Bankruptcy Questions Answered
Our blog is here to answer all kind of your questions. We have worked hard and endeavor to provide an up-to-date information and news about bankruptcy and its processes.
Whether you are looking for basic information about the protections available to you through Chapter 13 or Chapter 7 Bankruptcy, or have thought seriously about filing bankruptcy and are seeking help about specific issues, we are here to help you get control of your finances and move toward a future free of crippling debt.
We explain how filing bankruptcy can Stop Foreclosure and help you keep most of your personal belongings. If the information on the site does not answer your bankruptcy questions, a sponsoring attorney in your area is ready to provide you with a free evaluation of your personal situation and advise you what types of debt can be discharged in bankruptcy.
Making the decision to file bankruptcy is not easy. Getting all the information about bankruptcy and answers to your questions so that you can make an informed decision is very important. Take a look around our Web site and hopefully we have provided you with a comprehensive overview of bankruptcy, its process, benefits and drawbacks.
Q: What is bankruptcy?
A: Bankruptcy is a process under federal law that allows debtors who owe more money than they can pay to either eliminate their debts or work out a payment plan to pay a portion (or all) of their debts over time.
Q: Will bankruptcy stop all the harassing phone calls and mail from bill collectors?
A: Yes! An “automatic stay” will take effect when you file your case. It will stop the creditor harassment.
Q: Will bankruptcy stop a wage garnishment from a lawsuit over an unsecured debt? A: Yes. The automatic stay will stop the garnishment.
Q: How long will bankruptcy remain on my credit report? A: Bankruptcy can remain on your credit report for ten years.
Q: What does “secured” or “unsecured” debt mean? A: Secured debt is debt that allows a creditor to make a claim on an asset (i.e. home, real property or car). Unsecured debt is held by creditors that have no claim to your assets (i.e. credit cards).
What Is Chapter 7 Bankruptcy?The answer to this question lies in the answer to a broader question: “What is the ultimate aim of filing for bankruptcy?”
If filing for bankruptcy is an opportunity for a debtor to emerge out of a financial crisis and start afresh, then Chapter 7 of the Bankruptcy Code is the way to achieve this end relatively faster. Under Chapter 7 of the Bankruptcy Code all non-exempt property of the debtor is sold and the proceeds of the same are distributed to the creditors. In most cases where Chapter 7 is brought into force the debtor has no assets to lose, therefore the fresh start takes place relatively faster.
How Can I Be Sure This Is The Best Way?
Also known as liquidation (converting assets into money) or a straight bankruptcy, Chapter 7 Bankruptcy is the most common form of bankruptcy filing. This type of bankruptcy filing accounts for as much as 65% of all Consumer Banking filings.
As mentioned before, this is one of the faster ways of starting afresh, and more so if there are no objections from any of the parties involved. Ordinarily, most (if not all) debts would be discharged within months of the attorney filing a bankruptcy petition.
How Does Chapter 7 Bankruptcy Work?
A trustee is appointed who collects all non-exempt property, sells the assets and distributes proceeds from this sale to appropriate creditors. Chapter 7 is different from other bankruptcy filings because the debtor needs not make a payment to the trustee.
Even though in some cases this would mean that you will lose all your assets, this need not always be the case. It is strongly recommended that if you are apprehensive and feel you will lose your assets, discuss the matter with your Bankruptcy Attorney.
Under Chapter 7 Bankruptcy, the debtor receives a discharge on all dischargeable debts. There are 19 general classes of debt, such as child support, most taxes and student loans that are discharged under Chapter 7 Bankruptcy.
An added advantage with Chapter 7 bankruptcy is that by signing a reaffirmation agreement a debtor can continue to pay for a car loan or a mortgage on their home. This agreement is in place because as per the US Government Bankruptcy Code a debtor could be allowed to retain some or all of his property.
Also, any person who has been granted a Chapter 7 discharge (or completed a Chapter 13 plan) within the last 8 years, cannot file for a Chapter 7 bankruptcy plan.
How Do I File For A Chapter 7 Bankruptcy?
Once you get down to filing for Bankruptcy you’ll know exactly what we mean by repeating that our attorneys know best! Filing for bankruptcy is the fulfillment of a clearly laid of set of rules and procedures, but it is as complex as it seems simple.
Q: What happens if I file and discover another debt after filing? A: Your lawyer can amend your case to include any additional debts you may find after the case is filed.
Q: What happens when one spouse files without the other spouse?
A: You need to discuss this carefully with your attorney. The spouse that doesn’t file may end up being responsible for some of the debts.
Q: Can I be held responsible for a debt that I co-signed?
A: Yes. You can be held responsible for any debt that you signed an agreed that said you would pay in the event that someone else failed to make the payments (co-signed).
Q: Can all debts be discharged?
A: No. There are certain debts like student loans, government loans, back taxes and other debts that cannot be discharged.
Q: Will I lose my social security payments if I file? A: No
Q: Am I going to lose my personal property if I file bankruptcy?
A: There are exemptions, both state and federal, that allow you to keep a certain amount of personal property. Your attorney will explain how these exemptions apply to people who file bankruptcy in your state.
Q: Can I pick which debts to put in the bankruptcy? A: No. You must include all of your debts.
Q: When will I get my discharge?
A: Generally a Chapter 7 bankruptcy discharge is received 60 days after the 341 meeting, or first meeting of creditors. In Chapter 13, your discharge will be sent to you once you have completed the payments under the Chapter 13 plan.
After Filing Bankruptcy
After the difficult and complex process of bankruptcy, debtors often wonder when they will stand back up on their feet again. Despite how bleak your financial condition might seem with some good planning and time you can once again be financially secure. After filing for bankruptcy, your credit rating would definitely be affected, but there are things you can do to once again establish your credit.
Since the Bankruptcy Code and the Fair Credit Reporting Act are federal laws, the period during which bankruptcy details will still be included in your credit report is constant for all states. A consumer credit report that store information about bankruptcy for 10 years. The fact is that it takes about 18 months of paying your bills on time to re-establish a good credit rating which would prove that you can manage your finances sensibly. For those who have filed for bankruptcy, re-establishing credit would be an even more difficult task. However, it is possible to have good credit ratings once again.
First Steps to Reestablishing Your Credit
The first and most important thing to do is to get a job. For a start, even a part time job will be sufficient. The purpose is to create a steady work record as soon as possible. You have to also have to obtain credit records from the three credit bureaus. Once you have your credit report, ensure that all the information on it is correct and you can send in a 100 word statement that give good explanations for your situation, if at all you had a problem.
Additionally, as soon as your credit card debts are paid, you need to get rid of all excess credit cards. That means you can keep only the essential one or two credit cards. By doing so, you are putting on record that you have it in mind to use credit more cautiously from now on. If you are applying for credit cards, do not apply for too many at a time, and it would be a good idea to apply for a credit card with a local store or bank. However, if you are not able to obtain a regular credit card, you can apply for a secure credit card.
At the same time you should also open a savings account and make regular deposits to it. It is also essential that you pay your bills on time in order to ward of building up of debt and bad credit. By opening a checking account and making sure none of you checks bounce you will be showing that you are able to maintain your finances responsibly.
Get A Loan
You can apply for one from your bank or a credit union. Once you get your loan, make sure you make all the payments on time or, even before time, if possible. Before you do so, however, you should check if this organization reports all transactions to credit bureau since not all organizations do so.
That paying of debt and maintaining a good credit rating is not easy is not news. So in such a scenario, you should keep communication channels open with your creditors. Running away from them will not help you; in fact, they might have advice to give you in how to efficiently pay back your debts. After having spoken to them, you need to prioritize your payments. Payments for necessities such as groceries, rent, heat etc should be on top of the list with other pays that affect your credit rating next. At the same time, pay off the debts with the highest interests rates first.