Bankruptcy questions:
Q: What is bankruptcy?
A: Bankruptcy is a legal process under federal law which will allow a debtor to either eliminate his debts or work out a payment plan to pay a small percentage or up to all of the debt over time.
Q: Can bankruptcy eliminate harassing phone calls and mail from bill collectors?
A: Yes! It is illegal for a creditor or debt collector to attempt to collect on a debt that has been listed in your bankruptcy.
Q: Will bankruptcy have an effect on my credit report?
A: Bankruptcy can remain on your credit report for seven to ten years. But a lot of times filing for bankruptcy can actually help your credit.
Q: What type of debts can be listed in a bankruptcy?
A: Some taxes can be eliminated or paid over a period of time, a secured debt is a debt on an asset, such as a home, real property, personal property or a car. Unsecured debt is credit cards, medical bills and personal loans.
Q: Will I have to go to court for this?
A: Yes, but not in the usual court setting, meaning that there is not a judge or jury present when you go to your 341 Meeting of Creditors.
Q: Can one spouse file without the other spouse?
A: Yes, however you should discuss this carefully with the attorney. If there is a joint debt the non-filing spouse can still be held responsible for the debt.
Q: Is bankruptcy listed in the newspapers or on TV like criminal cases?
A: No. Bankruptcy is a private matter where you, your creditors and the trustee (along with bankruptcy clerks that handle the cases) will know that you filed.
Q: Will I ever be able to have credit again?
A: Yes, you will be able to have credit and live a normal life. Bankruptcy is designed to give you a fresh start, it is not a punishment.
Q: Will I have to surrender my home or car?
A: No, generally the exemptions that a debtor receives is enough to protect their property.
Q: Can I get rid of child support or spousal support in a bankruptcy?
A: No, but if you are behind on your payments you can file a chapter 13 and pay the arrears over time.
Q: Can I pick which debts to put in the bankruptcy?
A: No. All debts as well as assets are listed in your bankruptcy.
Q: How long will I be in bankruptcy?
A: Generally a Chapter 7 bankruptcy last 90 days from the time the case is filed and you receive your discharge. In a Chapter 13, you will receive a discharge when you have completed the payments under the Chapter 13 plan and the plan is 36 months up to 60 months.
Q: When can I start getting credit again?
A: Once you are out of bankruptcy and you have your discharge papers in your hand then you can start applying for credit.
Q: Do I have to have an attorney to file for bankruptcy?
A: No, but will you perform surgery on yourself? It is the same logic, you need someone to help you through the process or you can lose everything you have.
Bankruptcy misconceptions:
It is very difficult to file for bankruptcy.
It is not difficult to file for bankruptcy, but it is recommended that you hire an experienced bankruptcy attorney to ensure that it is done properly and that all alternatives are explored.
Only "deadbeats" file for bankruptcy.
You can let go of this misconception immediately. Most people file for bankruptcy after a life-changing experience, such as a sudden job loss, a serious illness, or a divorce. Bankruptcy is a financial tool that, at times, could make sense for almost anyone, including doctors, lawyers, business owners that have demonstrated past business successes.
If I am married, my spouse and I both have to file for bankruptcy.
This is not true if one spouse has a significant amount of debt in his or her name only. However, if spouses have debts they want to discharge that they are both liable for, they should file for bankruptcy together. Otherwise, the creditor will simply demand payment for the entire amount from the spouse who did not file for bankruptcy.
Everyone will know I filed for bankruptcy.
Bankruptcy is public record, but unless you are a prominent public figure, people are not going to go looking. In our area, newspapers do not publish bankruptcy filing information. The only people who are going to know are those who you tell and those who have access to the bankruptcy court record system.
I cannot get rid of back taxes through bankruptcy.
On rare occasions, you can get rid of back taxes. For the greatest chance of success, you have to file all your returns and the taxes owed need to be at least three years old.
I can only file for bankruptcy once.
You can file for chapter 7 bankruptcy once every eight years. For a chapter 13 court-approved debt repayment plan, you can file more often than that, but you cannot have more than one bankruptcy case going at the same time. Although there are circumstances under which it makes sense to file more than once, it is not a good idea to make a habit of filing for bankruptcy.
I can max out all my credit cards, file for bankruptcy, and never pay for the things I bought.
Behavior such as this can lead to fraud charges. Bankruptcy trustees know how to spot fraud, and the trustee in your case will carefully review all the purchases leading up to your filing. Bankruptcy judges do not look kindly at fraud.
I should not include certain creditors in my bankruptcy filing because if I do, I will not be able to repay them if the debt is discharged (under chapter 7 debt elimination).
Bankruptcy is an all-or-nothing deal, so you must include all of your creditors in the petition. Although you are no longer liable for debts that have been discharged, there is nothing in the Bankruptcy Code that prevents you from repaying them once you get back on your feet.
I will lose everything I own.
Bankruptcy actually makes it easier for you to keep your property. Once you have filed for bankruptcy, you and your property are protected from lawsuits, foreclosures, garnishments, and any other collection activity. Bankruptcy does not always wipe out liens, which means if you want to continue to keep the property, you will need to continue to pay the lien. Laws that allow you to keep property vary from state to state, and you should consult an attorney in your area.
I will never be able to own property again.
You will get credit card offers and be extended credit shortly after the discharge of your bankruptcy. There are also creditors that will lend to you while you are in bankruptcy.
