How soon can I file another bankruptcy?

If I filed a Chapter 7 in the past but have new unsecured debt, or fell behind on my mortgage, when can I file another bankruptcy?

You can file another Chapter 7 to wipe out new unsecured debt every 8 years from the filing date of your previous Chapter 7.  Wiping out debt depends on your income and equity in your home [if you have a home].

If it has been less than 8 years but more than 4 years since the filing date of your previous Chapter 7, you can file a Chapter 13. A Chapter 13 is where you will pay a percentage of your debt back. You pay a trustee who is court appointed. You would pay the trustee who in turn pays the creditors the percentage outlined in your Chapter 13 plan. This plan lasts for 3 to 5 years. The percentage to be paid back to your creditors can range from a few cents on a dollar to a larger amount, depending on your income and the amount of equity in your home [if you have a home]. It must be 4 years after the filing date of your previous Chapter 7 in order to be in such a plan.

If you need to file earlier than the 4 years from the filing date of your previous  Chapter 7, then you must pay 100% of your debt back in the Chapter 13 plan. You would not be paying any interest on that debt so that usually makes it possible to pay off the debt. It is called a nondischargeable Chapter 13. You will get a discharge, but because you can’t wipe out the unsecured debt, it is referred to as a nondischargable Chapter 13.

If you need to simply catch up on your mortgage, you can file a Chapter 13 with no time limit as to  when you filed your previous Chapter 7. And that Chapter 13 will allow you to catch up on your mortgage arrears. If the Chapter 13 is less than 4 years after your previous Chapter 7 was filed, the Chapter 13 in this case would not allow you to  wipe out any unsecured debts you may have accumulated. Again, the unsecured debt would have to be put in your plan at 100%.

In a mortgage arrears case, if it has been more than 4 years after the filing date of your previous Chapter 7, then you may be able to wipe out all unsecured debt while paying off the mortgage arrears through the Chapter 13 plan. Again wiping out your unsecured debt depends on your income and equity in your home [if you have a home]. You would still be able to pay off the mortgage arrears through this Chapter 13 plan.

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Do I have to appear in court?

Do I have to appear in court when I file for bankruptcy and what happens during that meeting?

Yes, you do have to appear for a brief  meeting with someone called the trustee. Your bankruptcy attorney is also there to represent you. The court meeting is called a 341a hearing. The trustee that will swear you in and ask you a few brief questions is not a judge and they are not there to harass you or not allow your case to move forward to completion. The trustee is a neutral party who must meet with you by law. There are no trick questions. It is a short meeting and nothing to fear. It is mandatory so that you can eventually obtain a discharge of your case. The meeting usually takes place approximately 4 to 5 weeks after your case has been filed.

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What is a Trustee?

A trustee is a court appointed person, usually an attorney, who will meet with you about 4 weeks after your bankruptcy case is filed. They are a neutral party who  will ask you a few simple questions  so that your case can move along for discharge. Your attorney will be there representing you during that brief meeting. There are no trick questions and your attorney will review those questions  with you prior to your meeting with the trustee.

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Obtaining a Mortgage Modification while in Chapter 13

How can you obtain a mortgage modification if in a Chapter 13?

If your lender allows you to modify your mortgage, and the terms are acceptable to you, your attorney has to file a motion in the Bankruptcy Court to get approval for the modification. Once approved by the court, you can proceed with your modification of your mortgage loan.

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Secured Credit Cards, Bankruptcy, and your Credit Score

Can one get secured credit cards after they file for bankruptcy?  What are they and do they help me build  credit by raising a credit score?

You can get secured credit cards after your bankruptcy has been discharged. You can apply at a local bank or wait for offers to come in by mail for a secured credit card.

Secured credit cards are cards you must pay for. You pay about $300 for the card and use that money to make payments on the card. You are developing credit while doing this. After a while, the lender will offer to turn your card into an unsecured card and will offer  you a higher credit limit you no longer have to put money up front on the card.

Take the higher credit limit offer but don’t use it. Open a second card if you are doing well with your first one and do the same. Your score is based on your available credit versus your debt. So while the lenders are giving you a higher credit limit, you are raising your score by not taking that card to the limit, therefore your debt to available credit ratio is good and will raise your credit score.

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Does Bankruptcy affect my spouse if I file alone?

Bankruptcy will not affect your spouse if you file alone as long as he/she is not on your debts that  need  to be discharged. Your bankruptcy will not affect your spouse’s credit score. If you and  your spouse are both on unsecured debts, and you file alone, then your spouse will be responsible for those debts. You will not because you will be discharging them through your bankruptcy.

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Save your home through Bankruptcy

If you are behind on your mortgage and want to save your home, bankruptcy is a good option. You can save your home through a Chapter 13 Bankruptcy. This allows you to put your mortgage arrears in a 3 to 5 year repayment plan to the Bankruptcy Court. This stops foreclosure as long as you remain current on payments going forward for  mortgage arrears to the court as well as your normal mortgage payments to your lender.

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Does bankruptcy ruin your credit?

Why do people think that by filing for bankruptcy, their credit will be ruined for 7 to 10 years? And why do they think they won’t be able to buy a car or home? The answer is simple. Continue reading

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We were all taught to pay our bills…but sometimes that is simply impossible.

We were all taught to pay our bills. But with soaring living costs and  high unemployment and/or under-employment rates, it is nearly impossible today to keep up with our bills. Continue reading

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Broken Bench

The word Bankruptcy means “Broken Bench”. So it is not a scary word even though people are scared to even look into filing for bankruptcy because they don’t know the meaning of the word, how bankruptcy was created,  and they don’t  realize the great things bankruptcy can do for them like wipe out debts without hurting their credit.

In the Bible, in Deuteronomy, the reason for God creating bankruptcy and the forgiveness of debts is because God did not like what was happening to those who owed their creditors for goods. Back then, most were carpenters, tool makers and other types of craftsman and worked on benches to make a living for their families. When they owed their creditors for goods  or materials and could not pay them, the creditor would come along and break the worker’s bench. This was devastating to the craftsman and he could not earn a living for his family. God stepped in and created bankruptcy. Again, meaning “broken bench”.

In Deuteronomy, God proclaims “At the end of every seven-year period you shall have a relaxation of debts, which shall be observed as follows. Every creditor shall relax his claim on what he has loaned his neighbor; he must not press his neighbor, his kinsman, because a relaxation in honor of the LORD has been proclaimed”.

In the Book of Leviticus: Moses announces God’s decree that special years be set aside for the forgiveness of debt, freeing of slaves, and other measures re-balancing the social order.

It was never God’s intention to create a society where debt was a crime. We see a society where loans were kept to a minimum by  law, and gratuity and charity, were kept to a maximum by law.  To accomplish this end, God did not outlaw borrowing and lending, but instead He provided that loans would eventually become gifts, and thereby limited loans only to those in need. He permitted the loan to take place, and the obligation to repay to occur, but He limited the legal obligation to repay to a maximum of only seven years. Every seventh year all lenders were to release their debtors from all of their debts. Every seventh year, the debtors were discharged from all their loans and were no longer legally obligated to repay them. The debtor was free of all loans by force of law.

“At the end of every seven years thou shalt make a release. And this is the manner of the release: every creditor who lends ought unto his neighbor, shall release it; he shall not exact it of his neighbor, or of his brother, because it is called the Lord’s release”. Deut. 15:1,2.

In our modern version of the law, it is your right to obtain a Chapter 7 discharge every 8 years. But, if you need to file another bankruptcy and it has not been 8 years since you filed your previous Chapter 7 case, you may qualify for  a Chapter 13.  Under the new laws, you can qualify to file a Chapter 13 four years after filing a prior Chapter 7 case.

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