Bankruptcy
What is Bankruptcy?
Bankruptcy allows a person who is hopelessly burdened with debt to free himself from that debt and start life in a new way. It allows individuals and businesses to work out a plan to repay money to the creditors over a period of time or completely eliminate most of the bills. However, to go bankrupt, the person has to declare himself as an insolvent.
Which kind of bankruptcy should I file?
You should know first-hand that consumers generally file Chapter 13 bankruptcy, where repayment is made to creditors, or Chapter 7 where the debts are dismissed. The type of bankruptcy that you would file depends on your circumstances and if you have assets available to repay all or part of your debts. You must consult an attorney as bankruptcy laws can be tricky and it is not always easy to determine under which chapter of bankruptcy one should file. Generally, Chapter 7 is the least expensive because you do not have to pay off the debts. Under Chapter 13 you repay about 10 cents followed by Chapter 11. So you must be aware of your different choices and consult with the attorney before filing bankruptcy.
What are the most common reasons for a Chapter 7 Bankruptcy?
Chapter 7 Bankruptcy is also known as straight bankruptcy as it is a liquidation proceeding whereby the debtor turns over all non-exempt property to the bankruptcy trustee who then converts it to cash for distribution to the creditors. One of the main purposes of Chapter 7 is to allow the person to start afresh. Unemployment, medical expenses, marital expenses are some of the common grounds for people to file Chapter 7 bankruptcy.
What is Chapter 13 Bankruptcy?
Chapter 13 Bankruptcy or a reorganization bankruptcy is one that allows individuals to pay off their debts over a period of time, generally three to five years. People who want to keep their non-exempt property can opt for this option of bankruptcy.
Can I file a personal Chapter 11?
The chapter 11 bankruptcy can be filed by individuals who wish to reorganize or restructure their debt load.
What’s the difference between secured and unsecured debt?
Before filing any sort of bankruptcy you must know that secured debt is a claim that’s secured by some type of property, either by an agreement or involuntarily with a court judgment or taxes. Property that is secured by debt can be claimed by the creditors in case of bankruptcy but unsecured debt is not tied to any type of property and the creditor cannot claim it under any circumstances.
Will my creditors stop harassing me?
By law all kinds of action against a debtor will cease once he files for bankruptcy. When the debtor is working out a plan, the bankruptcy code dictates that all creditors must stop all collection efforts against the debtor. A debtor cannot be pursued once the documents are filed.
Will my spouse be affected?
Your spouse will not be affected by your bankruptcy if he or she is not responsible for any of your debt. However, if your spouse is responsible for any of your debt then he or she may have to file bankruptcy too. Exceptions such as purchase or sale of real estate require both spouses’ signatures on contracts so both spouses would have to file for bankruptcy in such cases. Finally, your attorney should be your best guide in such matters.
When will I be discharged from bankruptcy?
Once you file for bankruptcy you would generally be discharged within 3 – 5 months.
Will I ever get credit again?
Obviously you will get credit from various banks. Two years after a bankruptcy discharge, you are also eligible for mortgage loans so you need not worry about anything. Besides, the fact you filed bankruptcy stays on your credit report for 10 years after which you are allowed to go along with your life normally and everything that happened in the past is never recalled later.
Can my boss fire me for filing bankruptcy?
Your boss cannot fire you for filing bankruptcy so you need not worry about it.
I was bankrupt before. When can I file again?
After passing of 8 years a person can again file Chapter 7 bankruptcy.
What debts cannot be discharged in bankruptcy?
Liens, such as mortgages and security interests in cars are non-dischargeable debts and you must be aware that these debts cannot be written off. Further, customs duties, taxes, child support, secured debts and fines and penalties imposed by the government.
Can I change from one chapter of bankruptcy to another?
Under a “motion to convert” you can change from one chapter to another.
Will I lose my home if I file for bankruptcy?
Whether you would lose your home or not depends on several factors, such as in which state you are in and the exemptions allowed in that state, the status of your loan and the type of bankruptcy etc.
How long does a bankruptcy stay on my record?
Your public records will hold proof of your bankruptcy for 7-10 years.
When can I apply for credit again?
Once you file for bankruptcy, you can still apply for credit, thought it will largely depend upon the creditor whether he wants to give you credit or not. The creditor cannot be forced to give you credit under any circumstances.
Can creditors object to a bankruptcy filing or plan?
Bankruptcy filings allow creditors to object to specific debts and they can do it after 60 days of the first creditor’s meeting. They have absolute right to object to your bankruptcy filing or plans
