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THE LAW OFFICE OF MARK J. MARKUS

Los Angeles California Bankruptcy Lawyer*
Practicing exclusively bankruptcy law since 1991
Free phone consults.  Office in Burbank.
*Board Certified Specialist in Bankruptcy Law

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Phone: 1-818-509-1173

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Frequently Asked Questions on Bankruptcy (FAQ) Mark J. Markus Attorney2021-08-25T15:56:28-07:00

 

Contents

Answers to Frequently Asked Questions about Bankruptcy Law

This page contains answers to Frequently Asked Questions about bankruptcy that I have gotten from my clients over the years.  If you have questions that you don’t see an answer to here, please send it along and I will add the answers here, if possible. 

 

What is the automatic stay?2021-08-27T16:15:29-07:00

The automatic stay is an injunction that goes into effect automatically upon the filing of a bankruptcy.  It prohibits the commencement or continuation of any acts to collect on a debt that arose prior to filing the bankruptcy. This includes enforcement of judgments, creating or perfecting liens, debt collection (such as wage garnishment and levies) and many other actions.  (It does not apply to collecting alimony or other domestic support obligations).

Does the automatic stay always apply when a bankruptcy case is filed, and if so, for how long?2021-08-25T11:59:01-07:00

Generally, the automatic stay goes into effect immediately upon filing your case and against acts taken towards you personally until you receive your discharge. Stays against actions towards property you own may last longer or shorter depending on what happens to that property during your case (e.g. it is sold by the Trustee or not, etc.).  Note:  For cases filed on or after October 17, 2005, there are several limits to the length of the automatic stay:  1.  If you had a prior bankruptcy case dismissed under any chapter within one year prior to the filing of your present case, the automatic stay will terminate 30 days after your new case is filed, unless you obtain a court order extending it, for cause and a showing of good faith as to why the prior case was dismissed.  2.  If you had more than one prior bankruptcy case dismissed under any chapter within one year prior to the filing of your present case, the automatic stay does not go into effect at all unless and until the court orders it into effect, after a noticed hearing.  There are other new limitations on the automatic stay, but you should check with your attorney as to whether they will affect you.

Is it too late to file bankruptcy if I’m being sued or already have a judgment against me?2021-08-25T11:59:23-07:00

No.  It’s almost never too late to file bankruptcy.  Assuming that it is a dischargeable debt (meaning one that isn’t incurred through fraud, or a domestic support obligation, or one of the others Congress has excluded from discharge), you can still get rid of the debt even if a creditor has filed a lawsuit against you and gotten a judgment.  You can even get rid of the debt if they have a lien against your property (although the lien will remain against the property unless you are able to remove it during the bankruptcy proceeding–see below).

Where Does My Bankruptcy Case Get Filed?2021-08-25T12:00:19-07:00

Your case is filed in the federal judicial district where you have resided or have your domicile (or for a business, its principal place of business), or principal assets located  for the greater part of the 180 day period prior to the date your case is filed

What does it mean to bankrupt or discharge a debt?2021-08-25T12:01:38-07:00

Many people refer to getting rid of their debts in bankruptcy as “bankrupting” the debt.  They often ask “can I bankrupt this debt?”   That is incorrect terminology.  The legal term for this is “discharge”.  What happens in bankruptcy (assuming you are successful) is that your legal obligation to pay on your debt will be discharged.   Debts are never technically eliminated.   They still exist after a bankruptcy, but you no longer have the legal obligation to pay on the ones that are discharged (or, bankrupted if you prefer).

How do I know what exemptions I have in bankruptcy and how much I can protect of my assets in my state?2021-08-25T12:02:35-07:00

Exemptions are protected allowances for the value in certain assets.  For example, a homestead exemption protects the equity you have in your home, up to a certain value.  All States have different exemption laws which protect the value in certain assets.

You need to check with a qualified bankruptcy attorney regarding what exemptions you are entitled to when you file your case.

Which state’s laws you use depends on where your domicile was located for the 2 years prior to commencing your bankruptcy case (more on exemptions).

Can I pick and choose who to list in my bankruptcy case?2021-08-25T12:03:03-07:00

Absolutely not.  I don’t know where people get this idea. You must list all your assets and all your debts in ANY chapter of bankruptcy. You may voluntarily repay anybody you want after your case is concluded (and you are required to repay any debts that are not discharged), but you are still required to list all your creditors.

Can you only bankrupt certain debts?

Can I transfer assets out of my name into someone else’s before filing bankruptcy?2021-08-25T12:03:50-07:00

Not unless they are sold for “reasonably equivalent value”.  Otherwise it can be recovered as a Fraudulent Transfer.

Can you be fired or denied employment because of a bankruptcy?2021-08-25T12:04:19-07:00

No. While an employer can usually find some reason to fire anyone, they cannot use bankruptcy as a basis for doing so. This is set forth in Section 525 of the Bankruptcy Code.

Can I remove liens against my property?2021-08-25T12:04:57-07:00

 Yes.  Under certain circumstances, judicial liens and “nonpossessory, nonpurchase-money security interests”  may be removed if, based on the value of the asset and the amount of senior liens and encumbrances against it on the date your bankruptcy case is filed, the fixing of the lien causes it to “impair” an exemption to which you are entitled under State (or other applicable) law.

Removing Judgment Liens

Removing Junior Mortgage Liens

Are any and all debts dischargeable in a bankruptcy case?2021-08-25T12:05:37-07:00

No.  There are many debts which Congress has excluded from discharge.  These are the main types excepted from discharge, although there are others.
See more on dischargeability of debt.

Can you be denied a student loan because you or your parents file bankruptcy?2021-08-25T12:06:20-07:00

No.  Section 525 of the Bankruptcy Code prohibits discriminatory treatment by any governmental or other student loan program on the basis of filing a bankruptcy. In other words, a student loan agency cannot deny your loan application based on the filing, by you or anyone you know, of a bankruptcy. If you would like to read Section 525 for yourself, see section 525

Can I keep my house and car if I file a bankruptcy?2021-08-25T12:06:43-07:00

In most cases, and with the assistance of an experienced bankruptcy attorney, you can usually keep your home and car.

It depends on which Chapter you file, and the values of your assets.

For more information:

Can I Keep My House or Car In Bankruptcy?

Keeping Your Home and Property In Bankruptcy

Can you go to jail for not paying your debts?2021-08-25T12:07:09-07:00

It depends.  The general answer is “no.”  But there are strange exceptions.

See more about debtor prisons

Do I really need an attorney to file bankruptcy?2021-08-25T12:07:50-07:00

Bankruptcy is not a “do it yourself” project, any more than doing surgery on your toe would be.

See my articles discussing the pros and cons of filing bankruptcy without an attorney.

Do you need a bankruptcy attorney?

How to file bankruptcy without an attorney

Can I file a bankruptcy before a lawsuit is filed against me?2021-08-25T12:08:14-07:00

Yes.  The bankruptcy filing will discharge (eliminate) any dischargeable debts which are owed on the date the bankruptcy case is filed.

In most cases, the debt on something is owed before a lawsuit is filed.

The lawsuit is merely seeking a court judgment stating the amount that is owed and giving powers of collection to the creditor.

So, a debt can be discharged by filing a bankruptcy case either before, or after, a lawsuit is filed.

 

Can I file bankruptcy if I am current with all my payments?2021-08-25T12:00:50-07:00

Yes.  There is no requirement that one be behind on payments in order to obtain bankruptcy relief.

See more about filing bankruptcy if current with payments

Can I get rid of taxes in bankruptcy including income tax to the IRS, FTB or Sales Tax to the SBOE State Board of Equalization Department of Tax and Fee Administration?2021-08-25T12:08:40-07:00

Income taxes and sales taxes may be discharged in bankruptcy if certain requirements are met.

Certain time periods have to run after the returns are due to be filed, after they are actually filed, and after the taxes are “assessed” by the taxing agency.

See more about: Requirements For Discharging Taxes In Bankruptcy

What types of debts can be prevented from being discharged in a chapter 13 case?2021-08-25T11:42:24-07:00

Mostly the same as listed above for Chapter 7, but there are some exceptions which can be seen on my Chapter 13 page

What Are The Different Bankruptcy Chapters And Which One Do I Need To File?2021-08-25T16:00:25-07:00

There are significant differences in the different bankruptcy chapters, what they can accomplish for you, what risks there are, and in eligibility to file under each.   Ultimately the way to determine which is best for your situation and which you qualify for, you need to have a comprehensive consultation with a bankruptcy attorney in your area.

For more information see my page on the Different Bankruptcy Chapters

Can I Eliminate or Discharge Rent Debt Owed To My Landlord In Bankruptcy?2021-08-27T15:47:31-07:00

Yes! Any bankruptcy chapter enables you to discharge rent obligations owed to a landlord.  Of course, if you don’t pay your rent, the landlord has the right to evict you.

Will Bankruptcy Stop An Eviction?2021-08-27T16:15:03-07:00

Yes.  The automatic stay in bankruptcy will temporarily stop any eviction IF the case is filed before the eviction process has terminated your rights to possession of the property.   How long the protection lasts depends on which bankruptcy chapter you file and whether you provide for catching up on the past due rent amounts.

See more information on evictions in bankruptcy.

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