Bankruptcy is a complicated and confusing area of the law. There are many misunderstandings and myths surrounding bankruptcy. Below are answers to a few of the most common questions regarding bankruptcy. For answers to questions you do not see below click here.
Q: Have the changes in the bankruptcy laws made it impossible for many people to file or done away with most of the benefits of filing for bankruptcy?
A: No. The new bankruptcy laws have had little effect on the great majority of people’s ability to file.
Q: Will everyone know I filed for bankruptcy?
A: No. Other than your creditors and co-debtors, it is very unlikely others will learn of your bankruptcy.
Q: Will I loose everything I have?
A: No. Most people are able to keep the property they want to keep.
Q: Will I ever get credit again?
A: Yes. You will probably be surprised at how quickly you will be able to build up your credit.
Q: If I file, will my spouse have to file for bankruptcy?
A: No. There is no requirement that both spouses have to file bankruptcy.
Q: I have had to file for bankruptcy before, can I file again?
A: Most likely yes. You can file a Chapter 7 bankruptcy once every 8 years. However, you may can file a Chapter 13 much earlier, sometimes even immediately a prior bankruptcy.
Q: Do I have to pay for the property I owe on if I want to keep it?
A: Yes. If you owe on your house and/or car(s) and you want to keep them you will have to continue to pay for them. Your other option is usually to surrender the collateral and not have to pay for it.
Q: If I file for bankruptcy, will creditors still harass me and/or my family?
A: No. Upon filing for bankruptcy an immediate order called the “automatic stay” issues from the bankruptcy court forbidding any and all attempts by creditors to collect a debt owed by you.
Q: What Can Bankruptcy Do for Me?
A: Bankruptcy may make it possible for you to:
Q: Should I Consider Filing Bankruptcy?
A: The decision to file for bankruptcy is a personal decision that you will have to make on your own. However, set out below are some indicators that you are beyond the ability to handle your debt load.
Q: What is a Chapter 7 Bankruptcy?
A: Sometimes known as “straight” bankruptcy or “liquidation.” It allows a debtor to discharge or “wipe out” most unsecured debt and most secured debt where the collateral is surrendered. Generally, those who file chapter 7 can keep all of their property they wish to keep except property which is very valuable with little or no debt on it or which is subject to a lien which they cannot avoid or afford to pay. It may require an individual to give up property which is too valuable or not “exempt” under the law, so the property can be sold to pay creditors.
Q: What is a Chapter 13 Bankruptcy?
A: In a chapter 13 case you file a “plan” showing how you will pay off some of your past-due and current debts over three to five years. The most important thing about a chapter 13 case is that it will allow you to keep valuable property--especially your home and car--which might otherwise be lost, if you can make the payments which the bankruptcy law requires to be made to your creditors. In most cases, these payments will be at least as much as your regular monthly payments on your mortgage or car loan, with some extra payment to get caught up on the amount you have fallen behind.
You should consider filing a chapter 13 plan if you:
Q: Have the changes in the bankruptcy laws made it impossible for many people to file or done away with most of the benefits of filing for bankruptcy?
A: No. The new bankruptcy laws have had little effect on the great majority of people’s ability to file.
Q: Will everyone know I filed for bankruptcy?
A: No. Other than your creditors and co-debtors, it is very unlikely others will learn of your bankruptcy.
Q: Will I loose everything I have?
A: No. Most people are able to keep the property they want to keep.
Q: Will I ever get credit again?
A: Yes. You will probably be surprised at how quickly you will be able to build up your credit.
Q: If I file, will my spouse have to file for bankruptcy?
A: No. There is no requirement that both spouses have to file bankruptcy.
Q: I have had to file for bankruptcy before, can I file again?
A: Most likely yes. You can file a Chapter 7 bankruptcy once every 8 years. However, you may can file a Chapter 13 much earlier, sometimes even immediately a prior bankruptcy.
Q: Do I have to pay for the property I owe on if I want to keep it?
A: Yes. If you owe on your house and/or car(s) and you want to keep them you will have to continue to pay for them. Your other option is usually to surrender the collateral and not have to pay for it.
Q: If I file for bankruptcy, will creditors still harass me and/or my family?
A: No. Upon filing for bankruptcy an immediate order called the “automatic stay” issues from the bankruptcy court forbidding any and all attempts by creditors to collect a debt owed by you.
Q: What Can Bankruptcy Do for Me?
A: Bankruptcy may make it possible for you to:
- Eliminate the legal obligation to pay most or all of your debts.
- Stop foreclosure on your house or mobile home and allow you an opportunity to catch up on missed payments.
- Prevent repossession of a car or other property.
- Stop the garnishment of your wages or bank account, stop lawsuits, stop debt collection harassment, and similar creditor actions to collect a debt.
Q: Should I Consider Filing Bankruptcy?
A: The decision to file for bankruptcy is a personal decision that you will have to make on your own. However, set out below are some indicators that you are beyond the ability to handle your debt load.
- Are you behind on payments on your house and/or car and being threatened with foreclosure and/or repossession?
- Are you using credit cards frequently to supplement your income with cash advances or purchases of necessities such as groceries and payments of utility bills?
- Has your house been foreclosed on or have you had a vehicle repossessed?
- Do you have more than one credit card maxed out or nearly maxed out?
- Do you have more than $10,000 of debt with credit card companies and/or finance companies?
- Have you frequently been using payday loans and/or check cashing lenders to make it through the next week or two?
- Have you been sued by a creditor and/or are you currently or soon to be garnished?
- Are you getting numerous calls and letters daily from creditors or collection agencies?
- Are you borrowing from one lender to make the payment to another lender, i.e., are your robbing Peter to pay Paul?
- Have you had your license suspended for causing an auto accident where you were not insured?
- Do you have large outstanding medical bills that insurance did not pay and you cannot negotiate a payment you can afford?
Q: What is a Chapter 7 Bankruptcy?
A: Sometimes known as “straight” bankruptcy or “liquidation.” It allows a debtor to discharge or “wipe out” most unsecured debt and most secured debt where the collateral is surrendered. Generally, those who file chapter 7 can keep all of their property they wish to keep except property which is very valuable with little or no debt on it or which is subject to a lien which they cannot avoid or afford to pay. It may require an individual to give up property which is too valuable or not “exempt” under the law, so the property can be sold to pay creditors.
Q: What is a Chapter 13 Bankruptcy?
A: In a chapter 13 case you file a “plan” showing how you will pay off some of your past-due and current debts over three to five years. The most important thing about a chapter 13 case is that it will allow you to keep valuable property--especially your home and car--which might otherwise be lost, if you can make the payments which the bankruptcy law requires to be made to your creditors. In most cases, these payments will be at least as much as your regular monthly payments on your mortgage or car loan, with some extra payment to get caught up on the amount you have fallen behind.
You should consider filing a chapter 13 plan if you:
- Own your home and are in danger of losing it because of money problems;
- Are behind on debt payments, but can catch up if given some time;
- Have valuable property which is not exempt, but you can afford to pay creditors from your income over time.
