Disclaimer: the information on this website is of a general nature, and does not constitute legal advice from a San Mateo Bankruptcy Lawyer.  The facts of each situation are unique, and the San Mateo Bankruptcy Attorney must discuss those facts with you before any advice can be given.

Here are some possible answers to a simple question:

The Automatic Stay

If you file for bankruptcy protection, you automatically get a court order known as the automatic stay.  The automatic stay order automatically stops (or "stays") most collection efforts by most creditors, including foreclosure, automobile repossession, lawsuits, and wage garnishment.

The Order of Discharge

The goal of filing for bankruptcy protection is to receive an order of discharge, which is a court order releasing you from all of your dischargeable debts, and ordering your creditors not to attempt to collect their debts from you.

Discharge Your Income Taxes

You may have heard the general rule that taxes are not dischargeable in bankruptcy.  If you can satisfy all 5 of the following rules, however, then your income tax debt is dischargeable in Chapter 7 and Chapter 13: (1) the most recent due date for filing the tax return for the tax year in question is over 3 years old; (2) you filed the tax return for the specific year in question more than 2 years ago; (3) the assessment of the tax in question is over 240 days old; (4) your tax return was not fraudulent; and (5) you must not have been guilty of a willful attempt to defeat or evade the tax.

Make Your Home Affordable

In a Chapter 13 case, you may be able to make your home affordable if you have 2 (or more) loans against your house.  In a process which some attorneys refer to as "lien stripping," you may be able to discharge the second loan if the value of your home is only equal to or less than the amount of debt you owe for the first mortgage.  For example, imagine that the value of your home is about $400,000, while you owe $500,000 for the first mortgage and $200,000 for the second.  In a Chapter 13 case, you can discharge the second loan as a wholly unsecured debt.  You would remain responsible, however, for the first mortgage.  If you have fallen behind on your first mortgage payments, you can use a Chapter 13 plan to cure the mortgage arrears over a period of 36 months to 60 months.

Make Your Car Affordable

In a Chapter 13 case, if (1) you still have a loan against your car; (2) the value of your car is less then the amount of debt you owe for the car loan; and (3) the car loan is more than 910 days old; then you can use a Chapter 13 reorganization plan to keep your car while you pay for the value of the car.  For example, imagine that your car is worth $5,000; you still owe $10,000 for the car loan; and you signed for the car loan over 910 days ago.  In a Chapter 13 plan, you can keep your car while you pay $5,000 over a period of 36 months to 60 months.  The remaining unpaid balance of the car loan will be discharged when you complete your Chapter 13 plan.

Chapter 7

A Chapter 7 bankruptcy case is a case under federal law in which the debtor seeks debt relief under Chapter 7 of the Bankruptcy Code.  The person who files a Chapter 7 case is called a debtor.  The debtor must turn his or her non-exempt property (if any exists) over to a trustee, who then converts the property to cash and pays the debtor's creditors.  If the debtor does not have any non-exempt assets, then the debtor's case will be classified as a "no asset" case, and the debtor will not have to turn over any of his or her property.  [Most Chapter 7 cases are "no asset" cases, which means that most Chapter 7 debtors do not lose their property when they file bankruptcy.]  The debtor will then receive a Chapter 7 discharge.

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Chapter 13

Chapter 13 is the chapter of the Bankruptcy Code which allows a person to repay all or a portion of his or her debts under the protection and supervision of the bankruptcy court.  The debtor must submit a repayment plan, and the plan must be 36 months to 60 months long.  The plan must be approved by the court to become effective.  If the court approves the debtor's plan, most creditors will be prohibited from collecting their claims from the debtor.    A court-approved plan can force unsecured creditors to accept the payment of only a portion of their claims.  The debtor must make regular payments to the Chapter 13 trustee, who collects the money paid by the debtor and disburses the money to creditors in the manner called for in the plan.  Upon completion of the payments called for in the plan, the debtor is released from liability for the remainder of his or her dischargeable debts.

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Do you have questions about our Bay Area Bankruptcy services?

Contact us at (650) 378-2421 or via our contact form.