Bankruptcy FAQ


Does Bankruptcy Affect My Credit?

Bankruptcy will have an affect on your credit but for many people it is a positive one. Your credit report will be flagged as having a bankruptcy which will appear for a number of years.  However, defaulted, late, or collection accounts are likely destroying your credit currently. When bankruptcy discharges those accounts your credit is no longer harmed by them and can start to improve.


How Long Does a Bankruptcy Take?

A Chapter 7 is generally a 4 month process. A Chapter 13 repayment plan will be for either 3 or 5 years as long as payments continue to be made.


What Happens to My Personal Property?

In Bankruptcy the code has set up a series of exemptions to protect your personal property.  These exemptions are designed to allow you to continue to have a normal standard of living by retaining your property up to a certain monetary value. This is done so that people are not stripped of everything they have so they can attempt to get back on their feet.


What Should I Bring to a Consultation?

To identify your eligibility for bankruptcy we will have to review your income, expenses, assets, and debt. The best things to bring to a consultation are your recent pay-stubs, tax returns, and mortgage statements.


Does Bankruptcy Stop Collections and Foreclosures?

Bankruptcy protects consumers and debtors with the automatic stay of bankruptcy.  The automatic stay of bankruptcy stops any foreclosure or collection actions against you  during the bankruptcy but the stay can be overcome by creditors and collectors if the bankruptcy does not resolve the defaulted account.


What is the Threshold Income for Chapter 7?

The income standard for a Chapter 7 is determined by the median family income for your state and family size.  To find this information see the U.S. Trustee's Office's information sheet on median income.


Short Sales FAQ


Will I Be Liable for Any Deficiency On the Mortgage?

A short sale approval usually comes with language that discharges you from any deficiency on the mortgage. Without this language it will be a discussion between you and your attorney if the deal should be expected. There can also be tax implications with debt forgiveness which should be discussed with your attorney and accountant.


Will I Get Any Money Out of the Sale?

Many short sale approvals provide for a relocation assistance money  if the property is still owner occupied. However, the amount is largely dependent on the mortgage holder's policy and the amount of the offer compared to the value of the property. Any funds made available are provided at the real estate closing when you hand over the property. No money is made available prior to the completion of the sale.


When Do I Have to Move?

A short sale has all of the same steps as a traditional real estate transaction but includes additional short sale requirements. Since it is similar to a traditional sale you still have to comply with any agreements made with the buyer, which typically include turning over the property in a "broom swept" condition free of all personal property.  To complete the short sale you as the seller will have to move prior to the completion of the sale and have the property empty of all personal property.


How Long Does a Short Sale Take?

A typical short sale usually takes between 3 to 7 months. On Occasion a short sale can take longer in the event there are extra steps that need to be taken such as dealing with other liens against the property.


Can a Short Sale Stop an Auction?

In most circumstances a short sale application with a mortgage company will not convince them to stop a foreclosure auction. Most mortgage servicing companies have in place the "37 day rule" where they will not review any mortgage relief application if there is a foreclosure auction pending within the next 37 days.