Bankruptcy Law FAQs

Answers to some of your questions

What does bankruptcy do to my credit?

Your bankruptcy can be reported on your credit report for 10 years from the filing of the case. If you file a bankruptcy and voluntarily dismiss it before the discharge, the credit reporting agency must report the dismissal as well as the bankruptcy filing.

Assuming you have income, you should be more credit worthy after a bankruptcy than you were before, since your old debts no longer have a claim on your future income.

After the discharge, you are entitled under federal law to have the balance of each discharged debt reported as "O". The history of delinquencies can be reported, but the balance must be zero. If it is not so reported, dispute the debt.

Negative history on your credit report is just that: history. It does not doom you to perpetual credit rejection. It does challenge you to strengthen your financial present by saving and using credit carefully.

Do I need an attorney to file bankruptcy?

No, however the legal system is a maze of very complex laws, rules, and regulations. It is very easy to make mistakes. In addition, banks and credit card companies hire teams of aggressive lawyers to fight bankruptcy cases. An attorney representing you is in a better position to negotiate on your behalf.

Will I be able to finance a new car after bankruptcy?

If your income qualifies you, you can potentially be able to finance a new car. However, you will probably be charged a higher rate of interest.

How much does it cost?

There is a court filing fee of $299 that must be paid to the Federal Court. Attorney fees vary, depending on what your case requires LYMAN AND POTENTE, APLC to do. We have payment plans available for most cases, and we will work with you to come up with a fee and a payment plan that you will be comfortable with.

Would a debt consolidation company be better?

It really depends on your situation – and on the consolidation company. Frequently, debt consolidation plans are phony deals that enrich the company at your expense. At the end of the day, your credit will be just as bad as or worse than if you had filed bankruptcy and you may still be in debt. There is only one way to have good credit and keep good credit: you must always pay according to the original terms and never owe more than you can afford to pay back.

Can I negotiate with my creditors?

Yes, but your creditors do not make it easy. Most creditors will not negotiate with you unless the account is already very delinquent. They usually want the settlement money "up front"...no payment plans; and after you pay out all the money, it does not restore your credit.

Can a paralegal or a legal document service represent me?

In California, legal document preparers and paralegals cannot represent you. They cannot even give you legal advice. Further, they cannot represent you in court. Only an attorney can do those things for you. People go to them because they feel that it is cheaper than hiring a lawyer. Bankruptcy cases are very complicated and it takes the full attention of an experienced attorney to get the very best outcome for you.

Isn't bankruptcy immoral, and just taking the easy way out?

Bankruptcy is choice that people would rather avoid if they could. Bankruptcy is the law of this land, not a gimmick or loophole. Bankruptcy is a law enacted by the U.S. Congress, called Title 11, U.S. Code, (Bankruptcy Code), pursuant to the U.S. Constitution, (Article 1, Section 8).

Bankruptcy is debt-forgiveness or reorganization for people or large companies that can not afford to pay their debts. Think of the alternatives. Forced labor? Imprisonment? These options are immoral and inefficient for the US economy. Bankruptcy is the law provided to the American People to deal with situations where a person finds that they owe more money than they can afford to repay their debts.