Line of credit: can bankruptcy eliminate (discharge) this type of debt?

Lines of credit can be eliminated, or discharged, through a bankruptcy filing. Lines of credit are often unsecured and can be eliminated entirely through a bankruptcy. Unsecured lines of credit are like credit card debt–minus the plastic. Like credit card debt, unsecured lines of credit are common culprits causing consumer bankruptcy filings.

If a line of credit is secured, that debt may need to be repaid even if you file for bankruptcy. May is the operative word here, though. If a line of credit is secured, most commonly against a home (home equity line of credit/HELOC), that debt can still be eliminated through a bankruptcy. It depends on the value of your home, how much you owe on other mortgages and the type of bankruptcy filed.

With the explosion of home equity lines of credits (HELOC/second mortgages) in recent years past, this is a potentially vital factor in a bankruptcy evaluation, as well as a common cause of bankruptcy filings here in Sacramento.

Bankruptcy planning

Before filing bankruptcy, it is best to plan for your filing. Ensuring your eligibility, protecting your property and making sure your debts will be discharged are all considerations in evaluating the type and timing of your bankruptcy.

For best results: consult a bankruptcy professional! Measure twice, cut once as the saying goes. Same situation in bankruptcy. Consulting with someone who knows bankruptcy will allow you to measure what you have and, more importantly, let you know what needs measuring!

Can I file bankruptcy without my spouse?

Yes, you can file bankruptcy without your spouse if married. Often one spouse does not want to file for a variety of potential reasons. Though most married couples file bankruptcy here in Sacramento together, they don’t have to.

If one spouse doesn’t file bankruptcy with the other, it is often necessary that the souse who doesn’t file waives their right to file bankruptcy. No matter this is a temporary waiver, it is frequently needed to protect the couple’s property.

As with everything, best to contact me or any other bankruptcy professional to evaluate the pros and cons of filing bankruptcy without your husband or wife.

Credit report necessary to file bankruptcy?

No, you don’t have to pull a credit report before filing bankruptcy. You are required to disclose all your debts, but a credit report is not required to do that. Typically debtors know who they owe and don’t need a credit report to remind them.

Often times, though, people aren’t certain who their creditors are, in which case a credit report is a helpful tool in preparing a bankruptcy petition (paperwork filed with bankruptcy court). Still, credit reports are not always accurate and shouldn’t be considered the definitive document defining your debt.

If your debt is old, mixed in with a spouse (or ex-spouse) or otherwise not certain, a credit report is a good source to help disclose your debt. If you miss or fail to disclose a creditor because of a bad memory or credit report, you are still protected through your bankruptcy filing. All debts before your bankruptcy are automatically part of your bankruptcy whether they are included in your bankruptcy petition or not. A creditor, then, cannot claim you still owe a debt because it wasn’t properly listed in your bankruptcy paperwork. This is particularly true in collection company cases where

Car accident injury and bankruptcy

Car accident injuries and bankruptcy relate in two primary ways:

1. If you caused an accident and are liable for another’s injuries or losses;

2. You were injured in a car accident caused by someone else.

If you were responsible for an accident that resulted in someone else’s injury, you may be liable for damages, meaning you may owe that other person money for their medical bills, pain & suffering, wage loss or property (car) damage. If you don’t have insurance, or enough insurance to cover the potential claim, you could be personally liable. Bankruptcy eliminates this type of debt and is a common cause of bankruptcy filing.

If you were injured by someone else in a car accident (or other type of accident), you have a potential claim against that person. That money you may get from the accident must be disclosed in your bankruptcy and, almost always, can be protected (exempted) entirely, meaning you can keep what you get from the injury and still eliminate your debts through your bankruptcy filing.