FAQs Archive - Page 2 of 3 - Square One Legal

Q: Do I have to include my spouse when filing for bankruptcy?

No. And your filing will not affect your spouse's credit or in any other way. However, if you are married and not separated, you are required to disclose your spouse's contributions to the household income (without disclosing your spouse's personal information). Married people may file a joint bankruptcy, usually for the exact cost of individual filing. And, it often makes sense to do that if your spouse has a lot of debt.

Q: Can I sell my stuff or pay off any loans before filing for bankruptcy?

While it may seem like a good idea to sell or transfer your assets to protect them or pay off your debt to family or friends before filing for bankruptcy, it's best not to do it. There are two reasons for that. First, the Trustee handling your case may be able to recover gifts and transfers within two years before the bankruptcy filing date and repayment of loans within one year before the bankruptcy filing date, to family and friends. Second, such actions may raise a red flag that will cause parties of interest to take a closer look into your case resulting in a lengthy and sometimes more expensive proceeding, or even worse, by uncovering something you are not aware of that may lead to denial of discharge. The bottom line is this will not help your case, but don’t despair! There can be options to make the proceedings easier, and it may be possible to take similar actions with safe legal backing. If you’re considering filing for bankruptcy, make sure to consult with a bankruptcy attorney to guide you through how to make actions that will protect you and your case. If you’re uncertain, our Honolulu team is here to help .

Q: Will filing for bankruptcy prevent my car or other belongings from being repossessed?

In most instances, the answer is yes. Both Chapter 7 and Chapter 13 have options to protect your cars, real property, and other assets. Talking to a bankruptcy attorney is the best way to determine which option is best for you.

Q: What is the difference between Chapter 7 Bankruptcy and Chapter 13 Bankruptcy? Which one should I file for?

The right option depends on your situation. How much debt you have, whether you qualify for Chapter 7, your disposable household income, whether you need to cure (repay) mortgage or car payment arrears, whether you owe taxes, and whether you have non-exempt assets you want to keep. We can help you find the best fit for your circumstances, but here is a good starting point: Chapter 7 is known as a “liquidation” bankruptcy and Chapter 13 is a repayment or reorganization plan. Both usually discharge unsecured regular debt such as credit cards and personal loans when the case is completed, but both have unique benefits. Chapter 13 has functions that can ‘cure’ (repay) mortgage and Homeowners Association ‘arrears’ (past due payments), which can avoid or stop foreclosure. It can cure car payment arrears to stop repossessions, and in certain situations can reduce the car loan principal balance owed and/or interest rate and repay taxes or domestic support obligations (child support and/or alimony). Chapter 7 is a quicker and cheaper process and usually preferred by people who qualify (under a certain household income threshold). It doesn’t cover all functions available in Chapter 13 though and may not be the best fit for your needs. If you are behind on your mortgage or car payments, facing foreclosure, owe taxes or domestic support obligations (child support and/or alimony), you should contact a Honolulu bankruptcy attorney for a free consultation to check your circumstances and help you through this process.