FAQs

I still owe money on my car.  I heard that I can’t keep my car if I file bankruptcy.  Is that true?

No, that is not true.  A Chapter 13 bankruptcy case can protect you from repossession and excuse you from catching up on past-due payments.  The vehicle loan is paid through a Chapter 13 plan over up to five years, and usually the plan can reduce the monthly payments due for the loan.

Learn more about Cars & Vehicles.

I owe income taxes, but I guess I can’t wipe out debts I owe to the government.  Is that true?

No, sometimes you can wipe out taxes, such as older taxes and some tax penalties.  Newer taxes that can’t actually be wiped out can still be put in a Chapter 13 plan that stops the Internal Revenue Service and state Franchise Tax Board from garnishing your wages, provides for their repayment, and often stops interest and penalties from accruing on them.

Learn more about Discharging Taxes in Bankruptcy.

My wages are being garnished by a credit card company that sued me.  Is it too late to file bankruptcy and stop this garnishment?

No, it is not too late.  If you file a bankruptcy you can stop a garnishment even if it has already started.  Sometimes, after you file bankruptcy you can get a refund of some of the money that was recently garnished.

Do I need to spend all my retirement funds and other savings before I can file bankruptcy?

No, you do not.  Most people do not want to file bankruptcy and we can understand that.  They try everything possible to avoid filing bankruptcy even though they cannot afford to pay their monthly bills.  They sell their stock, withdraw money or borrow against their retirement plans, they borrow from friends or relatives, and get second or third jobs.  We wish that people would come and see us before they used up all their retirement money and other assets, because we can often protect those assets even if the person files bankruptcy.

I filed bankruptcy a few years ago, but now I have more bills I can’t afford to pay.  I heard that you can only file bankruptcy one time in your life.  Is that true?

No, it is not true.  There are some complicated restrictions on filing another bankruptcy case after a previous case, though.  The rules are so confusing that only an experienced bankruptcy attorney should explain this to you.

Should I start a debt management or credit counseling plan instead of filing a bankruptcy?

Many people look at debt management or credit counseling plans for assistance when they can’t afford to pay their bills.  Unfortunately, we see many people who have paid these companies expensive up-front fees and high monthly payments for many months.  However, at some point they are sued by a creditor they thought was being paid by the debt management company.  Then they find out that most of the money they paid to the debt management company was kept by the company and did not get paid to the creditors.  So, after paying many thousands of wasted dollars, they come to see us and they finally receive the relief they needed all along – bankruptcy relief.

Can I afford an attorney for my bankruptcy?

When people finally realize they have to consider filing bankruptcy, they believe that they cannot afford to hire an attorney to help them.  They think their only option is hiring a non-attorney bankruptcy petition preparer, also called a paralegal.  Those ideas are wrong, however.

What does it cost to meet with an attorney for the first time?

We do not charge anything for an initial appointment to consider filing a Chapter 7 or 13 case.  We usually take more than an hour to go through the details of your own finances.  We do not spend the time talking about bankruptcy in general.  We ask you many questions about your debts and assets.  Then we “crunch” numbers and show you what options are open to you.  You can decide what to do then.  If you do not want to file a bankruptcy with our firm, that is okay with us – we will wish you well.  We always encourage people to take our calculations home and think about them.  We want our clients to feel sure that they want to file a bankruptcy before we prepare their papers.

Learn more about your free consultation.

Who will help me with my case?

All three of our attorneys (Jim Gold, Norma Hammes, and Jessica Begeman) work together on all of our cases. Depending on our schedules, Jessica and Norma usually meet with clients to analyze their finances and propose solutions.  Jim and Jessica usually represent our clients in court hearings and at meetings with bankruptcy trustees.  Our secretaries and legal assistant are very knowledgeable about our procedures and will be more than happy to help you with many questions.

Learn more about Gold & Hammes.

What about the cost of actually filing a bankruptcy case?

The court charges a filing fee for every bankruptcy case ($281 for Chapter 13, or $306 for Chapter 7) and there is a fee for the court-required credit counseling certificate (usually about $49).  Before the end of the case, a debtor education session and fee (usually about $19) is charged. Many of our clients choose to file Chapter 13 because they can still wipe out all the debt they could wipe out in a Chapter 7, but it also protects their car and home.  The attorneys fees we charge in a Chapter 13 are based upon a schedule set up by the bankruptcy court.  Most of the Chapter 13 attorneys fees do not have to be paid “up front” prior to filing the case, but are paid as a part of monthly payments that include, for example, a vehicle loan or income taxes.  We will calculate and explain this for you.

If you choose to file a Chapter 7 case, it will be necessary for you to pay the attorneys fees, in addition to the court filing fee and credit counseling certificate, before the case is filed.  The attorneys’ fees we charge are based on the complications of your individual case.  However, we do everything possible to make the case affordable to everyone who comes to see us.

I heard that the federal government has a program to help people modify their home loans?

In 2009, the Treasury Department started the Home Affordable Modification Program (HAMP).  Unfortunately, although many lenders participate in this program, not very many homeowners have received permanent HAMP modifications.

In early 2012, the federal government and state Attorneys General settled a court case with Ally Financial/GMAC Mortgage, Bank of America, Citibank, JPMorgan Chase, and Wells Fargo, which requires those mortgage servicers to offer loan modifications to borrowers nationwide.  A high percentage of these modifications are supposed to be given to California homeowners.  Fannie Mae and Freddie Mac loans, even if serviced by one of the settlement banks, are not included in the new mortgage modification program.

Learn more about loan modifications & other housing programs.

If I can’t work out a loan modification, I’ve heard about a “short sale” – should I try to do that?

A short sale is a sale for a price that is less than the amount of your mortgages.  Your lenders will have to agree to accept less than the amount you actually owe them.  Unfortunately, in some cases lenders can require you to agree to repay the waived portion of the loan later. In most cases, a short sale has no advantages over allowing the property to be foreclosed under the normal process.  However, each case is different, and you should speak with an experienced bankruptcy attorney to find out how they would affect you.

Will I owe income taxes if I do a short sale?

If you are successful in getting a short sale approved by the lenders, the reduction in their demand amounts could be taxable income to you (unless you are insolvent before the short sale goes through).  Your lender may send you an IRS 1099-C or 1099-A form. If the mortgage is included in a bankruptcy, however, the reduced amount will not be taxable income.  The rules about this are complicated and you should talk to a bankruptcy and a tax attorney or CPA about this.

Learn more about 1099-C & 1099-A debts.

How can a bankruptcy help with my foreclosure?

If you want to keep your house and you can afford to make your future house payments, a Chapter 13 case may be able to cure the past-due payments over five years. If you can’t afford to make your house payments, a Chapter 13, which will often wipe out your credit card (and other) debt, may still be able to slow the foreclosure.

In general, if a borrower files bankruptcy earlier in the foreclosure process, it is easier to keep bankruptcy protection of the property longer.  However, when a Notice of Trustee’s Sale is recorded your situation has become a crisis and you should immediately see an experienced bankruptcy attorney (make sure to bring all of your papers regarding the foreclosure!).

 Learn more about the foreclosure process.

I heard that some mortgages can be wiped out in bankruptcy.  Is that true?

In some cases, under current law entirely unsecured junior (e.g., second and third) mortgages may be able to be wiped out by the Bankruptcy Court, but only in a Chapter 13 case. An attorney who is experienced in filing Chapter 13 cases should be able to explain this to you.

Learn more about wiping out wholly unsecured junior mortgages.