Top Bankruptcy Questions Answered: What You Need to Know Before Filing
Filing for bankruptcy can be a major decision, particularly when it comes to understanding your options and the potential outcomes.. Whether you’re facing the repossession of your car, garnishments, or lawsuits, bankruptcy may offer a solution to help you regain control of your financial situation. In this blog, we’ll explore some of the top questions people have about bankruptcy and provide clear answers to help you make informed decisions.
Can I Keep My Car During Bankruptcy?
One of the most common concerns when filing for bankruptcy is whether you can keep your car, especially if it’s in danger of being repossessed. The good news is that depending on the type of bankruptcy you file (Chapter 7 or Chapter 13), you may be able to keep your vehicle.
In a Chapter 13 bankruptcy, you have the option to propose a repayment plan that includes your car loan. This allows you to catch up on payments while retaining ownership of your car. Chapter 7 is more complex—while some states offer car exemptions that protect the value of your car, if the equity in your vehicle exceeds these limits, the trustee may sell it to pay off creditors. Consulting a bankruptcy attorney can help you understand which option is best for your situation.
What Happens If I’m Sued by a Creditor?
Being sued by a creditor is a stressful experience, but it’s not uncommon—especially as collection companies target old loans and credit card debt. Creditors often file lawsuits to recover debts approaching 10 years old, and if they win, they can seek garnishments or other collection actions.
The timing of lawsuits tends to increase in September and October, with tax garnishments commonly filed during this period. If a creditor sues you and wins a judgment, they can garnish your wages or levy your bank account to collect the debt. Fortunately, filing for bankruptcy can halt these collection actions through the automatic stay, which stops creditors from pursuing lawsuits or garnishments.
Can Bankruptcy Stop Garnishments?
Yes, bankruptcy can stop garnishments, including tax garnishments that are filed in the fall. If your wages are being garnished due to a lawsuit or unpaid taxes, bankruptcy can provide relief by halting the garnishment process.
When you file for bankruptcy, an automatic stay goes into effect, which stops creditors from collecting on their judgments. This means that your current garnishment will end, and you may also be able to recover some of the wages that were previously garnished.
Can Bankruptcy Help Me Save My Home?
If you're falling behind on mortgage payments and facing foreclosure, bankruptcy might be the lifeline you need to keep your home. In a Chapter 13 bankruptcy, you can include missed mortgage payments in your repayment plan and spread them out over 3 to 5 years, giving you time to get back on track while avoiding foreclosure.
For those filing under Chapter 7, bankruptcy can temporarily delay foreclosure proceedings, giving you more time to explore other options, such as a loan modification or short sale. It’s important to consult a bankruptcy attorney to understand your specific options and how bankruptcy can help you avoid losing your home.
What Are My Options When Facing Mortgage Payment Issues?
Falling behind on mortgage payments can lead to sleepless nights and uncertainty about your future. Luckily, bankruptcy provides a way to address this issue head-on. Chapter 13 bankruptcy, in particular, is designed for individuals with a steady income who need time to catch up on missed payments while keeping their home.
In a Chapter 13 repayment plan, you’ll have the opportunity to restructure your mortgage arrears and make manageable monthly payments over several years. This option not only helps you avoid foreclosure but also ensures that you can retain ownership of your home, provided you stick to the repayment schedule. Filing for Chapter 13 can stop the foreclosure process and give you the breathing room you need to catch up.
Can Bankruptcy Help Me Stop Lawsuits?
Lawsuits for unpaid debts, car repossessions, and garnishments can take a toll on your mental and financial health. The good news is that filing for bankruptcy initiates an automatic stay, which acts as a legal shield to prevent creditors from pursuing any further legal action. This means that creditors must immediately stop collection activities, including lawsuits, wage garnishments, and repossession efforts, as soon as the bankruptcy is filed.
If a lawsuit is already underway, the automatic stay can pause the legal proceedings, giving you and your attorney time to work out a solution. Bankruptcy also offers a way to eliminate most unsecured debts, such as credit card balances and medical bills, which are often the source of these lawsuits.
Moving Forward with Confidence
Filing for bankruptcy is a significant step, but it can serve as a powerful solution for effectively managing overwhelming debt, halting lawsuits, and safeguarding your home and assets. Whether you’re dealing with car repossession, garnishments, or mounting mortgage payments, understanding your options can make all the difference in taking control of your financial future.
At Upton Law PLLC, we’re here to help you navigate the complexities of bankruptcy and guide you toward a solution that works best for your situation. Whether you're wondering if you can keep your car, stop lawsuits, or save your home, our team is here to answer your questions and provide the legal support you need.
Meet the founderShakeena Melbourne
At the heart of Upton Law is Shakeena Melbourne, founder and Principal Attorney, a lawyer who is a fierce advocate for your peace of mind and happiness.
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