Articles Posted in Bankruptcy FAQ

Bankruptcy FAQ – there are so many frequently asked questions about filing bankruptcy. Should I file? When should I file? What will it do to me? Will I lose everything? Can I keep my car? Can I keep my home? Will it stop a garnishment? Will it stop a foreclosure? If I’m married, do we both have to file? Will it affect my spouse? I’m behind on child support, can it help me with that? There are two main kinds of bankruptcy that an individual would choose from and they are Chapter 7 or Chapter 13. Both types have pros and cons. And both types definitely have a lot of false information spread out there about them. That’s where bankruptcy FAQ pulled together and in one place for someone to search through the answers helps so much to clarify fact from fiction. The laws in this area have changed over the years. The stigma of filing should not be there but because of the efforts of credit card companies and many other creditors spreading rumor and judgment, it sometimes still is there. Bankruptcy laws were created to protect you. To keep you and your family functioning during and thru hard times. Everyone experiences rough patches to no fault of their own. Death of a spouse, divorce, loss of a job, medical illness, accident, etc – so many things can impact our finances negatively that we had little to no control over. Bankruptcy allows you to regain control of things and get going back in a stable financial direction.

What is a Bankruptcy Estate?

Published on: January 13, 2025 | Rachel Coxwell

A bankruptcy estate is the entirety of assets or property rights that can be administered by the court in a bankruptcy case. The estate is created once a bankruptcy case is filed, and it includes all interests of the debtor in any kind of property.

Essentially this means that when a bankruptcy is filed, a debtor must list all the property they own or have an interest in. They must list assets such as real estate, vehicles, household goods, financial accounts, inheritances, businesses, potential active lawsuits they have against someone else, royalties, income, settlements, insurance funds, retirement accounts, tax refunds, and much more.

A debtor must list all their assets or potential assets in a bankruptcy case to ensure the court is fully aware of all property they own or have an interest in. However, just because the debtor must list all these types of property, does not mean they lose their property.

Bankruptcy has what are called exemptions that are governed by state laws. Exemption is what we refer to as the protections for certain property that a debtor can keep and retain through a Chapter 7. Once a debtor lists all their assets in their paperwork, they get to abide by the laws of the state where they filed and protect certain property from the bankruptcy court and trustee. The exemptions allowed in each state may determine what type of bankruptcy a debtor may file if they want to keep.

You may have heard some Chapter 7 cases referred to as a “no-asset case.” A no-asset case does not mean that a debtor owned or had an interest in nothing. It means that the debtor listed all their assets and interests in their paperwork, but state law helped exempt / protect those assets from being taken by the trustee and used to pay unsecured creditors. In an “asset” Chapter 7, the debtor would have non-exempted / unprotected property that the trustee can take and use to pay towards unsecured creditors that would generally be eliminated (or discharged) by the bankruptcy case.

For example, in Mississippi, your homestead equity, or equity of the home you physically reside in, is protected up to $75,000.00. If a debtor owned a single-family home, that was worth $100,000.00 and they had a mortgage totaling only $25,000.00, they would have equity of $75,000.00 and it would be exempted, and the Trustee could not take it. However, Continue Reading ›

Federal Rental Assistance Information

Published on: September 3, 2021 | Frank Coxwell

There are many state and local programs to help if you are having issues with rent, utilities, or other housing costs for renters and programs to help assist if you are a landlord. You can visit this website to find programs in your state:

https://www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/renter-protections/find-help-with-rent-and-utilities/?utm_source=newsletter&utm_medium=email&utm_campaign=ERAPscams

To apply you must first find a program in your state or local area – each program has their own policies and procedures for their local communities. Emergency rental assistance could help cover rent, utilities, home energy costs, and other utilities. It could potentially even help cover reasonable late fees, internet, and moving expenses or security deposits for families who have to move. Each program is centered to their local area.

10 Things you should not do before filing bankruptcy

Published on: May 8, 2018 | Frank Coxwell

I have listed some of the mistakes people make right before they file bankruptcy. People do these things because of mistaken information they got from someone else. Talk with your bankruptcy lawyer and ask questions. Your lawyer can protect you and your property as long as you tell them everything up front. Disclose all financial information to your attorney and prevent future surprises. You don’t want to end up losing the things you were trying to protect and save. If you have questions about the reasons why we don’t want you to do these things right before you file bankruptcy, call us. Once you hear the explanation, everything will make sense . Some of these thing you can do, you just need to wait for the right time.

Don’t pay money to family or friends and don’t pay back loans to family members or friends.
Don’t file if you are about to receive an inheritance, personal injury settlement, or large sum of money.

Should you file a Chapter 7 or a Chapter 13?

Published on: May 7, 2018 | Frank Coxwell

A chapter 13 bankruptcy can do everything a chapter 7 can do and more. A chapter 13 has extra tools for special debts. A chapter 13 takes 3-5 years to complete and costs more than a Chapter 7 in the long run. Which one you should file depends on what you are trying to hold on to and save.

A chapter 13 has special powers which allow you to deal with foreclosure, tax debts, child support, and student loans better. You can catch up the payments on a home or car in a chapter 13 over 3, 4, or 5 years. A chapter 7 only lasts about 4 to 5 months from start to finish. It will only delay a foreclosure and put off student loan and tax problems. Chapter 7 will not help catch up the back notes on a mortgage. In a chapter 13 you can catch up the back notes over a longer period of time, lower the notes and the interest rate on vehicles and loans.

When to use a Chapter 13

Why you should breakup with your Bank before filing bankruptcy

Published on: May 5, 2018 | Frank Coxwell

No matter how much you love your bank, there are a lot of good reasons to leave them if you are going to file bankruptcy. If you don’t want to leave them, you might want to keep your money somewhere else temporarily.

Reason #1 Frozen Bank Accounts

Several nationwide banks, like Wells Fargo, Bank of America, and Chase, freeze bank accounts with significant balances when they get a bankruptcy notice. This would apply to all bank accounts with your Social Security number attached. It doesn’t matter if you need the money to pay bills, or if the money is exempt, the account is frozen and you can’t get your money. Any money going into the account will be frozen. The bank will claim they are helping the Chapter 7 trustee. The account can be released, but not always quickly or easily.

Avoid having too much or too little income tax withheld.

Published on: September 5, 2017 | Frank Coxwell

If you get an income tax refund, money is being taken from your paycheck that you could use right now. If you get an income tax refund, you are letting the government hold and use your money for a year without paying you interest. If you get an income tax refund, you are letting the government hold money that can be seized by other government agencies and some creditors.

Check your tax withholding so you are even at the end of the year. You don’t want to get a refund and you don’t want to owe additional taxes.

Review the amount of taxes withheld being withheld from your pay check. Everyone’s situation changes. A yearly review can help you avoid having too much or too little federal income tax taken from your paychecks. You want to have the correct amount taken out so you can be at a zero balance at the end of the year. The ideal situation is, no taxes owed and no refund due.

3 Reasons To Move Your Checking Account Before Filing Bankruptcy

Published on: June 19, 2017 | Frank Coxwell

Banks do unexpected things when one of their customers files bankruptcy. Nothing they do is to help you. Even if you think your bank is the greatest, there may be reasons to change banks before you file your bankruptcy case.

They May Take the Money in Your Account.

Your bank owes you the money that is in your account. But if you owe them money on a personal loan or a car loan, they have the right to take the money in your account to pay themselves what you owe them. This is called a set off, or an offset. While your bank can do this at any time, based upon the loan documents, the notice of bankruptcy is what will set this off. All of a sudden, you can’t get to the money in your account. Your money is the bank’s money.

I am drowning in medical bills. Help?

Published on: November 15, 2016 | Frank Coxwell

If you are overwhelmed with medical expenses, you are not alone. I read an article recently where it stated that medical bills and accounts now represent over 50% of debt classified as being in collections status. That’s huge! According to the Federal Reserve, the government agency that keeps up with these things about 1 in 6 credit reports have medical debt collection accounts listed. About 40% of these credit reports were also experiencing a lower credit score and the majority of these debts were listed as still unpaid.

There are two major issues. One – people are struggling with the amount of medical debt that they are in – there isn’t a payment plan out there that would be feasible for them to attempt. And two – people are struggling with somewhat manageable medical debt but the medical collections community seems to have absolutely NO desire to work with them on any type of reasonable payment plan.

I met with a couple the other day that make good money and had health insurance. The husband recently had to undergo surgery and the bills were steadily coming in from the doctors, labs, and the hospital – but overall it wasn’t too bad. The problem is that they all wanted their money immediately. Pay or be sent to collections in 30 days. Pay the debt collector or be sued. Be sued and be garnished or have your bank account frozen.

Can I file bankruptcy if I do not have a Social Security Number?

Published on: October 6, 2015 | Frank Coxwell

Yes. You can file bankruptcy in the US if you do not have a Social Security Number (SSN).

There is no requirement that you be a US citizen to file for bankruptcy in the US.
There is no requirement that someone be a US resident to file for bankruptcy in the US.
There is no requirement that someone be in the US legally to file for bankruptcy in the US.
There is no requirement that someone live in the US to file for bankruptcy in the US.
There is no requirement that someone have a SSN to file for bankruptcy in the US.

11 USC 109 states that a person “that resides or has a domicile, place of business, or property in the United States, or a municipality, may be a debtor under this title.” Debtor meaning a petitioner, bankruptcy filer, person who wants to file bankruptcy.

If you do not have a SSN, you may need to sign a statement to that effect or you could request an ITIN (Individual Taxpayer Identification Number) from the IRS . These are provided by the IRS to those who cannot obtain a SSN. Although you may file a bankruptcy without a SSN, you must provide acceptable proof of identity at your bankruptcy 341 meeting. Continue Reading ›

Is My Personal Information Protected in Court Papers During A Bankruptcy?

Published on: September 13, 2015 | Frank Coxwell

The E-Government Act of 2002, contains laws governing privacy of information in court files in order to protect personal, sensitive, and private data from being available to the public. Federal courts had to immediately update their rules and practices to be compliant with this Act. These rules state that personal identifying information is prohibited and local rules also contain cautions and restrictions on the disclosure of other information deemed sensitive.

Specifically listed as examples of personal identifying information were:

Social Security Numbers;
Financial Account numbers;
and Birth Dates.

The following categories of information were deemed sensitive:

Personal identifying numbers, such as driver license numbers;
Medical records, treatments, and diagnoses;
Employment histories;
Personal financial information;
Proprietary or trade secret information.

The restrictions placed on personal identifying information are also applicable to sensitive information. Federal Rule of Civil Procedure 5.2 and Federal Rule of Bankruptcy Procedure 9037 also contain sections on redacting personal data before filing it in court papers.

An individual’s Social Security Number and other private information is of no use and not a concern of the general public. Interfering with the private affairs of a individual by disclosing this sensitive and personal information intrudes upon their right to privacy and creates a risk of identity theft. Continue Reading ›