Bankruptcy FAQs
- Do I Need to Work with a Bankruptcy Lawyer?
- What Happens after Bankruptcy?
- Who Files for Bankruptcy in America?
- What Should I Avoid in a Bankruptcy Filing?
- What Are My State’s Bankruptcy Laws?
- What is an Automatic Stay?
- What Debts Aren’t Discharged in Bankruptcy?
- What Property Can I Keep if I File Chapter 7 Bankruptcy?
- Will I Have to Repay Debts After Bankruptcy?
- What is the Difference Between Secured and Unsecured Debt?
- How Long Does a Bankruptcy Stay on My Credit Report?
- Can I Remove a Bankruptcy from my Credit Report?
- When Can I Apply for New Credit?
- How Do My Creditors Find Out That I Filed Bankruptcy?
- How Do I Begin the Bankruptcy Process?
Do I Need to Work with a Bankruptcy Lawyer?
The introduction of the BAPCPA in 2005 made filing for bankruptcy more complicated than ever before.
Filing bankruptcy is a big decision. You first need to decide which type of bankruptcy is the best for you and your situation. This is just the first in a long line of decisions you will make during the bankruptcy process.
A bankruptcy lawyer can help you focus on how to improve your finances in the long run, and how to begin rebuilding your credit, instead of worrying about the legal requirements of the bankruptcy court. They can also ensure that you follow the appropriate rules to avoid a dismissal of your case. A financial fresh start is possible with the help of an experienced bankruptcy attorney.
What Happens after Bankruptcy?
A fresh financial start is possible after filing Chapter 7 or 13 Bankruptcy, but it's up to you to take the lead and develop responsible spending and saving habits. Life does go on after filing for bankruptcy.
It is imperative that you plan and stick with a budget, contribute to and build your savings account and rebuild your credit. While it may seem overwhelming at first, remember that 1-800-Bankruptcy offers several resources to help you do so. You can re-establish a healthy relationship with money and credit.
Bankruptcy does stay on your credit for 10 years, but it is important to remember that the impact of it will likely diminish if you commit to making smart money choices.
Who Files for Bankruptcy in America?
The most important thing to remember when filing for bankruptcy is that you are not alone. Recent statistics suggest the annual personal bankruptcy filings is close to the 1 million mark. Don't worry: dealing with mounting bills is a universal issue in America; bankruptcy is often the most logical protection when facing monumental debt.
Recently, government data has shown the "average" filer is between the ages of 25 and 54, and has attended school through twelfth grade. More than 65 percent of filers were employed at the time of their filing, and had an annual income of less than $30,000.
Credit over-extension, surprise expenses, job loss and illness are the most common factors that have led Americans to file for bankruptcy in recent years. Visit recent bankruptcy statistics to learn more about who files for bankruptcy in America.
What Should I Avoid When Filing Bankruptcy?
There are specific types of behavior that make it less likely you will receive a discharge and a chance to start over financially when filing bankruptcy. Make sure you do not make any of these common bankruptcy mistakes:
- Creating more debt before filing: Using your credit cards to rack up more debt looks bad to the court; they may see it as an intentional act on your part to assume new debt because you think it will be discharged during bankruptcy.
- Repaying your friends and family: This is one of the only situations where friends and family can't come first. Every creditor you owe deserves a fair portion of what you owe them; when you pay back friends or family and not your other creditors, it shows the court a lack of good faith.
- Hiding or Destroying your personal property: Willfully hiding or destroying any of your personal assests is considered fraudulent. You could wind up owing serious amounts of cash, or worse, end up in jail if you get caught. Chances are: you will get caught.
- Falsifying or neglecting to disclose information on bankruptcy forms: Let a bankruptcy lawyer help you with the necessary paperwork; mistakes and omissions, regardless if they are intentional or not, can and will work against you during a bankruptcy filing.
What Are My State's Bankruptcy Laws?
Each state has its own set of bankruptcy exemptions that will affect you should you choose to file for Chapter 7 bankruptcy. However, bankruptcy laws are regulated at the federal level; the laws are universal, no matter what country you live in.
State exemptions specifically define what you are allowed to keep during a Chapter 7 bankruptcy liquidation sale. Your court-appointed bankruptcy trustee may not sell your personal items that are exempted by state law to pay your creditors.
In most instances, individual states exempt a house, car, personal wages and various other personal and household items. Your bankruptcy attorney can better outline specific items your state considers exemptions, and how they apply to your case.
What is an Automatic Stay?
An "automatic stay." is entered when you officially file a Chapter 7 or 11 bankruptcy in a bankruptcy court. This prohibits further collection actions being enforced against you - creditors are no longer able to call and harass you, or send you threatening letters. The automatic stay also halts foreclosure, repossession, lawsuits and wage garnishments.
Talk to a bankruptcy lawyer today to learn how an automatic stay can benefit you and your financial situation when filing for bankruptcy.
What Debts Aren't Discharged in Bankruptcy?
Certain debts, such as child and spousal support, as well as most tax debts are considered "non-dischargeable" debts in bankruptcy. Student loans are also considered "non-dischargeable", unless you can provide proof that repaying the debt would be an undue burden.
Talk to a bankruptcy lawyer today. Find out if you have non-dischargeable debts, and what you can expect if you do.
What Property Can I Keep if I File Chapter 7 Bankruptcy?
Filing Chapter 7 bankruptcy gives the bankruptcy court the right to sell any of your non-exempt property to repay your creditors. Don't panic - this does not happen often. Most people who petition for Chapter 7 bankruptcy are allowed to keep all of their property.
State bankruptcy exemption laws vary from state to state; most often, exemptions are made for property such as your homestead, personal items, a portion of your wages, you car, or any tools for your trade.
Talk to a bankruptcy lawyer today. They will help you find which of your personal items cannot be sold by the bakruptcy court.
Will I have to Repay Debts After Bankruptcy?
Most of your unsecured debts will be discharged once you file for Chapter 7 bankruptcy. This means you won't ever have to repay them. Your payments will be restructured into a repayment plan should you file for Chapter 13 bankruptcy, meaning you will be given a certain amount of time to repay some or all of your debts.
Talk to a bankruptcy lawyer today to find out which bankruptcy filing is right for you.
What's the Difference Between Secured and Unsecured Debt?
A secured debt is something that is secured by a lien of some sort on your property. This is either by mutual agreement, or involuntarily with a court judgment or taxes.
While a car or home loan is considered a secure debt, things such as credit cards, signature loans or medical bills are not. Unsecured debts such as these are classified as such because they are not connected to any type of property. .
Talk to a bankruptcy lawyer to better understand which of your debts are considered secured or unsecured.
How Long Does a Bankruptcy Stay on My Credit Report?
Though a bankruptcy stays on your credit for 10 years, it is often the case that filing for bankruptcy actually helps improve a person's credit.
Find out more about credit and filing bankruptcy.
Can I Remove a Bankruptcy from my Credit Report?
It is not possible to remove a bankruptcy from your credit report, however, you may file an explanation with the credit bureaus that briefly describes the cause of your bankruptcy.
Leanr more about credit and filing bankruptcy.
When Can I Apply for New Credit?
You can apply for credit any time after filing for bankruptcy. It is at the creditor's discretion whether to grant you credit or not.
Leanr more about credit and filing bankruptcy.
How Do My Creditors Find Out That I Filed Bankruptcy?
After filing for bankruptcy, the bankruptcy court sends a notice to all of your creditors. The notice includes information such as your bankruptcy case number, the automatic stay, the name of your court-appointed trustee(s), the date of the Meeting of Your Creditors, and the information they need about filing claims and/or objections about the discharge of your debts. The bankruptcy court notifies all of your creditors by mail.
A bankruptcy lawyer can explain all of the legal requirements for filing bankruptcy.
How Do I Begin the Bankruptcy Process?
Start by making a complete list, to the best of your knowledge, of all of your debts and assets. Doing so will help your bankruptcy lawyer accurately complete your petition and necessary schedules that are required for filing in bankruptcy court.