger of foreclosure or car repossession, or are being sued, or are having their wages garnished – even then, they do not want to think about filing bankruptcy. It is very painful to think of filing bankruptcy – especially before the person understands bankruptcy.

In most cases, once bankruptcy options are explained by an experienced attorney, people are greatly relieved to find that their problems can be resolved after all. Do not wait until after your house is foreclosed, your car is repossessed, or your wages are being garnished. Find out what bankruptcy relief is available to you sooner rather than later.