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Will a Bankruptcy Show Up on a Background Check?
There are many reasons why a person may consider filing for bankruptcy. This is usually a solution for people who have extensive debts that will be difficult or impossible to fully repay, especially if they are experiencing harassment from creditors and could potentially face consequences such as wage garnishment, home foreclosure, or repossession of a vehicle or other property. Filing for bankruptcy will allow the requirement to repay certain types of debts to be completely eliminated, and it can provide much-needed financial relief. However, a bankruptcy can remain on a person’s record for a number of years. Those who are considering bankruptcy will want to understand whether background checks performed by prospective employers or others will include information about their bankruptcy filing.
Background Checks, Credit Reports, and Bankruptcy
Can I Remove Liens From My Home Through Chapter 13 Bankruptcy?
There are multiple types of debt that can cause a family to experience financial difficulties. When a family struggles to repay what is owed to creditors, they may be concerned about the steps that may be taken, such as a bank foreclosing on their home if they are unable to make mortgage payments. In some cases, multiple creditors may have a claim against a home, and different types of liens may exist. Debtors who are in a difficult or impossible financial situation may be considering bankruptcy, but they will often want to determine whether they will be able to keep their homes. Chapter 13 bankruptcy is often the best option in these cases, and when filing for this type of bankruptcy, it is important to understand how different types of liens will be handled.
Priority of Liens in a Chapter 13 Bankruptcy
How Are Liens Handled During a Chapter 7 Bankruptcy?
Debt-related issues can be complicated, and understanding the financial issues surrounding the money owed to creditors can often be difficult. In addition to the money a person owes, multiple different types of liens may exist on the property they own. For those who are unable to pay their debts, bankruptcy may be a good option, but they will need to understand how this will affect both the amounts they owe to creditors and any liens that are in place.
Chapter 7 Bankruptcy and Different Types of Liens
When a person takes out debts, they will have an obligation to repay what is owed. In some cases, this obligation may be enforced through a lien. A lien will give a creditor a legal claim against property owned by the debtor. In some cases, creditors may be able to enforce liens by repossessing property, or a lien may give them the right to receive payment when the property is sold.
How Are Trusts Handled in Bankruptcy Cases?
Trusts can be helpful tools used by families as part of a comprehensive estate plan or for asset protection purposes. When a person creates this type of legal agreement, they will transfer ownership of certain assets to the trust, and a trustee will maintain control over these assets and distribute them to different beneficiaries according to specific instructions. For those who are considering bankruptcy, it is important to understand how assets held in a trust will be addressed during this process.
After filing for bankruptcy, a debtor will be required to submit documentation of all of the assets they own. In a Chapter 7 bankruptcy, certain assets may be seized by the bankruptcy trustee and liquidated, while in a Chapter 13 bankruptcy, a debtor’s assets and financial resources may determine the amount that will be paid in a monthly repayment plan. Since assets held in a trust will generally be considered to be owned by the trust rather than the debtor, there may be some question about whether these assets will be part of the bankruptcy estate. When addressing this issue, a bankruptcy trustee may look at how much control a person has over the assets in a trust and whether they are a beneficiary.
How Soon Can I File for Bankruptcy After a Debt Discharge?
Americans who have debts that they are unable to repay or that put them in difficult financial positions have multiple options for debt relief, including filing for bankruptcy. By filing a petition for bankruptcy, a person can put a stop to creditor harassment, and they can determine the best way to eliminate their debts and begin rebuilding their credit. However, there are some situations where a person who has completed the bankruptcy process may encounter additional financial difficulties, and they may need to seek debt relief for a second time. In these cases, it will be important to understand how long a person will need to wait between different types of bankruptcy filings.
Time Limits for Filing a Second or Subsequent Bankruptcy
In our modern economy, there are a variety of circumstances that may require a person to file for bankruptcy more than once. Multiple types of debts can affect a person or family, and bankruptcy may be necessary to allow them to return to a position of financial stability. However, even after discharging debts, a person may accrue new debts through no fault of their own, such as when a serious illness results in large medical bills. For those who have previously used bankruptcy to address their debts, different waiting periods will apply depending on the type of bankruptcy they had previously filed and the type of bankruptcy they plan to pursue in their next filing.
How to Decide Between Chapter 7 and Chapter 13 Bankruptcy
It is all too easy for debts to become unmanageable. While large debts are often seen as a failure or a sign of irresponsibility, the truth is that this issue most commonly affects people due to no fault of their own. An unexpected illness or a serious injury can result in massive medical expenses, and it can also affect a person's ability to work, leading to increasing bills and difficulty covering basic living expenses. Issues such as the loss of a job or a divorce can also lead to unexpected expenses and problems covering the costs of living.
In these situations, bankruptcy may be the best option for getting rid of debts and returning to a position of financial stability. However, many people who are considering bankruptcy are unsure about whether they should file under Chapter 7 or Chapter 13. By answering the following questions, you can determine which option would be best for you.
Is a Short Sale a Good Idea During or After Bankruptcy?
A homeowner who has encountered financial difficulties may have a number of options that will allow them to avoid losing their home. While different forms of bankruptcy may be an option that will allow a person to prevent foreclosure, there are some situations where maintaining ownership of a home will not be possible. In some cases, a person may consider a short sale of their home, which will allow them to sell the property for less than the amount owed on the mortgage without the requirement to pay a deficiency to their lender. However, a homeowner will need to understand whether it is a good idea to do so while also pursuing debt relief through bankruptcy.
Short Sales and Chapter 7 Bankruptcy
Chapter 7 bankruptcy will allow a person to discharge most of their debts, providing them with financial relief and ensuring that they can avoid difficulties in the future. In most cases, it will not be a good idea to pursue a short sale before, during, or after filing for Chapter 7. One of the primary benefits of a short sale is to avoid a deficiency judgment that may be owed to a mortgage lender if a home is sold for less than the amount owed on the loan. However, Chapter 7 will discharge the debts a person owes, including deficiency judgments, so pursuing a short sale will not provide a homeowner with any advantages.
Can Filing for Bankruptcy Stop an Eviction?
People who are considering bankruptcy are often in dire financial straits. The accumulation of multiple forms of debt may have caused a person to get behind on some or all of their payments, especially if they have also experienced a loss of income. As creditors and collection agencies begin calling and seeking repayment, a person may be worried about how to address these issues, but in many cases, they may be focused on more immediate concerns, including the possibility of eviction from their apartment or house due to the nonpayment of rent. In these situations, a person will want to understand how bankruptcy may help them avoid being put on the street.
Preventing an Eviction by Filing for Bankruptcy
Filing for bankruptcy is one of the most effective ways to deal with outstanding debts and actions taken by creditors or landlords. As soon as a bankruptcy petition is filed, a form of protection known as the automatic stay will take effect. This will prevent creditors from doing anything to collect what is owed, including contacting the person to ask for payment. The automatic stay will generally apply to evictions, so if a landlord has notified a tenant that they are pursuing an eviction, or if the landlord has begun the eviction process, they will be required to stop these actions during the bankruptcy case. However, if a landlord has already gone to eviction court and obtained a judgment of possession, the automatic stay will not stop them from carrying out this judgment. This shows that the timing of a bankruptcy filing is important, and to stop an eviction, a person will need to file their bankruptcy petition as soon as possible after learning that their landlord is planning to take legal action against them.
Can a Creditor Object to Exemptions During a Bankruptcy Case?
When a person or family is struggling with debts and related financial issues, it can sometimes seem like there is no way out of this situation. While bankruptcy may be an option, many people are hesitant to pursue this form of debt relief because they worry that they will lose some or all of the property they own. Fortunately, there are a number of exemptions that can be used to protect property and ensure that a family will not have to completely start over.
When filing for Chapter 7 bankruptcy, these exemptions may prevent certain assets from being seized and liquidated. In fact, many debtors will qualify for a no-asset bankruptcy in which all of their assets will be exempt. However, debtors will need to make sure they claim exemptions correctly. Claiming invalid exemptions may delay a debtor’s ability to complete their bankruptcy, or certain assets may be determined to be non-exempt, resulting in the liquidation of these items.
UPDATE: Can a Debt Collector Garnish My Wages in Texas?
Originally published: February 12, 2021 -- Updated: May 16, 2022
UPDATE: As discussed below, wage garnishment is generally not allowed in Texas except for a few types of debts. However, this does not mean that creditors cannot take action to collect debts from a person. In fact, the garnishment of a person’s bank account may be effectively the same as garnishing their wages. By understanding the types of actions a creditor can take, a debtor who is facing this type of situation can determine their best options for receiving relief from their debts.
If a creditor obtains a judgment against a debtor requiring the debtor to pay the debts that are owed, the creditor may then ask for a turnover receiver. This type of court order will be sent to a person’s bank, and the bank will freeze the debtor’s bank account. This will prevent them from withdrawing any money from the account. Some or all of the funds in the account may then be seized by the creditor.
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