Chapter 7 Bankruptcy Lawyers - Nick Davis Law

It depends. While it might seem logical to stop paying bills if you’re planning to file for bankruptcy, certain payments should still be made. For instance, if you want to keep your car or home, continuing to pay on secured debts like auto loans or mortgages may help prevent repossession or foreclosure. However, making large payments to creditors just before filing can be problematic, as the trustee may see it as preferential treatment toward certain creditors, and could try to reclaim those payments. It’s best to consult with your attorney before stopping payments to avoid complications.

If you’ve made significant charges on your credit cards just before filing for Chapter 7, especially for luxury items or cash advances, these debts may not be dischargeable. Creditors could challenge these charges as fraudulent if they believe you had no intention of repaying the debt. The bankruptcy court typically looks at charges made within 90 days before filing to determine if they were made in good faith. To avoid potential issues, consult with your attorney about recent spending and how it may affect your case.

While Chapter 7 bankruptcy can discharge many debts, it does not eliminate obligations related to alimony, child support, or divorce-related property settlements. These are considered priority debts, and you will be required to continue paying them even after your bankruptcy discharge. Additionally, if your divorce decree includes certain property settlement obligations, they may not be dischargeable under Chapter 7. You should inform your attorney if you’re going through or have recently gone through a divorce to ensure that your obligations are clear and handled properly.

Your tax refund can be at risk if you file for Chapter 7, as it may be considered part of your bankruptcy estate. Whether or not you can keep it depends on when you file, the timing of the refund, and how much of it is protected by exemptions. If you file before receiving the refund, the trustee may claim it to pay creditors. However, some states, including Texas, offer exemptions that might allow you to protect some or all of the refund. Timing your bankruptcy filing and discussing exemption strategies with your attorney can help preserve as much of your refund as possible.

It’s critical to list all debts when filing for Chapter 7 bankruptcy. If you forget to include a debt, it may not be discharged, meaning you could still be responsible for paying it. In most cases, if the oversight is discovered early, you can amend your filing to include the omitted debt, but it’s always better to be thorough from the start. Keeping a detailed list of all creditors and debts before filing is essential, and working with an experienced attorney can help ensure nothing is overlooked.

Transferring or selling assets just before filing for Chapter 7 can lead to serious problems. If the bankruptcy trustee believes that you transferred property to hide it from creditors, the transfer could be reversed, and you might lose the asset. Worse, it could be seen as fraudulent behavior, potentially resulting in the denial of your bankruptcy discharge. If you’re concerned about protecting certain assets, it’s better to work with an attorney to explore legal options like exemptions, rather than taking risky steps that could harm your case.

If you file for Chapter 7 bankruptcy individually, your spouse’s credit will not be directly affected. However, if you share joint debts, the creditors can still pursue your spouse for full payment on those debts, even if your obligation is discharged. It’s important to assess whether you and your spouse are better off filing jointly or if filing individually makes more sense. An attorney can help analyze your situation and provide advice on how to protect both parties during the process.

Once you file for Chapter 7 bankruptcy, you must list all of your debts—there’s no option to selectively exclude certain debts. However, if there are debts you wish to keep, such as a car loan or mortgage, you may have the option to “reaffirm” those debts. By reaffirming, you agree to continue making payments in exchange for keeping the collateral (e.g., the car or house). It’s important to weigh the risks, as reaffirming a debt means you remain liable for it, even after the bankruptcy.

If you own a small business or are self-employed, filing for Chapter 7 bankruptcy can impact your business, depending on how it’s structured. If the business is a sole proprietorship, its assets could be considered part of your personal bankruptcy estate, meaning they could be sold to pay creditors. However, if the business is a separate legal entity, like an LLC or corporation, its assets may be protected. That said, your personal guarantees on business debts could still affect your bankruptcy case. Consulting an attorney with experience in both personal and business bankruptcy is crucial for understanding your options.

Filing for Chapter 7 bankruptcy generally does not affect your professional licenses or certifications. Most licensing boards don’t penalize individuals for financial difficulties or bankruptcy filings. However, if you work in a field that requires fiduciary responsibility (like finance or law), or if you’re a public figure, there may be some scrutiny. It’s important to check with your professional board or employer to understand any specific rules related to your field, and to address any concerns upfront.