Services Focused On The Positive

Answers To Questions About Bankruptcy

At Kaeding Law Office, PLC, I help people understand their rights and options when it comes to starting fresh. I am dedicated to helping you relieve the emotional stress of dealing with foreclosure, wage garnishments, and creditor and bill collector harassment. Here are some commonly asked questions and their answers. For answers to your specific questions, please call 712-847-5882 and speak with me.

Who should file a Chapter 7 bankruptcy?

The answer to this question depends on your specific circumstances. Usually, a Chapter 7 bankruptcy is preferable for those who are current on their secured debt payments (house, automobile, etc.) but have a lot of unsecured debts (credit card bills, medical bills, etc.). If you don’t have nonexempt assets, your income is low, and most of your debts are unsecured, then a Chapter 7 bankruptcy may be your best option. Some people simply do not qualify to file for a Chapter 7 bankruptcy because they earn too much money.

Who should file a Chapter 13 bankruptcy?

A Chapter 13 bankruptcy is preferable for those who are behind in payments on secured debts (mortgage, automobile loans, etc.) but have enough income to make the regular contractual monthly payments on these debts but would like an opportunity to pay the arrearage amounts off in a plan.

Another compelling reason to file a Chapter 13 bankruptcy is if you have debts that are nondischargeable in Chapter 7 bankruptcy (such as IRS taxes, student loans, and child support arrearages). This will compel the creditors into a repayment plan and require them to accept monthly payments in accordance with the Chapter 13 bankruptcy plan and avoid wage levies or seizure of your assets.

Finally, some people simply feel better about filing a Chapter 13 bankruptcy and paying back to their creditors what they can afford, even if it is not enough to pay all the creditors in full.

How can I save my home from foreclosure?

When you get behind in your house payments, the mortgage company may put the loan in a default status and therefore will accelerate the debt and demand full balance on the note. There is no “magic number” that will automatically put your loan in default status. It is my experience that most mortgage companies begin the foreclosure process once payments on the note become approximately three months overdue.

Once the loan is in default status, the creditor more than likely will refuse to take monthly payments and will begin the foreclosure process. If you are unable to refinance the loan or if the creditor refuses to reinstate the loan, you may need to file for protection in bankruptcy to stop the foreclosure sale. Under a Chapter 13 bankruptcy plan, you can make the regular monthly contractual payments on the house and be given a period of time to pay the arrearages in order to stop the foreclosure sale.

The foreclosure process in Iowa takes approximately six months to a year. However, this time period varies so it is extremely important that you obtain legal counsel to discuss your options once you are served a Petition for Foreclosure.

How can I protect my co-signers if I file bankruptcy?

Even if you receive a discharge on the debt in your Chapter 7 bankruptcy case, your co-signer may not be protected from collection efforts taken by creditors who may pursue collection efforts.

If the below criteria are met and you file a Chapter 13 bankruptcy, however, your co-signer may be protected from collection efforts:

  • Your debt must be classified as consumer
  • The co-signer receives no benefit from the debt or your discharge of the debt
  • Debt accrued cannot have been because of normal business operations
  • The debtor successfully completes the Chapter 13 bankruptcy repayment plan as agreed in the court petition

What is a reaffirmation agreement?

A reaffirmation agreement is a contract that is signed after the filing of a bankruptcy proceeding where the debtor agrees to pay a debt that is listed in the bankruptcy. These are typically signed only for secured debts. The most common situations where a debtor signs a reaffirmation agreement is in the case of a home mortgage loan, an automobile loan, or a loan for furniture. By signing a reaffirmation agreement, the debtor continues to be legally responsible for the debt after the bankruptcy.

How will a bankruptcy filing affect my credit score?

Many people who initially contemplate filing bankruptcy don’t have the greatest credit to begin with. They often find that once their debt is discharged, their credit score starts to improve. However, it is important to understand that most types of bankruptcy filings will stay on your credit report for a period of at least ten years. During that period, it may negatively affect your credit.

I suggest to my clients that it may be wise to obtain some type of credit card shortly after your bankruptcy case closes in order to rebuild their credit. Of course, this only works if you make your payments in a timely manner and pay the entire debt off each month so you don’t accrue interest.

Get The Bankruptcy Answers And Guidance You Need

I know that it can be a scary and unfamiliar process for you to file for bankruptcy. Many people feel that they have somehow failed. I do not believe this. I believe that for most people who are in deep debt, filing for bankruptcy is a smart financial move. It means you are ready to put the past behind you and make a fresh start with new opportunities and possibilities. Find out if you are a good candidate for bankruptcy. I offer a free, no-judgment consultation. Call 712-847-5882. Have a question? Email me at the firm, and I will respond.

I am a debt relief agency. I help people file for bankruptcy relief under the Bankruptcy Code.