Bankruptcy offers a legal blanket of protection to those who are overloaded with debt. This can be a fresh financial start. Many people choose bankruptcy as a method of easing stress and worry due to out of control finances. Below are some commonly asked bankruptcy questions and answers which you may find helpful.
What is bankruptcy?
Bankruptcy is a plan set up by the federal bankruptcy court to provide relief to those burdened with debt. Sometimes the debt may be eradicated. Other times debt may be consolidated into one affordable payment.
Who may file for bankruptcy?
Most anyone may file for bankruptcy if their debt far out weights income. However, there are set rules for filing. A bankruptcy attorney may help you access eligibility to file. Also, the person must have not filed a prior bankruptcy case within a set amount of time.
How many times may a person file for bankruptcy?
A person may file multiple times for bankruptcy if needed. However, there is a waiting period between each filing. As well, the bankruptcy court may want to know the reason for multiple filings. Some courts and states may even order credit counseling to help the person acquire better skills in money management.
How long must a person wait between filing bankruptcy cases?
Usually the wait is eight years for a chapter seven filing and three years for a chapter 13.
What is a chapter 13 bankruptcy?
Chapter 13 bankruptcy is very similar to debt consolidation. The debtor supplies a list of all creditors. In return, these debts are consolidated into one low payment. This payment is more in line with what the person may pay based on their income. Most often chapter 13 bankruptcy is based on a three to five year repayment plan.
What is a chapter 7 bankruptcy?
Chapter seven bankruptcy is a liquidation of debt. The debtor agrees to relinquish possession of most non-exempt assets to the bankruptcy court. Within a few months debts are cleared.
Can I keep my house and car if I file bankruptcy?
This depends on the type of bankruptcy filed. Most often chapter 13 will allow the person to keep assets. However, chapter seven may require that such assets be forfeited to repay debt if there is a lot of equity in the property.
How long does bankruptcy remain on a persons credit?
A chapter 7 bankruptcy remains on the credit report for ten years and a chapter 13 for seven years.
Once I file for bankruptcy can creditors still harass me?
No. Once you have given creditors a bankruptcys case number they are no longer allowed to contact you. They will no longer be able to make telephone calls, sue you, home visits, garnish wages, or perform repossessions. If they do so they are breaking the law.
If I am married does my spouse have to file also?
No. One spouse may file without the other. This will not effect the credit of the non filing spouse in any way. However, joint credit accounts and loans may not be included in the bankruptcy case.
Who will know that I have filed bankruptcy?
It is true that bankruptcy is a public record. However, most people will never know you have filed.
Can I be fired from work for filing bankruptcy?
No. Employers may not fire an employee for reasons of poor credit. In fact, U.S.C. Sec. 525 is a law which prohibits any employer from discriminating against persons who have filed bankruptcy.
The above information cover some common bankruptcy questions. For a complete list of answers you may want to seek the advice of a local bankruptcy attorney. Bankruptcy is a valuable solution to many out of control debt situations. You can click here to find a local bankruptcy attorney you can talk to for free.