Frequently Asked Questions

Frequently Asked Questions

1. Will Bankruptcy Ruin my Ability to Get Credit?

This is the question I have encountered most often since I began practicing law. And it is a question for good reason. Every person hopes to have a better financial future after filing for bankruptcy relief and being able to get credit is important to establishing this.

The truth is that most people benefit substantially by filing for bankruptcy. Every month that payments are not made to a creditor results in these missed payment being reported on a person’s credit report. This is how your credit report works. The credit reporting agency keeps track of your payment habits so that people who loan you money know whether you are a good risk or a bad risk. Missing payments means a lower credit score, and this in turn means that people are less likely to give you credit because you are considered a high risk. Paying off the debt or filing for bankruptcy is the only way to remedy the situation. Filing for bankruptcy means that on the date you file, your credit cards, medical bills and other debts are NOT able to be reported as late. Because of this, your debts cannot continue to hurt your credit score. Bankruptcy is what gives people the ability to stop paying their debts, get a fresh start and open new accounts in order to rebuild their credit. To discuss this further with an experienced bankruptcy attorney, please contact Owen Legal Services.

2. Bankruptcy is Embarassing and I Do Not Wish to File

As stated on this websites home page, I have filed over a thousand bankruptcy cases for clients over the years. It is understandable why people do not want to come to my office to discuss bankruptcy. But in most cases, they should realize they have just encountered difficult circumstances. Often my clients are good people who have encountered financial situations beyond their control, i.e. victims of a job loss or outrageous health expenses. Just because someone is having financial difficulties, does not mean they have done anything wrong. Be assured, I do not pass judgment on the people I serve. I am only hired to make the process of filing bankruptcy as efficient and painless as possible. And the sooner that a person get their finances in order, the sooner they can get back to restructuring their lives. Bankruptcy should not be considered an embarrassing event, in most cases, it is a necessity. To discuss this further with an experienced bankruptcy attorney please contact Owen Legal Services.

3. Is Bankruptcy Information a Public Record?

Technically the answer to this question is yes. However, personal bankruptcy is not a newsworthy item, and is rarely published in a local newspaper. A bankruptcy filing is traditionally listed in a Court Reporter, or it is listed on the federal court’s filing system. Most people do not subscribe to and see the Court Reporters in their local area, and only attorneys and others associated with the bankruptcy court have access to the Court’s online filing system. The general public normally does not have access to these records. To discuss this further with an experienced bankruptcy attorney please contact Owen Legal Services.

4. What Things Shouldn’t I Do Before Filing?

Do not Use Credit Cards – Using credit cards when filing for bankruptcy can be a very costly mistake. While bankruptcy rules normally do not allow a creditor to come after you if you used a credit card over ninety days before filing bankruptcy, creditors will definitely have an issue with a person that knows that they must file bankruptcy and then uses a credit card. Creditors may claim fraud if that ever happens. An individual should always stop using credit cards the moment they retain an attorney to file bankruptcy.
Do not take a loan from your 401k to pay off your debt – It is always best to not use your retirement account to pay off your debt. Taking a loan or a withdrawal from your retirement account may result in owing money to the IRS, especially if the loan or withdrawal is not repaid back into the retirement account within the required time. Owing money to the IRS would seriously impact your debt situation.
Do not pay back friends or family for any loans that they gave you – The rules written by Congress give the bankruptcy trustee (the person appointed to review your bankruptcy case) the power to undo some payments made to creditors before you filed your bankruptcy case. You are required to tell the court about any payments made to friends or family within two years before filing bankruptcy. This is because the trustee can file a lawsuit against your friend or family member in order to get a judgment from the bankruptcy court to recover this money. This may result in your friend or family member having to pay an attorney to defend themselves. It is best to avoid this problem by having your friend or family member wait to get their money back from you at a later date. If a payment has already been made, it may be better to file a Chapter 13 bankruptcy to avoid your friend and family member from being sued. Your attorney can discuss these alternatives.
Do not transfer property out of your name – Similar to the section above, it can be problematic to put an asset in a friend or family member’s name. This could result in the trustee forcing them to return the property and then taking the property from them. While the trustee may not care if you transfer a car worth $800 to your friend for $800, they will have a problem with you transferring a $10,000 motorcycle to your son for no money. The trustee will consider such a transfer as a way of avoiding the sale of the property. The trustee will undo the transfer, sell the property and give the money to your creditors. No matter what, it is always best to fully discuss all of these circumstances with an experienced attorney at Owen Legal Services.
Do not adjust your tax exemptions to have more money or more of a refund due – Sometimes people decide to change their number of dependents that they claim to increase or decrease their tax withholdings. If you claim more dependents, then less taxes are withheld and you get to keep more money. If you claim less dependents, then more taxes are withheld, and you will get a bigger refund. The problem with adjusting this amount is that if you withhold too much, then you may not receive enough money each month to pay your bills. The government will be holding that money until it’s time to file taxes. If you then file for bankruptcy before receiving your tax refund, the bankruptcy trustee may force you to turn over the tax refund to pay the creditors. On the other hand, if you withhold too little, you may have more money to live on, but may owe the IRS when you file your taxes at the end of the year. This will worsen your situation since you will owe money not only to credit card companies but also to the IRS and the State of Ohio, and these debts cannot be discharged under normal circumstances. Please discuss this decision with your bankruptcy attorney at your free initial consultation.
Do not wait too long to file – If you decide after your free consultation that filing for bankruptcy is your best option, then filing your bankruptcy case as quickly as possible is the most effective way to help your situation. When the case is filed, the Automatic Stay comes into effect, which means that creditors are not allowed to call you, garnish you, sue you, continue in a previously filed lawsuit, report negative items on your credit reports, etc. In most cases, having the Automatic Stay in place immediately enables you to regain control of your financial situation. Therefore, it is very important to speak with your attorney to determine how severe your financial stress is, and to determine a proper course of action.