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THE BANKRUPTCY AGENCY OF IDAHO Call for a free consultation: 208-522-6461 Idaho Falls 208-232-0567 Pocatello 208-736-3736 Twin Falls
You are not alone!
Bankruptcy is a big decision. The following material is provided as a guide for you. Note: An initial consultation is essential for anyone considering bankruptcy, as each case is unique.
What is Chapter 7? 
If I file a Chapter 7, will I lose my possessions? 
What happens if I file Chapter 13? 
Under a Chapter 13, will I lose my possessions? 
How will filing bankruptcy impact my credit? 
Do I have to surrender my tax return? 
How long will my case take? 
Do I need an attorney to file bankruptcy? 
How do I get my case started immediately? 
What is Bankruptcy? Bankruptcy is the process of gathering assets and discharging debt. Consumers may file for Chapter 7 or Chapter 13 bankruptcy depending on their financial situations. Each type of bankruptcy provides certain protections to consumers. For example, garnishments, harassment from creditors, lawsuits and foreclosures are all prohibited by law when an individual has filed for bankruptcy.
How do I know whether to file a Chapter 7 or 13? There are a number of factors that determine whether a person files for a Chapter 7 or a Chapter 13. An initial consultation will help to provide insight as to which chapter is appropriate. Some factors include income, current status of mortgage payments, and if a person has filed before, among others.
What is Chapter 7? Chapter 7 is commonly referred to as the “discharge.” If a person has to file bankruptcy, this is usually the preferred method. Under Chapter 7 most debts can be discharged or erased, which provides consumers with a fresh financial start.
If I file a Chapter 7, will I lose my possessions? When an individual files bankruptcy, their property and debt is called an “estate” and is controlled and supervised by the U.S. Trustee Program. The Trustee Program has to abide by the law when managing estates. Idaho law claims that an individual is entitled to keep certain property through the use of exemptions such as these:
- $100,000 home equity — This means the trustee’s office cannot take and then sell your home to pay your creditors unless there is $100,000 worth of equity in your home.
- $5,000 equity per debtor, per vehicle (maximum of two vehicles only).
- Example: A couple owns three vehicles — a small car, mid-size car, and a sport utility vehicle. All three are paid off and are worth less than $5,000 each. The couple would get to keep two of the vehicles with the $5,000 exemption, and have to surrender the third vehicle to the trustee.
- Example: A couple is making payments on a brand new truck and currently owe $20,000 on the vehicle. They also have a mid-size car that has been paid off and is worth less than $5,000. In this case, the couple would keep the mid-size car and would have the choice to either surrender the truck to the lender and walk away from it, or keep it and continue to make payments. These are just a few examples of exemptions; there are others that apply. A consultation will reveal potential additional exemptions.
What happens if I file for Chapter 13? Under Chapter 13, an individual will pay back a portion, or in some cases all, of the debt owed over a three- to five-year period. The rate will usually be significantly reduced depending on the amount currently being paid. Usually an individual has to file Chapter 7 over Chapter 13 because their income is higher. The premise behind the law is that because an individual is making a higher income, they can also afford to pay more back.
Under Chapter 13, will I lose my possessions? Usually not. A 13 differs from a 7 in that the debtor can usually keep his or her property.
How will filing bankruptcy impact my credit? There is no doubt that filing bankruptcy will affect your credit in a negative way. A bankruptcy will generally stay on your credit report for 7–10 years. This does not mean an individual cannot get a loan or a credit card after filing bankruptcy, however. Future loans or credit cards will depend on a person’s credit worthiness.
Do I have to surrender my tax return? Yes. With a Chapter 7, an individual only has to surrender the return for one year. With a Chapter 13, an individual must surrender the return for all the years in the bankruptcy plan.
How long will my case take? It depends on the chapter of bankruptcy. Chapter 7 — Generally this takes a minimum of three to five months to complete. There are a number of factors that can accelerate or delay the process. Chapter 13 — The case will usually take between three to five years to complete.
Do I need an attorney to file bankruptcy? Under the law, an attorney is not required for an individual to file bankruptcy, which can save him or her an added expense for attorney fees. However, most people become frustrated with the filing process, struggle to understand all the requirements and may miss out on exemptions. Filing bankruptcy is incredibly complex when compared to a simple task like registering a vehicle. An attorney can provide answers more specific to each case before an individual files and will inform his client of any potential issues the case may present from a qualified professional perspective. The attorney will also handle all the filing requirements, which can often prove a great relief.
How do I get my case started immediately? Please call Brown Law Offices at 208-705-LAWS. The information provided is basic and intended to aid individuals who are considering filing for bankruptcy. An individual should not rely solely on these questions when thinking about filing bankruptcy. Doing so could lead to poor or rash decisions that may lead to negative consequences in the future. A preliminary consultation is strongly recommended to address the many additional areas an individual can explore before filing.