Declaring Bankruptcy FAQ
Declaring Bankruptcy FAQ
Q: What is Declaring Bankruptcy Under Chapter 7?
A: Declaring bankruptcy under chapter 7 refers to a total discharge of debts and is a liquidation proceeding. During this type of bankruptcy case, an individual is released from paying certain, if not all, debts back to the creditors. Certain items of property, deemed non-exempt, can be taken, though, to help pay back the debt as determined by the court.
Q: What is Declaring Bankruptcy Under Chapter 13?
A: Chapter 13 bankruptcy is when a payment plan is made to pay back any debts you owe. The court will decide on a payment plan of three to five years. This will help you catch up on your payments and will keep you from losing valuable items during the bankruptcy.
Q: Do I need an Attorney for Bankruptcy?
A: It is advisable to hire an attorney when declaring bankruptcy, but not necessary. You may represent yourself in a bankruptcy case. If you choose to go without a lawyer, you should make sure you file your paperwork correctly and understand all of the paperwork you are signing. If you make an error, you may not be able to obtain your bankruptcy.
Q: Will Creditors Leave me Alone after Declaring Bankruptcy?
A: Yes, by law creditors must not contact you requesting payment for debts after you have declared bankruptcy. This protection will continue until your bankruptcy case is completed. Creditors with contracts on secure debt, such as a bank having a car loan, will request that this stay be lifted if you do not attempt to make your payments after declaring bankruptcy.
Q: Will my Spouse be Affected?
A: If your spouse has not signed a contract and is not responsible for the debt you are trying to discharge in bankruptcy, he or she will not be affected. Be aware, though, that in some community property states, some debt is deemed as marital debt whether the other spouse signed on the dotted line or not. Joint bankruptcies are sometimes better when both spouses owe on the same debt. This may help you keep the creditors off your back after a bankruptcy case.
Q: Who will know about me declaring bankruptcy?
A: Bankruptcies are public record, so anyone who wishes to know about your bankruptcy can gain access to those records. Current employers and future employers may have access to this information. However, by law, you can not be fired or discriminated against because of a bankruptcy.
Q: How long will declaring bankruptcy stay on my Credit Report?
A: Bankruptcies stay on credit reports for ten years. This does not mean you will not be able to access credit for ten years, however. You may be able to obtain secured credit just a few years after declaring bankruptcy.
Q: Will declaring bankruptcy involve me going to court?
A: In each bankruptcy case, there is a 341 meeting. This meeting will include you, your bankruptcy trustee, and your creditors. Not every creditor will attend, but the ones that do will be allowed to ask you certain questions pertaining to your income and ability to pay back your debt. Always answer these questions honestly; your answers will help determine whether you are sufficiently capable of paying your debt.
Q: How much does declaring bankruptcy cost?
A: Declaring bankruptcy generally costs about $300, although you may be able to save money by filing online. If you choose to hire an attorney, this will usually cost between $1,000 and $2,000.