This page is designed
to break through that wall of mystery and give you the knowledge
you'll need to make an informed decision regarding your financial
future.
GENERAL QUESTIONS
TYPES OF BANKRUPTCY
WHAT CAN I KEEP?
DEBTS INCLUDED
EFFECTS ON CREDIT
BANKRUPTCY COSTS
What is bankruptcy?
When you file for bankruptcy protection, you’re
simply admitting the truth — that you are unable to keep
your promise to pay your bills. But, more importantly, you
are asking the court to stop your creditors from forcing you
to keep your promise to pay your bills, when you don't currently
have the money to do so. This court protection will stop all
of the endless calls and harassment and put a stop to any
legal actions taken by your creditors. Filing bankruptcy can
allow you to keep your car, your home, and your peace of mind.
How do I know if I qualify for bankruptcy?
There are a number of factors to consider when
determining if bankruptcy is right for you. We've developed
an easy-to-use test to help you. Just click on our Bankruptcy
Test and get started!
Keep in mind there are no income requirements
to meet before you can file for bankruptcy. You don't have
to owe a certain amount of money, and you don't have to be
behind on your bills before you can file. Basically, anyone
can file at any time. A bankruptcy judge will make the final
determination of your status.
Is there a good or bad time to declare bankruptcy?
There is no good or bad time to declare, but
it is better to file before you are in a financial crisis.
The bottom line as to whether or not you should declare bankruptcy
is a personal decision based solely on your personal financial
situation. Take the Bankruptcy Test to see if declaring bankruptcy
is right for you.
What are the steps in filing for bankruptcy?
Take the first step now and click on Get
Started and submit your information online.
Who will know that I've filed for bankruptcy?
Bankruptcy filings are a matter of public record.
If I change my mind after filing, can I
stop the bankruptcy?
Only a judge can decide if a filing can be dismissed
or not. Even if you get the case dismissed, your credit report
will still show that you filed.
Do my spouse and I have to file jointly?
No. The decision to file individually or together
depends on your situation.
If only my spouse files, what am I liable
for and what happens to my credit?
If there is no joint debt, your credit will
not be affected. If there is joint debt and only one member
files, then the member who did not file will be responsible
for the entire debt.
back
to top
What is Chapter 7?
In Chapter 7, you are asking the court to discharge
(forever release you) from your promise to pay your debts.
It is often possible to keep your assets in Chapter 7 because
they may be exempt (under law--unable to be touched by your
creditors) or because there may be no equity in the assets
(the value of the assets is less than the amount owed on them).
As a result, it is often possible to keep your house and car
(or other assets) when filing Chapter 7.
What is Chapter 13?
In Chapter 13, you are reorganizing your finances.
What this means is that you are using the power of the court
to keep your assets, but reduce your payments. Under Chapter
13, you may cure your delinquent mortgage payments and keep
your house, reduce the amount you have to pay to purchase
your car, or pay off back taxed and child support without
interest or penalties. The amount you pay back will be determined
by you and your attorney. It will be based on your disposable
income and the net equity of the things you own. It is often
possible to stop interest from accruing and dramatically lower
your monthly payments.
How do I know if I should file Chapter 7
or Chapter 13?
It depends on your financial situation and the
factors involved. Typically, these factors will include the
following: the amount of your disposable income, your net
equity in your assets, type of debts you already have, and
what you are trying to accomplish or obtain by filing for
bankruptcy protection. For example, if you have little or
no disposable income or your assets have little or no value,
or what you owe on your assets outweighs their value, or most
of your debt is unsecured, you might want to consider Chapter
7. On the other hand, if you have disposable income and have
enough to pay some of your debts on time, or have substantial
equity in your house, or if trying to delinquent house payments,
or if you have special debts that are difficult or impossible
to get rid of (taxes, child support, loans, etc.), you should
choose Chapter 13.
back
to top
If I declare bankruptcy, will I have to
give up my home? My car?
Actually, you may not have to give up your home,
your car, or any of your other possessions. Bankruptcy allows
you to keep the things you are in risk of losing due to late
payments. When you file bankruptcy, the court puts a protective
order in place that prevents your creditors from collecting
the debt you owe them. As long as the proper type of bankruptcy
is chosen, and the property has little to no equity (equity
is how much something is worth after deducting how much is
owed on it), or is exempt (some possessions are exempt in
bankruptcy, which allows you to keep them), it may be possible
for you to keep everything you own while still filing bankruptcy.
If I own my own business but I file for
personal bankruptcy, can my business assets be seized to pay
off my personal debts? What about the other way around?
It is possible to file bankruptcy, retain your
business assets, and continue to operate your business. Your
lawyer can explain how in detail during a personal consultation.
Does my personal bankruptcy
affect my corporation?
NO! Your bankruptcy will not affect a publicly
held corporation. Your lawyer can explain how in more detail
during a personal consultation.
back
to top
What debts are included in bankruptcy?
All of your debts are included in bankruptcy
and must be disclosed to the courts. This includes: taxes,
student loans, home mortgages, car loans, utility bills, credit
card bills, doctor bills, and any other debts that you owe.
Can I be released from all my debts?
You can be released from almost all your debts.
However, there are some that cannot be released in bankruptcy.
These include taxes (except for income taxes, and as long
as they meet the proper criteria), student loans, and/or spousal
or child support debts which were obtained because of fraud
or other wrongdoing. Also included are debts owed because
of intentional injury to another and debts owed as result
of injuring yourself or someone else while driving an automobile
under the influence of drugs or alcohol.
Can I be forced to use funds from any retirement
accounts to satisfy any debts?
As a general rule, most retirement plans are
exempt in bankruptcy.
If I file for bankruptcy, does that include
any outstanding monies owed to federal/state taxes?
Yes. You are required to disclose your debt,
and if it meets the proper criteria, it may be discharged
in bankruptcy.
back
to top
Will I be placed on a budget? For how long?
Only when filing Chapter 13 will you be placed
on a budget. You must propose a budget to the court to show
how much you can afford to repay on your debts.
Will declaring bankruptcy ruin my credit
rating forever?
NO! In fact, bankruptcy may even improve your
ability to get credit! If you have bad credit now, you need
to be released from all your current bills in order to get
good credit in the future. This is what bankruptcy does. Once
you are released from your debts, you can start rebuilding
your credit. No one can predict exactly how long this will
take, but we have current clients who have purchased a new
home or car while under Chapter 13. Under current FHA standards,
most people can qualify for a home loan 2 years after filing
for bankruptcy. Credit cards can first be obtained by getting
a secured credit card and paying on time. This will allow
you to get an unsecured credit card. Car loans are available
right after filing for bankruptcy.
back
to top
How much will it cost to file bankruptcy?
It varies, depending on how much time is involved
in the case, and the type of bankruptcy you choose. As a general
rule, Chapter 7 bankruptcy is the least expensive type of
bankruptcy to file. Often, prices can start as low as $400
(plus court costs of $200). This fee must be paid directly
to the attorney before filing the bankruptcy. The cost of
Chapter 13 typically is $1,500 (plus court costs of $185),
but is paid as part of your bill re-payment plan.
back
to top |
