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Common Questions about Bankruptcy

How San Diego Residents Can Regain Financial Freedom

When facing large amounts of debt, it’s typical for people to feel hopeless about their future. At the Law Offices of Mark. L. Miller, we know it doesn’t have to be that way. For many San Diego residents, bankruptcy has provided an effective way to regain control of their finances and put a stop to the harassing calls of debt collection agencies. For over 20 years, our legal team has been helping people gain a fresh start with their lives by assisting them in filing for bankruptcy. Below are some frequently asked questions about bankruptcy and how to begin the process.

Interested in getting a new start with your San Diego finances? Call (619) 494-3821 to learn more about how filing for bankruptcy can help.

  • What is the difference between Chapter 13 and Chapter 7 bankruptcy?

    The main difference between Chapter 13 and Chapter 7 is the elimination of debt. With Chapter 13 bankruptcy, the goal is to restructure payments in court to make it more possible and realistic to repay debt. This type of bankruptcy is probably more suitable for those who still receive monthly income. In these cases, there is little to no risk of losing valuable assets or property.

    In Chapter 7 bankruptcy, all debts are eliminated. This solution is more valuable for those who are drowning in debt and need immediate relief from obligations like credit card bills, auto loans, and other small debts. Often times a life-changing event occurs such as losing a job, unforeseen illness, the death of a spouse which make it impossible to pay off these debts. By declaring exemptions, it is possible to hold on to property as well.

  • Is bankruptcy right for me?
    Depending on your situation, bankruptcy may be a solution to your problems. Since we offer free consultations, calling us is the best way to obtain information. Bankruptcy is a solution for those who are dealing with constant debt collection phone calls, suffering from wage garnishments, facing foreclosure or repossession, and even dealing with lawsuits. If you feel you are able to repay your debts but need to lower your monthly payments, filing for Chapter 13 bankruptcy may be a possible solution. If you feel you cannot pay your debts, Chapter 7 may be a more suitable solution.
  • Will filing for bankruptcy stop the creditor phone calls?
    Yes. Once you file for bankruptcy, creditors are prohibited by law from calling you anymore. Our firm has helped thousands regain their freedom from harassing phone calls by beginning a path back to financial stability.
  • Can income taxes be eliminated by bankruptcy?

    It is nearly impossible to get rid of income taxes unless you die or, in some cases, file for bankruptcy. By filing for Chapter 7 bankruptcy, it is possible to eliminate a lot of income taxes. By filing for Chapter 13, taxes can be structured into fixed, affordable monthly payments.

    Personal income taxes may be dischargeable if:

    • They are at least three years old
    • You filed the tax returns for the years that you owe at least two years prior to filing bankruptcy
    • The taxes were assessed at least 240 days prior to filing
    • There are no events that tolled the time periods above (tolling events can include an offer in compromise, incarceration, etc.)
  • What are some common mistakes people make before filing bankruptcy?

    When you owe large amounts of money, it can be tough to sleep at night. The stress of paying back debt can drive people to make some unfortunate decisions, so before you make any major changes to your finances in an effort to fix them, there are some things you should know.

    When dealing with debt, do not:

    • Run up a credit card—Any debts in excess of $600.00 owed to a single creditor will still be valid if they are filed within 90 days of filing for bankruptcy. This will hurt your ability to start fresh following a bankruptcy.
    • Repay a family member before repaying another creditor—You cannot treat your family member any better than you would an ordinary creditor. A bankruptcy trustee can reclaim any amount repaid to a family member or business insider within two years prior to filing bankruptcy. Wait until the bankruptcy is over before paying back family members.
    • Liquidate a retirement account to repay debts—Did you know retirement accounts are generally protected? It is possible to eliminate debt while keeping funds in an ERISA qualified account. Do not drain your retirement account in a futile attempt to pay down credit card debt.
    • Transfer property out of your name—Most property can be protected during a bankruptcy. If property is transferred to an insider with the intent to hinder, delay, or defraud a creditor, a trustee can undo that transfer up to 4 years before the bankruptcy was filed. Don't put your property and bankruptcy at risk by making major changes on your own.
    • Take out a second mortgage to repay debt—it is often possible to file bankruptcy without losing your home. Credit card debts can be easily forgiven, but the loss of a home is permanent. It is usually not worth it to put your home at risk to pay credit card debt.
    • Fail to appear at court proceedings—If there’s a collection case pending against you in state or federal court, don’t assume that you can avoid the court process simply because you’ve decided to file bankruptcy. Until your bankruptcy case is filed, a collection case continues.
    • Withhold information from your attorney—Your lawyer can only provide advice based on the information you give them. Failure to notify your attorney about your assets can lead to the loss of those assets, denial of your bankruptcy case, fines and in extreme cases, imprisonment.
  • Am I the only one struggling with my finances?

    Quite honestly, most people are just a paycheck or two away from homelessness. Many solutions are available for relief, but not all are helpful. Many “quick-fix” schemes ignore the fact that it can take decades to pay off a relatively small amount of debt, and will not help you pay off your bills or get out of debt.

    Credit cards and other debt collectors do not want you to pay off your debt. The credit card company’s minimum payment schedule ensures that you will never pay more than the interest on your debt. Realistically, you can never get out of debt by only making minimum payments.

    Bankruptcy offers an option to either wipe out your debt entirely or pay off a portion of your debt at a low monthly payment over a period of time. A great benefit of bankruptcy is that you are protected from creditor collections, harassment and wage garnishments. The bankruptcy laws protect you from the creditors, and we enforce those laws to your benefit.

  • Will bankruptcy destroy my credit?

    The biggest concern with most people considering filing for bankruptcy is whether or not they’ll be able to secure a loan for a home or automobile. These financial goals are relatively easy to establish after a bankruptcy case. In most cases, the completion of a bankruptcy case increases someone’s credit (i.e. FICO) score because the amount of debt and bad credit is wiped out in the case, leaving the good information on the report.

    It is possible to qualify for a common house loan two (2) years after a bankruptcy case is concluded through the Federal Housing Authority (FHA) and its two (2) subsidiaries, Fannie Mae & Freddie Mac. Some loans within these programs are available for as little as 3% down, though you should be careful that you can afford not only the down payment, but also the monthly payments, property taxes, insurance, fees, and any other costs associated with owning a home.

    You can start rebuilding your credit immediately after your bankruptcy is over. One of the best ways to do this is to go to a bank or credit union and apply for a major credit card. Your bank or credit union may ask you to open a savings account and deposit an amount equal to the card limit. This is called a secured card. By using the card and making payments on time, you will be surprised to see how quickly your credit score improves.

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