4929 Wilshire Blvd., Suite 690, Los Angeles, CA 90010
Phone: 323-933-8401
Helping You Make the Best Decision About Bankruptcy Safeguarding Your Family, Your Legacy & Your Future Experienced Attorneys Putting Your Estate Plans in Order

Commonly Asked Bankruptcy Questions & Answers

What is bankruptcy? How can it help me?

Bankruptcy is a process designed to help debtors eliminate most of their debts or repay them under the protection of the court. When you file for bankruptcy, a “petition” is filed with the Federal Court. On the same date the petition is filed, an “automatic stay” is issued by the court. This automatic stay is a Court Order that tells your creditors that they may not contact you, that they may not continue current lawsuits filed against you and that they must stop all collection actions against you. You do not have to wait for this protection. It is automatically granted upon the filing of your case. Bankruptcy will help you to “discharge” or eliminate your credit card debt, medical bills and other unsecured debt. Unsecured debt is debt where the creditor is not entitled to repossess (ex: cars) or foreclose (ex: homes) on collateral.

Bankruptcy can be very helpful in allowing our clients to get a fresh start.

Should I file for bankruptcy?

It depends. There are several factors that one must consider when deciding to file for bankruptcy. Deciding whether to file for a bankruptcy is a very important decision and we understand that. We will sit down with you and go over all of the options you have in your case. We will discuss the positives and negatives associated with each option and provide you with enough information so that you can make the best decision for you and your family. If bankruptcy is not a good option for you, we will tell you so. Likewise, we will not pressure you into filing for bankruptcy.

What is the difference between a Chapter 7 Bankruptcy and a Chapter 13 Bankruptcy?

A Chapter 7 bankruptcy is generally what people think about when they hear the word bankruptcy. In most cases, Chapter 7 bankruptcy will allow you to eliminate all of your unsecured debt (e.g., credit card debt and hospital bills). It will not allow you to eliminate your secured debt (e.g., mortgages and car loans). If your home is being foreclosed upon, a Chapter 7 will only delay that process for a few months. This may be beneficial as it delays any foreclosure sale, allows you to stay in your home for the time being, will give you time to work on a loan modification, or will give you time to change your mind and file a Chapter 13.

A Chapter 13 bankruptcy is a “catch-up” plan. A Chapter 13 bankruptcy will allow you to catch up on missed mortgage payments over a period of three (3) to five (5) years. During this time, you will be allowed to stay in your home as filing a Chapter 13 will stop any pending foreclosures. As long as you are able to make your mortgage payment and your catch up payment, you will be able to keep your home. In most cases, you will not have to pay any money to unsecured creditors. Once your plan is completed (after three to five years), you will be all caught up on your mortgage payments and your unsecured debt will be eliminated.

Will filing a bankruptcy stop my foreclosure sale?

Yes. Filing a bankruptcy will stop a foreclosure sale by “operation of law” as soon as the bankruptcy is filed.

What can I do if I am behind on my mortgage payments and the mortgage holder has started to foreclose on my house?

Filing for bankruptcy may be a good option for you. Specifically, by filing a Chapter 13 Bankruptcy, you will automatically stop any foreclosure sale on your home. The same day the Chapter 13 petition is electronically filed by our office with the Federal Court, an “automatic stay” or injunction is ordered by the Court. This means the foreclosure proceedings are stopped that same day. You will then be able to catch up on these missed mortgage payments over three (3) to five (5) years while still staying in your home.

Do I have to pay my second mortgage on my home?

It depends. Many of our clients qualify for what is called a “lien strip.” If your home is worth less than you owe on your first mortgage, then you may “strip off” your second mortgage. For example, if your home is worth $300,000 and you owe $350,000 on your first mortgage, you can strip off your second mortgage, no matter what you owe on it. This generally means that you can eliminate your second mortgage and you will not have to pay it. We have been successful in 90 percent of lien strip motions we have filed on behalf of our clients to get rid of their second mortgages.

How will a bankruptcy affect my credit score? How long will a bankruptcy be on my credit?

A Chapter 7 will generally be on your credit report for 10 years and will initially reduce a good credit score by about 200 points. A Chapter 13 will generally be on your credit report for 7 years after you finish your plan in three (3) to five (5) years. What is important to know is that there are ways to rebuild your credit score after a bankruptcy.

Can I still keep my car even though I am filing for bankruptcy?

Yes, as long as you keep making payments on the car. If you file a Chapter 13, you have had the car longer than 2.5 years and it is worth less than you owe on it, your monthly payments may be reduced (sometimes significantly).

Can I obtain a loan modification while I am in bankruptcy?

Yes. Our office will assure your lender that the Bankruptcy Court will approve any loan modification and, once you have the loan modification, our office will obtain a court order approving it.

I filed for bankruptcy before. Can I file another bankruptcy?

If you filed a Chapter 7 before and received a discharge, you must wait eight (8) years before being eligible for another Chapter 7 discharge. If you filed a Chapter 7 before and received a discharge, you must wait four (4) years before being eligible for a Chapter 13 discharge. If you filed a Chapter 13 before and received a discharge, you must wait six (6) years before being eligible for a Chapter 7 discharge.