Bankruptcy FAQ
1. What is bankruptcy? What does it do?
Bankruptcy is a legal way for people like you to eliminate debt by providing at least partial payment to creditors and providing you a legal, financial fresh start.
2. Who can file bankruptcy?
Anyone – individual or company – can file bankruptcy. There are different kinds of bankruptcy for individuals and corporations.
3. There is more than one type of bankruptcy? Which should I use?
Most consumers (individual people) primarily file either Chapter 7 or Chapter 13 bankruptcy.
The type of bankruptcy you file depends on many factors – like the type of debt you have, income levels, and if you need to keep your home. Bankruptcy attorneys can help you determine which type of bankruptcy is right for you.
4. Is it true I’ll have to sell off all my stuff, including my house and car?
No, not necessarily. Each state is different, but most states have exemptions that allow you to keep most of your property – possibly even your house and car, depending on the value of the property. Based on your circumstances and legal advice, you may choose to give up your house or car.
5. Will bankruptcy stop foreclosure and creditor calls or harassment?
Yes. Filing bankruptcy provides immediate Automatic Stay Protection. Automatic Stay Protection stops foreclosure, creditor harassment, collections, and even lawsuits. Once you file bankruptcy your creditors must stop all contact.
The length of protection varies depending on which type of bankruptcy you file and if you follow your plan to completion.
6. What is a discharge? Does it apply to all my debts?
A discharge means your debt is no longer owed, nor can the creditor attempt to collect on the debt. It no longer exists. It’s gone.
Not all debts are discharged under bankruptcy law. Bankruptcy discharge applies to debts that are part of the filing. Any debts acquired during or following your bankruptcy filings are not discharged.
Nor are all debts dischargable. Debts that are not generally discharged under bankruptcy are: certain secured debts like mortgages and car loans, tax debts, child support, spousal support/alimony, student loans, debts incurred because of intentional acts like fraud or because of a DUI.
7. What is the difference between secured and unsecured debt?
Secured debt has an asset attached (collateral put up against the loan) that a creditor can claim as payment – such as a house or car.
Unsecured debt has no such collateral or asset attached – such as most credit or charge card debt.
8. Will I be able to get credit after bankruptcy?
Yes. Many companies charge higher fees and interest for those who’ve filed bankruptcy. But from the time of your discharge, you will likely receive offers for new credit cards. You will need to carefully consider if you’d want to accept any of those offers.
9. How long do bankruptcies stay on my credit report? Are they public record?
A bankruptcy filing stays on your credit report 7-10 years. And yes, a bankruptcy is part of the public record. It will show up on credit and background checks. Generally, however, only the people you tell or give access to your credit report will know about your bankruptcy.
10. Will I have to go to court?
Yes. Filing bankruptcy requires you to attend a 341 Meeting of Creditors. You will be required to answer questions by the trustee and perhaps your creditors about the validity of your case. You do not go alone; your attorney will attend with you.
11. Do I really need an attorney to file bankruptcy? Can I do it on my own?
Bankruptcy is a complex legal matter, and a local bankruptcy attorney can advise you on options and exemptions you may not know about or fully understand. You have the right to file on your own, but your creditors will be protected by attorneys. So should you.
