Bankruptcy FAQ
What is bankruptcy?
What are the different ways to file for bankruptcy?
Who can file for bankruptcy?
What do I have to do to begin the bankruptcy process?
Does bankruptcy affect both parties in a marriage? What about divorce?
What property am I allowed to keep if I file bankruptcy?
What types of debt CANNOT be discharged?
What happens to my credit after I file bankruptcy?
What is a trustee?
Is it possible for me to lose my home after filing for bankrutpcy?
Q: What is bankruptcy
A: Bankruptcy is a legal process whereby an individual consumer or a business who owes other people or businesses more money than they have the ability to repay works out an arangement whereby they can repay the money over time or completely eliminate (discharge) most of financial obligation completely.
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Q: What are the different ways to file for bankruptcy?
A: There are five(5) different types of bankrkuptcy filings. Each method is used for a particular purpose:
Individuals filing for personal bankrkuptcy normally choose between Chapter 7 and Chapter 13. Consideration must be given to whether or not creditors will be repaid, over what time period and what possessions the filer will be allowed to keep. It is critical that you seek out the services of an experience bankruptcy attorney to assist you in determining the proper course of action for your personal circumstances.
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Q: Who can file for bankruptcy?
A: Generally any individual or business that owes money to a creditor has the ability to file for bankruptcy. There are a few exceptions. An experienced bankruptcy attorney can make an exact determination.
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Q: What do I have to do to begin the bankruptcy process?
A: The simple approach is to pull together a complete accounting of all of your debts and creditors. At this point you may acquire the necessary forms and file for bankruptcy with a bankruptcy court. It is strongly recommended that you seek out a bankruptcy attorney to assist you in this process. Filing incorrectly can be a very expensive proposition.
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Q: Does bankruptcy affect both parties in a marriage? What about divorce?
A: A couple that is married may jointly file a single bankruptcy petition together. In the event that only one spouse files for bankruptcy, the other spouse may in fact be liable for debts. Finaly, even though there is divorce decree a creditor may demand payment from the divorced spouse if he/she is a co-signer.
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Q: What property am I allowed to keep if I file bankruptcy?
A: Bankruptcy law currently allows an individual to keep certain types of property. This property is said to be "exempt" and can include:
- "Tools of the trade" an equipment required for one's livlihood
- Equity in a home up to a certain value
- Vehicles up to a certain value
- Jewelry
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Q: What types of debt CANNOT be discharged?
A: In general, the following debts cannot be discharged in bankruptcy:
- Taxes owed to local, state and federal governments
- Debts associated with obligations to a that are part of a divorcee decree or separation agreement
- Debts for damages associated with death or personal injury from being impaired by alcohol or illegal drugs
- Debts that have been incurred after the bankruptcy filing date
- Debts associated with malicious and willful action against another person or personal property of another person or business
- Debts that were not listed in the bankruptcy filing
- Debts for products and services that were obtained fraudulently
- Student loans that have been financed or guranteed by the federal government
It is important to consult a qualified bankruptcy attorney to understand which debts cannot be discharged in your particular circumstance.
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Q: What happens to my credit after I file bankruptcy?
A: Bankrupticies can remain on credit reports for seven to ten years. It is generally not possible to remove a negative entry from bankrutpcy from your credit file prior to this period of time. It is possible to secure credit after filing bankrutpcy. However, it is up to the discretion of the lendor as to the whether they will extend credit, and under what terms, after filing for bankruptcy.
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Q: What is a trustee?
A: A trustee is a person who is responsible for managing the bankruptcy process. Trustees are appointed by the United States Trustee and is frequently, yet not always, an attorney. They are paid a fee, which is generally derived from the funds distributed in the bankruptcy and the filing fee. Their responsibilities include:
- Act as the responsible part for administering the bankruptcy
- Helping creditors to obtain as much money as possible from the debtor.
- Run the first meeting o"341 meeting", which is the first meeting of the creditors
- Obtain information and documents from the debtor
- Collect and sell non-exempt property or collect and distribute money on a repayment plan
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Q: Is it possible for me to lose my home after filing for bankrutpcy?
A: There are a number of factors that play into whether or not the debtor will lose his/her home after filing for bankruptcy including:
- Whether the loan is current, or in foreclosure
- Which type of bankrutpcy you are filing for
- The type of exemptions allowed in the state in which you reside
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