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Commonly Asked Bankruptcy
Questions
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WHAT IS BANKRUPTCY?
Bankruptcy is a legal action in which a person who cannot pay his or her bills can get a fresh financial start. The right to file bankruptcy is provided by federal law, and all bankruptcy cases are handled in federal court.
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HOW CAN BANKRUPTCY HELP ME?
By filing for bankruptcy, you may:
get most or all of your bills wiped out (DISCHARGED); get to keep most or all of your property which otherwise might have been lost to creditors; and get extra time to pay bills, if you have regular income.
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WHICH CHAPTER OF BANKRUPTCY IS RIGHT FOR ME?
There are two (2) types of bankruptcy for individuals:
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CHAPTER 7
In straight bankruptcy under Chapter 7, you, the debtor, file a petition asking the court to discharge your debts. The basic idea in a Chapter 7 bankruptcy is to wipe out (discharge) your debts in exchange for you giving up your property, except for EXEMPT PROPERTY which the law allows you to keep. In many cases, much or all of your property may be exempt. Property which is not exempt is sold and the money is distributed to creditors.
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CHAPTER 13
In a Chapter 13 case, you, the debtor, file a PLAN showing how you will pay off some of your past-due and current debt over an extended period, normally 3 to 5 years. This is different from Chapter 7 bankruptcy, where you ask the court to discharge your debts. The most important thing about Chapter 13 is that it will allow you to keep valuable property - especially your home, which might otherwise be lost.
You should consider filing a Chapter 13 plan if you:
own your own home and are in danger of losing it because of money problems; are behind on debt payments, but will be able to catch up if given some time; have regular income (including government benefits such as social security or public assistance).
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HOW MUCH WILL I HAVE TO PAY TO FILE BANKRUPTCY?
The filing fees for Chapter 7 & Chapter 13 are as follows:
Chapter 7: $200.00
Chapter 13: $185.00
Attorney Fees: In addition to the legally mandatory filing fees, the debtor will also have to pay attorney fees.
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WILL BANKRUPTCY AFFECT MY CREDIT?
There is no clear answer to this question. If you file for bankruptcy, it can appear on your credit for ten (10) years. But since bankruptcy wipes out your old debt, you are likely to be in a better position to pay your current bills, so you may be able to get new credit.
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HOW WILL BANKRUPTCY AFFECT MY EMPLOYMENT?
An employer or government agency cannot discriminate against you because you have filed bankruptcy.
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WHAT CAN I EXPECT IF I FILE BANKRUPTCY?
The bankruptcy process is a meticulous one, which requires a debtor to complete a full inventory of his or her assets and liabilities. The appropriate forms must be completed and filed with the court. Most importantly, a debtor-in-bankruptcy must be completely honest and forthcoming regarding his or her financial affairs. A debtor(s) will be required to sign a form, certifying that he or she has made complete disclosure of his or her financial records. Without this disclosure, the bankruptcy process cannot proceed.
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THIS MATERIAL IS INTENDED TO PROVIDE GENERAL INFORMATION TO YOU REGARDING THE BANKRUPTCY PROCESS. IT IS NOT AN EXHAUSTIVE EXPLANATION OF THE ENTIRE BANKRUPTCY PROCESS, AND IS NOT INTENDED TO CONSTITUTE LEGAL ADVICE.
The filing fees are the same for an individual or a married
couple. In addition, a debtor who cannot afford to pay these
fees at once can arrange with the court to pay the fees
in installments. |