Filing for Chapter 7 bankruptcy is a way to get a fresh start by eliminating many types of debts.
Most people who file for Chapter 7 bankruptcy will have the majority of the debt they had at the date of filing their petition forgiven. This is called “pre-petition” debt.
Any debts you incur after you file your bankruptcy petition are not forgiven at the conclusion of the bankruptcy process. These are called “post-petition debts”.
It seems like it would be easy to determine which debts you took on before and after you filed for relief from your debt, but certain types of common bills can be tricky to categorize under local bankruptcy rules.
There are a few exceptions, but generally, you can wipe out qualifying debts that were incurred before your bankruptcy filing date.
It’s usually easy to identify debts from before your bankruptcy filing but a few are a little trickier.
- Using a credit card you had before your bankruptcy petition was filed is a pre-petition debt
- Utility and phone bills from before the date of your bankruptcy filing are pre-petition debts
- Utility and phone bills from after the filing date are considered post-petition debts and they are not forgiven by your bankruptcy discharge
- Loans taken out after filing are post-petition debts and will not be covered by your bankruptcy petition
- HOA or COA dues and assessments are dischargeable if they were due before filing your bankruptcy petition.
- You remain personally liable for any HOA or COA dues or assessments that become due after filing the petition. This liability remains even if you give up your house, condominium, or townhome as part of your case as long as you remain on the title as the owner.
- Any lease payments due under a lease you signed before filing Chapter 7 bankruptcy is considered a pre-petition debt that can be discharged in bankruptcy.
- If you keep making lease payments without entering into a new agreement, you might not be responsible for any payments you fail to make after your discharge.
What Happens to a Car Loan or Mortgage in Chapter 7 Bankruptcy?
Many debts require monthly payments. This is called an installment loan agreement. You have to keep making payments during your bankruptcy if you want to keep the property once you receive your discharge.
Your car payment and house payment are secured by the property itself. If you don’t make the required payments, the lender can take the property.
Your bankruptcy discharges your liability to pay but it doesn’t eliminate the lien the creditor has against your home or car. This lien allows the creditor the right to reclaim the property if your payments fall behind again after receiving your discharge.
If you want to keep your car or home, you must keep your payments current after your bankruptcy. It should be easier for you to do this with many of your other obligations forgiven as part of your bankruptcy case.
Reaffirming Debt After Chapter 7 Bankruptcy
Occasionally, after you file Chapter 7 bankruptcy, your creditor will want you to reaffirm a debt.
Reaffirming a debt is entering into a new contract with the creditor.
It’s common to enter into reaffirmation agreements when you have financed a car you would like to keep after your bankruptcy petition is resolved.
Since this is a new agreement after your bankruptcy case is complete, any reaffirmed debt is considered post-petition debt.
Your bankruptcy discharge doesn’t forgive your obligation to pay under this new agreement. You need to make your payments as agreed, otherwise the creditor can sue you for the money you owe, and they can come and take the property to satisfy the new debt.
The Benefits of Using a Riverside Bankruptcy Attorney
There are many benefits to working with a local Riverside bankruptcy attorney.
Personalized Attention to Your Case
With so many moving parts, bankruptcy is a complicated process. You don’t want to go it alone. And you don’t want to get lost in the shuffle of a large Los Angeles firm.
Big city firms have hundreds of lawyers and support staff trying to juggle thousands of cases. This means that you can get passed around to a lot of people who don’t know you or the details of your case.
Janus Law is a boutique law firm. Our attorneys know the details of all the cases they handle. You never get passed off to someone who is trying to play catch up when you finally manage to get them on the phone.
Familiarity With Local Trustees
A trustee is appointed to each Chapter 7 bankruptcy case. Your trustee is assigned based on the division in which your case is filed. We have a working relationship with many trustees from the Central District of California – Riverside Division panel. In fact, Larry D. Simons is a Chapter 7 trustee assigned to the Riverside division.
Occasionally, disputes arise during the bankruptcy process. Your lawyers may need to negotiate – or even file litigation – in order to settle these matters. If your lawyer has a previous relationship with your trustee, it could help to resolve disputes more quickly.
Assistance with Your Financial Future
Our work is not strictly limited to resolving your Chapter 7 bankruptcy. At the Law Offices of Larry Simons, we believe in setting our clients up for future financial success.
We will review your entire financial situation and make recommendations that can help you going forward. We will make suggestions that can keep you from falling back into debt.
A Firm You Can Trust, Right Here in Riverside
If you believe Chapter 7 bankruptcy could be right for your financial situation, contact Janus Law right now. We have offices in Mission Hills and Riverside.
There is no charge to speak to a Certified Bankruptcy Specialist about your situation and you’ll have a better understanding of what can be done to become debt-free.
Don’t wait another minute to take control of your money and eliminate debt.
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