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Common Bankruptcy Questions
What is bankruptcy?
Bankruptcy is a federal court process enlisted to eliminate or repay the debts of consumers or businesses under the protection of the bankruptcy court. What is the difference between Chapter 7 and Chapter 13?
Chapter 7 is also called Liquidation Bankruptcy. Except for specific non-dischargeable debts (such as child support and alimony, student loans, debts for personal injury or death caused by your intoxicated driving, recent income tax debts, and fines and penalties imposed for violating the law) Chapter 7 bankruptcy monitors the liquidation of other assets after which the proceeds are used to pay off creditors.
Chapter 13 is commonly called Reorganization Bankruptcy. A plan is filed with the court which proposes how you will repay your creditors. There will be a portion of the debts repaid in full, others will be dismissed or only partially repaid.
Can filing for bankruptcy stop a foreclosure or repossession?
Yes, Chapter 13 bankruptcy plans can arrange for car and mortgage payments in the reorganization, and the creditor is expected to accept these payments in lieu of foreclosure or repossession. How can I re-establish my credit after filing bankruptcy?
Secured credit cards (in which the debtor deposits funds with the credit card issuer) can be obtained to begin the process of rebuilding credit. Most of our clients are surprised at how relatively easy it is for them to re-establish good credit after a bankruptcy. Although a bankruptcy is not something positive on your credit report, many times it actually improves our client's credit because all debt has been wiped clean and many creditors will consider you a lower risk after a bankruptcy. How much will it cost me?
Court filing fees for bankruptcy average approximately $200.00. The average attorney's fees for a typical consumer case can be as low as $785.00 and we will work with you on flexible payment options. How long is the bankruptcy process?
Typically, a Chapter 7 bankruptcy case takes about four months, while a Chapter 13 filing, because it involves long term repayments, can run as much as five years. Those are the basic questions we are asked, for the real information junkies you can read on for a more in depth discussion. However, if you have been reading this far you should call us so that we can answer all questions as they relate to your specific situation. 732-681-6800 Can a husband file bankruptcy without his wife filing, or must both spouses file?
Either spouse can file on his or her own. It is not required that they both file. What is this going to do to my credit reputation?
This is probably the most commonly asked question. Bankruptcy can be reported for 10 years after which time it must come off the credit report. On the other hand, consider that most people who ask us this question have a credit reputation that is already heavily damaged. If you have repossessions or judgments on your record, and you are heavily in debt, do you think that you can obtain a bank loan if you don't file bankruptcy? Also keep in mind that credit is not your friend. Credit is the reason people end up filing for bankruptcy. Credit means debt. I am current on all my payments. I have never been late on a payment. How can bankruptcy be appropriate for me?
I have many clients that are drowning in debt , but they appear to be "making it" because they have depleted their savings, then they have transferred the debt from one credit card to another (people really do pay their MasterCard bill with Visa) always in search of temporary low interest rates and pre-approved credit cards. Ask yourself what your total monthly credit card and loan debt is. Then ask yourself if you have enough income left over each month after paying normal living expenses to pay the minimum payment on all that debt. If you can't, then you are traveling backwards, even though you haven't defaulted on a loan - yet. The handwriting, however, is on the wall and it is only a matter of time until the house of cards collapses. I am an honest person and I cannot stand the thought of not paying my debts, it's like cheating to me. How can I live with that?
Bankruptcy does not change your moral obligation to repay your debts, it only changes your creditors' abilities to use the legal process to force you to pay them. If you feel obligated to pay your debts, the law welcomes you to voluntarily pay your debts even after bankruptcy has forgiven them. And, if you pay a little bit towards a debt that has been legally forgiven in bankruptcy, that will not re-ignite the old debt, it remains extinguished. You would be free to pay any of your old creditors, in whatever order you wanted, however much you wanted, and when you wanted to do so. You could, for example, pay Visa $5 one month and then skip three years before paying again. You could pay back your friends and relatives before you get to the big banks. |
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This intel was contributed by djfmer
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May, 2012
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