Call Us:   775-786-7600            
Placeholder Picture

Stephen R. Harris

Attorney and Counselor at Law
Northern Nevada Bankruptcy Attorney for over 35 years
Free initial consultation to discuss your bankruptcy options.

AVVO Rating
Stephen R. Harris, Esq.
Bankruptcy Attorney
6151 Lakeside Drive
Suite 2100
Reno, NV 89511
775-786-7600
or
775-690-9120

Nevada Bar #001463
FREQUENTLY ASKED QUESTIONS
REGARDING CONSUMER BANKRUPTIES


(CHAPTER 7 AND CHAPTER 13)

>> What are my real options for keeping my house? >> Can I wipe out the second mortgage on my house in bankruptcy? >> What do I get to keep if I file bankruptcy? >> Will my student loan go away in bankruptcy? >> Will my debt to the IRS go away in bankruptcy? >> What is debt settlement? >> Will all my medical bills go away in bankruptcy? >> Are there any down sides to short sales? >> How much can a creditor attach of my wages with a judgment? >> What kind of records will I need in order to file bankruptcy? >> What if I forget to list a debt on my bankruptcy petition? >> What is the best way to make sure I list all my debt on the bankruptcy petition. >> Are my assets protected if they are in my living trust? >> What if a credit card company calls after I file a Chapter 7 case? >> What do I do with my expensive jewelry in my Chapter 7 case? >> Can I run up my credit cards before I file my Chapter 7 bankruptcy? >> Does a bankruptcy get rid of a deficiency on my real property? >> Will a judgment against me be discharged in bankruptcy? >> Can I sell or give away my assets before I file bankruptcy? >> Is it true that a corporation cannot discharge its debt in a bankruptcy. >> If I file a Chapter 7 bankruptcy for my corporation will it discharge my personal guarantees? >> Is it true that I can't file for bankruptcy since the new law went into effect? >> Is filing for bankruptcy very difficult? >> How many times can I file for bankruptcy? >> Will I ever be able to apply for credit again? >> If I am married, do my spouse and I both have to file for bankruptcy? >> What is lien stripping? >> What can I expect at a 341 meeting? >> How do I get a Bankruptcy removed from my credit report? >> Are Social Security Benefits Included in Disposable Income for Means Testing? >> How much property can I keep after filing? >> What is the difference between secured creditors and unsecured creditors? >> Does a bankruptcy case automatically remove liens (such as deeds of trust s) against my property? >> How does the automatic stay stop foreclosures, repossessions or other collection efforts from taking place? >> What must I do to prevent foreclosures and repossessions? >> How does a chapter 13 case help me with my secured debts? >> What is a reaffirmation agreement and how does it work? >> Can I make payments on a discharged debt without a reaffirmation agreement? >> What happens if I fall behind in payments after filing a chapter 13 case? >> Once a chapter 7 or chapter 13 case is completed, are there other requirements before I receive a discharge? >> How do I know when my bankruptcy case is completed and I am no longer in bankruptcy? >> What are the long-term effects of bankruptcy? Will I ever be able to get a loan again? >> Can my employer fire me if I file for bankruptcy? >> I rent an apartment. Can I be evicted if I file for bankruptcy?

What are my real options for keeping my house? If you are faced with a foreclosure, the bankruptcy can stop the foreclosure temporarily, but you will be required to become current on at least the first deed of trust in order to keep it, or you must have the lender modify the loan. (Back to the top.)

Can I wipe out the second mortgage on my house in bankruptcy? This is possible in a Chapter 13 bankruptcy if it is your primary residence and there is absolutely no equity in your home after considering the first trust deed. This is called lien stripping. (Back to the top.)

What do I get to keep if I file bankruptcy? 1. You get to keep your exempt assets such as equity in a car that is equal to or less than $15,000, household furniture equal to or worth less than $12,000, equity in a primary residence equal to or worth less than $550,000, one gun, and Individual Retirement Accounts or Qualified Retirement Plans with a value of equal to or less less than $500,000. A full exemption list per Nevada Law is set forth at NRS 21.090, see Resources for the actual link to the full exemption statute.

2. All nonexempt assets like children’s cars, rental properties, tax refunds, rental deposits, money in bank accounts, and airline tickets will be listed as assets of the estate at fair market value.
(Back to the top.)

Will my student loan go away in bankruptcy? Absent an undue hardship that is very difficult to establish, the answer is no. United Student Aid Funds v. Espinosa decided 12-1-09 set forth those very difficult guidelines. (Back to the top.)

Will my debt to the IRS go away in bankruptcy? Generally not. Tax liabilities can be paid over time of up to 60 months in a Chapter 13, and certain older taxes may be dischargable under certain circumstances. (Back to the top.)

What is debt settlement? This is when a certain cash payment less than the debt owing is accepted by a creditor as full payment of the debt. (Back to the top.)

Will all my medical bills go away in bankruptcy? Absolutely yes. The issue is when do I file bankruptcy, trying to make sure my medical condition has been resolved. (Back to the top.)

Are there any down sides to short sales? Yes, there can still be debt forgiveness resulting in a taxable income or a lender may expect you to waive your defenses to the note which may give them a longer period to sue you on a deficiency. (Back to the top.)

How much can a creditor attach of my wages with a judgment? The "applicable nonbankruptcy law" of the federal Consumer Credit Protection Act, 15 U.S.C. sections 1671 – 1673, protects 75% of net pay from garnishment. NRS 21.090 provides that 75% of an individual’s net pay is exempt from execution, unless the order is for the support of another person or for any debt due for any state or federal tax. (Back to the top.)

What kind of records will I need in order to file bankruptcy? Last three years’ tax returns, last six months bank statements, copies of recent credit card statements for last balances, payoffs on all debt whether secured or unsecured. (Back to the top.)

What if I forget to list a debt on my bankruptcy petition? A debt that is not listed on your bankruptcy petition will not be discharged. Therefore when in doubt about owing a creditor money, list that creditor. (Back to the top.)

What is the best way to make sure I list all my debt on the bankruptcy petition. Get a credit report from all three credit reporting agencies. (Back to the top.)

Are my assets protected if they are in my living trust? A revocable living trust created by you does not provide relief against your own creditors. (Back to the top.)

What if a credit card company calls after I file a Chapter 7 case? It may just be disorganization on their part. Tell them you have filed a chapter 7 bankruptcy. Instruct them to not call again. (Back to the top.)

What do I do with my expensive jewelry in my Chapter 7 case? Sell it, and keep the receipt and keep a list of where you spent the proceeds. Then get a cheap watch. Your wedding rings are exempt. (Back to the top.)

Can I run up my credit cards before I file my Chapter 7 bankruptcy? No, under section 11USC 523, consumer debts owed to a single creditor and totaling more than $500 for luxury goods or services incurred by an individual on or within 90 days before the order for relief under this title are presumed to be nondischargable and cash advances of more than $750 that are extensions of consumer credit under an open end credit plan obtained by an individual debtor on or within 70 days before the order for relief under this title are presumed to be nondischargable. (Back to the top.)

Does a bankruptcy get rid of a deficiency on my real property? Yes, the contingent liability of a deficiency from a lender on either a short sale or a foreclosure is dischargable if listed on your bankruptcy petition. (Back to the top.)

Will a judgment against me be discharged in bankruptcy? A judgment will normally be discharged, but you cannot argue about the amount of the debt, and if the judgment is recorded in the county in which you have a home, it will be a lien against your home that makes it more expensive to remove in the bankruptcy court removal of a non-consumer judgment recorded on your judgment recorded on your residence is a realistic option. Even more awful, is if you have signed a confession of judgment or stipulated judgment, your homestead exemption will not allow that judgment recorded against your residence to be removed. (Back to the top.)

Can I sell or give away my assets before I file bankruptcy? There are of course rules against this. Any sale, gift or transfer of an asset must be disclosed in the bankruptcy filings if it was made within two years of filing. There are also state laws that allow a bankruptcy trustee or creditor to go back four years to recover assets. (Back to the top.)

Is it true that a corporation cannot discharge its debt in a bankruptcy? Yes, but the trustee in a Chapter 7 closes the business and sells the assets. (Back to the top.)

If I file a Chapter 7 bankruptcy for my corporation will it discharge my personal guarantees? No, you would need to file personal bankruptcy. (Back to the top.)

Is it true that I can't file for bankruptcy since the new law went into effect? This is not true. In fact, nearly everything that could be done under the old law can be done under the new law. (Back to the top.)

Is filing for bankruptcy very difficult? It really isn't. The process is fairly straightforward but it can be difficult to understand at times. (Back to the top.)

How many times can I file for bankruptcy? You can only file for Chapter 7 once every eight years and you are actually allowed to file for Chapter 13 more frequently than that if necessary. (Back to the top.)

Will I ever be able to apply for credit again? Yes, in fact, the opposite might be closer to the truth. We see many clients who start receiving credit offers shortly after they receive their discharge. The terms aren't the best but it can be the beginning of starting to rebuild your credit. (Back to the top.)

If I am married, do my spouse and I both have to file for bankruptcy? Not necessarily. In many cases it makes sense for both spouses to file but you don't have to. In fact, there are a number of cases where it makes more sense for just one spouse to file if all the debt is in that individual’s name. An experienced bankruptcy lawyer can help you understand the pros and cons of each option. (Back to the top.)

What is lien stripping? Liens can be stripped off of the debtor's assets in Chapter 11 or Chapter 13 when there is not enough equity in the asset, after deducting senior liens from the property's current market value, to secure the unsecured in whole or in part, where the lien exceeds the value of the debtor's property. Section 506 of the Bankruptcy Code acknowledges that a lien is only a secured claim to the extent there is value in the asset to which it attaches. To the extent that the claim exceeds the value of the collateral, that portion of the claim is unsecured. In Chapter 11 or Chapter 13, even voluntary liens, such as deeds of trust, and security interests, can be stripped down to the value of the collateral, with the exception of voluntary liens secured only by the debtor's residence. Unfortunately Congress has thus far failed to change to bankruptcy law to allowing the modification of the deed of trust on a primary residence. Contrast this procedure to lien avoidance pursuant to § 522, where only judicial liens such as judgment liens or voluntary liens on household goods can be avoided if the property would otherwise be exempt. (Back to the top.)

What can I expect at a 341 meeting? One of the parts of the process of filing for a Nevada bankruptcy is something which is known as a 341 meeting. Named for the part of the US bankruptcy code which mandates that this meeting take place, this meeting is where the debtor’s identity will be verified and creditors will have an opportunity to find out more about the debtor’s assets as well as their level of debt. Attending a 341 meeting is mandatory if you’re seeking the protection of Chapter 7 or Chapter 13 bankruptcy in the state of Nevada (in fact, it’s mandatory to attend this meeting regardless of which state you reside in). If you fail to attend this meeting or to supply the trustee who conducts the meeting with the appropriate paperwork, you’ll be denied the opportunity to have your debt discharged through this bankruptcy proceeding. It’s also important to remember that any statement you make during your 341 meeting will be under oath. Any false statements made during this meeting will not only bar you from receiving the protection that a Dallas Texas bankruptcy provides, but can also lead to penalties for perjury including fines and/or imprisonment. Before your 341 meeting, you’ll have to provide your most recent tax return to the trustee. This document is necessary in order for your income to be verified (since your creditors will be allowed to ask questions about this at the meeting).. During this meeting with your creditors, they may ask about your income as well as what kind of assets you hold and what other debts you may currently be obligated to pay. If you have any kind of secured debt (such as a mortgage or auto loan), then these creditors may ask you how you plan to keep paying on these debts in order to retain the property which secures these debts. Depending on the type of Dallas Texas bankruptcy you’re filing and your individual circumstances, you may be required to have these assets liquidated by the trustee in order to partially pay your debts or you may be able to keep them through entering into a payment plan with your creditors. The exact details of your bankruptcy will be determined later when a bankruptcy judge examines your case and decides how (or if) your debts will be discharged. In most cases, debtors can have most of or all of their debt discharged through a Nevada bankruptcy proceeding, though there are types of debt which cannot be dealt with through the bankruptcy courts. Regardless of the type of bankruptcy protection you happen to be filing for, attending a 341 meeting is an absolute must and is a necessary step in seeking relief from your debts through the courts. (Back to the top.)

How do I get a Bankruptcy removed from my credit report? The Bankruptcy Court has no jurisdiction over credit reporting agencies. The Fair Credit Reporting Act, 6 U.S.C. Section 605, is the law that controls credit reporting agencies. The law states that credit reporting agencies may not report a bankruptcy case on a person's credit report after ten years from the date the bankruptcy case is filed. Other bad credit information is removed after seven years. The larger credit reporting agencies belong to an organization called the Associated Credit Bureaus. The policy of the Associated Credit Bureaus is to remove chapter 11 and chapter 13 cases from the credit report after seven years to encourage debtors to file under these chapters. You may contact the Federal Trade Commission, Bureau of Consumer Protection, Education Division, Washington, D.C. 20580. The telephone number is (202) 326-2222. That office can provide further information on reestablishing credit and addressing credit problems. For information on credit practices, contact (202) 326-3224. (Back to the top.)

Are Social Security Benefits Included in Disposable Income for Means Testing? Chapter 13 debtors cannot be compelled to include social security benefits in the computation of their disposable income, and thus in their projected disposable income, given the Bankruptcy Code's explicit exclusion of social security income from the statutory definition of "current monthly income." A New York bankruptcy court found itself "simply without discretion" to alter the treatment afforded to social security income under the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), "regardless of how unfair the outcome may seem in any particular case." Under the BAPCPA amendments to the Code, the court indicated, social security income "enjoys complete protection from the reach of unsecured creditors" in bankruptcy. In re Bartelini, 2010 WL 2287559 (Bkrtcy.N.D.N.Y., Judge Davis). (Back to the top.)

How much property can I keep after filing? Chapter 7 Every state has exemption laws that allow you to keep some necessities, even if you do not pay your creditors. The idea is that it would do little good to take all of your assets because you would not have a place to live, clothes to wear or a way to get to work. Most exemption laws allow you to keep clothes, household goods, a car of some limited value, tools of trade, as well as other property. Some exemptions allow you to keep some equity in a house. In addition, bankruptcy law contains its own set of exemptions, which you can use when you are in bankruptcy, at least in some states. If you live in Arkansas, Connecticut, the District of Columbia, Hawaii, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, Pennsylvania, Rhode Island, Texas, Vermont, Washington or Wisconsin, you can choose to use either the state or the bankruptcy exemptions, based upon your particular circumstances. One scheme may be great for one person, but horrible for another. An experienced bankruptcy attorney will be able to help you choose the appropriate exemptions. As we described above, you must give all your non-exempt assets (the ones that do not fit within the exemptions) to the bankruptcy trustee. The trustee will then sell these assets to pay a portion of your pre-petition debts. However, many people do not have property in excess of the allowed amount of exempt property, and if that is the case, you do not need to surrender any property. Despite the exemptions, you always need to pay debts owed to Secured Creditors in order to keep the collateral securing the debt. Your exemptions do not affect their claims. Chapter 13 Most people who file for Chapter 13 keep all of their property. In exchange for keeping their property, however, they commit to repaying a portion of their debts under a three- to five-year repayment plan. The plan will include payments to your secured creditors (creditors who took collateral for their loans, such as car lenders). You may use a chapter 13 to save your home from foreclosure. The automatic stay stops the foreclosure proceeding as soon as you file bankruptcy. Chapter 13 allows you to catch up on overdue pre-petition payments over time, while keeping up with current payments. (Back to the top.)

What is the difference between secured creditors and unsecured creditors? A "secured creditor" is a creditor that has a lien on an item of your property. A lien is an interest in property that allows a creditor to have your property sold to satisfy your debt to that creditor. Deeds of trust lenders and car lenders are secured creditors. They have voluntary liens on your property. An "unsecured creditor" is a creditor who has no interest in any of your particular property. Most credit card issuers are unsecured creditors. Outside of bankruptcy, there are only two ways an unsecured creditor can get paid. First, you can pay the debt voluntarily. This is the way most debts are paid. The other way unsecured creditors get paid is much harder. They must sue you, get a judgment against you, and ask the sheriff to seize your particular property and sell it to satisfy the creditor's claim. When the sheriff seizes your property for an unsecured creditor, that unsecured creditor has an involuntary lien and becomes a secured creditor for bankruptcy purposes. Even in bankruptcy, the secured creditor has greater protection because its lien on your property is usually honored. The bankruptcy does not remove it. (Back to the top.)

Does a bankruptcy case automatically remove liens (such as deeds of trust s) against my property? No, not at all. Secured creditors get extraordinary rights in a bankruptcy case. Bankruptcy may temporarily delay secured creditors, but most voluntary liens (such as those held by your deeds of trust bank and your car lender) have to be satisfied by either paying the creditor or surrendering the property to the creditor.
However, you have some opportunities to remove involuntary liens and a small category of voluntary liens.
Chapter 7
You can remove involuntary liens (except for liens securing alimony or support obligations) and some voluntary liens on property that you could exempt. For these voluntary liens, you can only remove liens on certain household goods (for example, clothing, one radio, one television, one VCR), "tools of the trade" and professionally prescribed health aids (such as a wheelchair or a hearing aid).
Chapter 13
If you file chapter 13, you have the additional ability to remove liens by completing payments under the plan. In some cases, the plan will reduce the amount that you must pay or change the time period over which you must pay the debt. In the case of homes and cars, the ability to change the payment terms is limited.
(Back to the top.)

How does the automatic stay stop foreclosures, repossessions or other collection efforts from taking place? Just by filing a bankruptcy petition, an "automatic stay" against all collection efforts goes into effect. Creditors must stop all efforts to collect from you. Creditors must stop making calls to you, stop sending letters, stop all lawsuits to collect, and stop doing everything else to make you pay. The automatic stay also stops foreclosures, repossessions or sales of property from going forward. If you don't pay your house payments, however, the creditor will have the right to continue the foreclosure after your bankruptcy case is finished. Thus, the benefits of the automatic stay may be temporary when the creditor is a secured creditor. There are a number of exceptions to the automatic stay. Two important exceptions are: attempts to establish or collect alimony or support obligations criminal suits Just remember that as to secured creditors, the automatic stay is temporary. It means only that creditors must ask the court before taking action. No bankruptcy filing allows you to keep property that is security for a loan without making payments on the loan. If you are behind on the payments and the property is of insufficient value to satisfy the debt, or there is risk of loss of the property, a secured creditor may obtain court permission to seize and sell the property. In addition, in a chapter 7 case, as soon as the bankruptcy case is closed, the automatic stay terminates, and the secured creditor can proceed with foreclosure or repossession if you are behind on the payments. If your largest debts are secured debts, you may be better off filing a chapter 13 case than a chapter 7 case because the chapter 13 will allow you to pay off the past-due secured debt over time. In chapter 13, the automatic stay also protects people other than you who are "co-debtors". Co-debtors are people who also have an obligation to pay the same consumer debt as you do. That includes people who have guaranteed the debt for you. (Back to the top.)

What must I do to prevent foreclosures and repossessions? Soon after filing the petition, you must declare whether you will return the property, purchase the property from the creditor or enter into a Reaffirmation Agreement with the creditor. However, if you do not do one of these things, the stay will terminate and the creditor may take the property. Chapter 13
In most cases you will be able to keep property even if you have given it as collateral for a loan. Your plan can modify some loan obligations by stretching out payments and reducing interest rates. As long as you make payments under your plan, your lenders will not be able to foreclose on or repossess your property.
(Back to the top.)

How does a chapter 13 case help me with my secured debts? In a chapter 13 you must pay your home deeds of trust loan in full. The good thing is that the case gives you time to pay this off over the original term of your deeds of trust . You must pay any overdue payments over the course of the three to five-year plan. You must make your regular monthly payments time. This means that if you were behind on the deeds of trust payment when you filed for bankruptcy, you will be making a larger deeds of trust payment during your plan to make up for the past due debt. You will not be allowed to reduce the interest rate on your deeds of trust loan. If you took out a loan to buy a car for your personal use within 910 days (approximately 2.5 years) before you file for bankruptcy, you must pay that loan in full in your chapter 13 plan. If you gave any other property to a lender as collateral for a loan that you obtained within a year before filing for bankruptcy, you must also pay that loan in full in your chapter 13 plan. You may be able to reduce the interest rate on these secured debts. (Back to the top.)

What is a reaffirmation agreement and how does it work? A reaffirmation agreement is an agreement providing that you will pay a creditor's debt even though the debt would otherwise be discharged in bankruptcy. Your creditor must agree to the reaffirmation, so while the debt can be renegotiated, but most reaffirmation agreements simply require you to pay the debt as originally agreed. People usually reaffirm a debt so that they can keep property that they gave as collateral for the debt. Thus, most reaffirmation agreements deal with secured debts, and chapter 7 debtors enter them to keep the creditor from repossessing or foreclosing on the property securing the debt. A valid reaffirmation agreement puts you under a legal obligation to repay the otherwise dischargeable debt. If you default on the payments required under the reaffirmation agreement, the creditor can repossess or foreclose on the property and seek a personal judgment against you. In order for a reaffirmation to be valid, you and your creditor must sign the agreement and file it with the court before you receive a discharge. In addition, either your attorney or the court must determine that the agreement does not impose an "undue hardship" on your family. The Bankruptcy Code contains many other requirements for reaffirmation agreements. If you and your creditor do not comply with all the requirements for a reaffirmation, the agreement may not be binding. In that event, you would have no personal obligation to make payments under the agreement. As a rule, you should think very carefully about whether to reaffirm debt, as this limits your bankruptcy discharge. (Back to the top.)

Can I make payments on a discharged debt without a reaffirmation agreement? Yes. You can voluntarily pay the debt. Often people voluntarily repay with debts to family members or friends. However, the key to this kind of payment is that it is entirely voluntary; you have no legal obligation to pay a discharged debt, and the creditors can take no action to pressure or persuade you into making the payments. (Back to the top.)

What happens if I fall behind in payments after filing a chapter 13 case? The terms of a confirmed plan bind you and each creditor. If you have an unexpected financial problem during your chapter 13 case, you should immediately consult with your attorney. It is often possible to deal with changed circumstances by amending the chapter 13 plan. Also, it is sometimes possible to add debts that you incurred after filing chapter 13 to the plan, so that they will be discharged with other debts at the completion of the plan. (Back to the top.)

Once a chapter 7 or chapter 13 case is completed, are there other requirements before I receive a discharge? You must now complete an instructional course in personal financial management from an approved agency prior to receiving a discharge, with limited exceptions. In a chapter 13 case, if you owe domestic support obligations such as alimony or child support, you must also certify to the court you have paid all amounts due. (Back to the top.)

How do I know when my bankruptcy case is completed and I am no longer in bankruptcy? At the conclusion of an individual's bankruptcy case, the court enters an order closing the case, and a copy of this order is sent to you. Unless the trustee has assets to distribute to creditors, case closing takes place fairly quickly in chapter 7 cases. In a chapter 13, the court will not close the case until after you finish making payments under the plan or the court dismisses the case. A court will dismiss your case if you do not make payments to the trustee on time. (Back to the top.)

What are the long-term effects of bankruptcy? Will I ever be able to get a loan again? Your credit report will state that you filed for bankruptcy. A bankruptcy will stay on your credit report for seven years if you filed for Chapter 13 and ten years if you filed for Chapter 7. Lenders use credit reports in deciding whether to make loans. A bankruptcy does not mean you will never be able to borrow money again, but at first, it may be harder to get a loan at a good interest rate. (Back to the top.)

Can my employer fire me if I file for bankruptcy? The Bankruptcy Code prohibits an employer from firing you solely because you filed for bankruptcy or because you did not pay a debt that was discharged in bankruptcy. If your employer has other reasons for firing you, the fact that you filed for bankruptcy will not protect you. (Back to the top.)

I rent an apartment. Can I be evicted if I file for bankruptcy? Not immediately. In most cases, the automatic stay will prevent your landlord from evicting you. You will be required to assume your lease, however, which means that you must promise to both make up any missed payments and make all future payments on time. To avoid losing your apartment, you must make all payments when they are due. There are two exceptions to the rule that your landlord cannot evict you upon filing for bankruptcy, however. If the landlord has already sued you for eviction and the court has given your landlord the right to take possession of your apartment, your landlord will be able to evict you 30 days after you file for bankruptcy. Also, if your landlord has already started eviction proceedings because you endangered the property or used illegal drugs on the property, your landlord will be able to continue those eviction proceedings fifteen days after you file for bankruptcy. (Back to the top.)

AVVO Rating
Stephen R. Harris, Esq.
Bankruptcy Attorney
6151 Lakeside Drive
Suite 2100
Reno, NV 89511
775-786-7600
or
775-690-9120

Nevada Bar #001463    steve@harrislawreno.com