Most people who are considering bankruptcy know very little about the bankruptcy process. The following FAQ is designed to assist you by providing basic answers to some of the most commonly asked questions. For additional information, please view the Courts General Information.
How long does a bankruptcy stay on my credit report?
Under the fair credit reporting act a bankruptcy can stay on your credit report for up to ten years. However your credit score does not have to stay low for ten years but can increase over time if certain steps are taken to improve your credit after filing for bankruptcy.
How long after a bankruptcy can I buy a house?
It depends on how good your credit was before you filed bankruptcy and what steps are taken to improve your credit after bankruptcy. We have had clients buy a house within 2-3 years after completing a bankruptcy.
How long after a bankruptcy can I buy a car?
Most lenders will want you to wait at least 6 months after a discharge before buying a car. However there are some lenders who may loan you money to buy a car immediately after you receive a discharge or sometimes while the bankruptcy is still ongoing.
Can taxes owed to the IRS be discharged in a bankruptcy?
This depends on several factors including how long before filing bankruptcy were your taxes due, how long before filing bankruptcy were the taxes assessed and the taxes involved (income taxes vs. sales taxes or payroll taxes). Generally income taxes that are older than 3 years old are dischargeable.
Can a bankruptcy stop the IRS from levying my bank account?
Yes, once a bankruptcy is filed, an automatic stay goes into effect and prevents the IRS from taking money from your bank account.
Can a bankruptcy stop the IRS from garnishing my wages?
Yes, once a bankruptcy is filed, an automatic stay prevents the IRS from taking steps to collect past due taxes including garnishing wages.
Can taxes owed to the State of Louisiana be discharged in a bankruptcy?
Yes, typically income taxes owed to the state of Louisiana must be at least 3 years old before they are dischargeable.
If I have had my driver’s license suspended for failure to pay state taxes, can a bankruptcy help me get my license back?
Yes, once a bankruptcy is filed the state of Louisiana cannot use the suspension of your drivers licence as a collection tactic. They must reinstate your licence.
Can student loans be discharged in a bankruptcy?
Typically no, student loans are more difficult to discharge. However, more and more bankruptcy courts are allowing the discharge of student loans in bankruptcy because of undue hardship.
Additionally, private student loans may be discharged in bankruptcy under certain circumstances.
If I file a bankruptcy, can I keep my house?
If you can continue to make the house payments, then the answer is generally yes. If you can not continue to make the house payments, then the answer is typically no unless you obtain a mortgage modification from the mortgage company.
If I file a bankruptcy, can I keep my car?
If you owe money on the car and can afford to make the payments then the answer is typically yes. In fact, car payments can often be reduced in chapter 13.
If a credit card company has already filed a lawsuit against me, is it too late to file bankruptcy?
No, once a bankruptcy is filed the automatic stay immediately stops almost all lawsuits.
If a credit card company has a judgment against me, what can they do?
Credit card companies typically use two collection tactics to collect judgements.
- Wage Garnishment: The credit card company can (and will) take up to 25% of your take home pay from every paycheck.
- Lean Against Property: A lean can (and will) be placed against all real estate that you own in the parish where the judgement was taken.
Judgements can often be removed in a bankruptcy.
If a credit card company is garnishing my wages, is it too late to file bankruptcy?
No, a bankruptcy filing will stop all wage garnishments immediately.
If my house is set to be sold at a foreclosure sale, can a bankruptcy stop the sale?
Yes, a bankruptcy will stop the sale of your home as long as the foreclosure sale has not yet occurred.
If my house was sold at a foreclosure sale, can a bankruptcy help me get my house back?
No, in the state of Louisiana, once a house is sold at foreclosure sale the sale is final.
If I file a bankruptcy, is my credit ruined for 10 years?
No, if you take certain steps toward improving your credit after the bankruptcy is completed. If you had good credit at some point before the bankruptcy was filed, it typically takes two to three years to return to your prior credit score.
Can a credit card company take my house?
Theoretically, yes a bank can take your house. However very few credit card companies foreclose on judgement leans against a persons house. They instead rely on other collection tactics such as wage garnishment or sitting on the lean until the house is sold or refinanced.
If I have a pending loan modification, can the mortgage company still foreclose on my house?
Yes. Just because you are waiting for a decision on a loan modification does not mean that the mortgage company cannot move forward with its foreclosure action. Many homeowners have lulled into believing that the loan modification application would stop the foreclosure proceeding, only to later find out that the house was sold at a foreclosure sale and is now lost.
If I file bankruptcy, should I still try to get a loan modification?
Yes. Loan modifications can often result in very favorable terms for homeowners that cant be achieved in bankruptcy such as reducing interest rates or putting all of the arrearages on the back of the loan.
If I haven’t been making my car payments, do I have to immediately turn over my car to the repo man when he shows up at my door?
No. As long as the person repossessing the car is not a sheriffs deputy acting pursuant to court order, legally you do not have to turn over your car. A repo man cannot repossess your car if by doing so he would “breach the peace”. A repo man also cannot enter into closed gates or closed garage doors to repossess the vehicle without your permission. However if a sheriffs deputy shows up with a court order then you must turn over the car/truck immediatly.
If my car has already been taken by the repo man, can a bankruptcy help get it back?
Yes, so long as the car has not yet been sold at an auction or at private sale by the lender. The lender must return the car to you after a Chapter 13 bankruptcy filing if the lender or its agent is still in possession of the car.
Are child support payments dischargeable in a bankruptcy?
No. Obligations to pay child support are not dischargeable under any circumstances.
Can a bankruptcy be used to stop child support payments from coming out of my check?
No. The automatic stay in bankruptcy court does not apply to child support payments.
If I make over $100,000 per year, can I still file a bankruptcy?
Yes. However, you may not be able to file a chapter 7 bankruptcy but may instead have to file a chapter 13 or chapter 11 bankruptcy due to your high income.
Is my 401K or IRA at risk if I file a bankruptcy?
No. Retirement accounts are exempt assets in bankruptcies filed in Louisiana. The only portion of a retirement account that is technically not exempt are contributions made within one year of filing but this exception is not usually enforced.
If I file a bankruptcy and discharge hospital bills, will the hospital still admit me as a patient?
Typically, yes. Hospitals are large institutions that serve their communities so they will usually treat patients who have had their hospital bills discharged in bankruptcy.
Once a bankruptcy is filed, can bill collectors keeping calling and harassing me?
No, immediately upon filing a bankruptcy, the automatic stay goes into effect which prevents bill collectors from calling you. If bill collectors do continue to call you, they can be fined by the bankruptcy court.
If I file a Chapter 7, can I keep my house without paying my mortgage?
No, if you want to keep your house in a Chapter 7, you have to keep making your mortgage payments.
If my house is paid for, can I still file a bankruptcy?
Yes, but you will likely have to file a Chapter 13. While the first $35,000 of your home’s value is exempt in Louisiana, any value above $35,000 can be administered by the trustee in Chapter 7. So, if you house is worth $50,000, you would not want to file a Chapter 7 because the trustee could sell your house, give you a check for $35,000 and then pay the remaining $15,000 to creditors. Most people do not want that to happen. A Chapter 13 would allow you to keep your house by paying the $15,000 in non-exempt equity to creditors over three to five years.
If I was a victim of credit card fraud, can bankruptcy be used to stop collection activity?
Yes, a bankruptcy can be used to stop the collection calls and eliminate those fraudulently obtained debts.
If I am going through a divorce, do I need my spouse’s permission to file a bankruptcy?
No, either spouse can file a bankruptcy proceeding without the other spouse’s permission, even if they are still legally married.
If I file a bankruptcy, do I have to be humiliated in court?
No! The role of the bankruptcy court and the trustees in bankruptcy is to evaluate your case fairly and ensure that you are qualified to be a debtor under the Bankruptcy Code. Likewise, creditors are not allowed to harass you in court but merely to ask questions about your case in a civilized manner (unlike the way many debt collectors behave!). It is very likely that any court hearings for your case and the creditors’ meeting you attend will be very brief and to the point. Many of our clients are amazed at how short and efficient the process can be!
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Weinstein & St. Germain, LLC
1414 NE Evangeline Thwy.
Lafayette, LA 70501