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FAQ’s
Q: What exactly is bankruptcy?
Bankruptcy is a federal court process under the United
States Bankruptcy Code designed to help individuals or
businesses ("debtors") that owe others ("creditors")
more
money than they're able to pay. It allows them to either work
out a plan to repay the money over time or completely eliminate
most of the bills under the protection of the Bankruptcy Court.
Q: Who can file bankruptcy?
With few exceptions, any person or business owing money to a creditor
can file a bankruptcy petition.
Q: Can I file bankruptcy without
a lawyer?
Yes you can, but we recommend that you visit an Attorney, get
an overview of your situation and any issues that are present
in your case.
If you think of filing bankruptcy as "just
filling out forms", you’re mistaken. It’s the
same as seeing tax preparation as "just filling out forms";
and the tax forms come with instructions written for the non-professional.
Bankruptcy forms do not.
The more complex your situation, the more you have
to lose in an ill advised bankruptcy filing. It should be worth
your while to pay an Attorney to advise you and guide you in your
bankruptcy proceeding.
Q: What is the difference between
Chapter 7 and Chapter 13 Bankruptcy?
In Chapter 7 bankruptcy, you are seeking that the Bankruptcy Court
discharge most of the debts you owe. In exchange for this discharge,
the Bankruptcy Trustee can take any property you own that is not
exempt from collection (see below), sell it, and distribute the
proceeds to your creditors. The Bankruptcy Trustee is an official
appointed by the Bankruptcy Court to oversee you case. The Bankruptcy
Trustee is charged with the duty of making sure that your filing
is truthful and if there are assets that are non-exempt he or
she can take those assets to satisfy your current debts.
In Chapter 13 bankruptcy, you are seeking that the
Bankruptcy Court approve a repayment plan whereby you manage some
of your debt down to manageable levels and eliminate other debts.
In Chapter 13 bankruptcy you file a repayment plan with the bankruptcy
court to pay back all or a portion of your debts over time. This
plan is called the Chapter 13 Plan. The amount you'll have to
repay depends on how much you earn, the amount and types of debt
you owe, and how much property you own. There is also a Bankruptcy
Trustee appointed by the Court to oversee you case. The Bankruptcy
Trustee is charged with the duty of making sure that your filing
is truthful, if there are assets that are non-exempt he or she
can take those assets to satisfy your current debts and the Bankruptcy
Trustee administers plan payments and distributions to creditors.
Q: What do I need to begin
the bankruptcy process?
You need to compile a listing of the past and present debts you
have. The Petition in a bankruptcy filing includes schedules of
assets and liabilities, as well as a statement of financial affairs.
These documents are filed with the Bankruptcy Court, along with
payment of the applicable filing fee.
Q: What happens if one spouse
files for bankruptcy and not the other?
Your spouse will not be affected when you file for bankruptcy
if they are not responsible (did not sign an agreement or contract)
for any of your debt.
Q: When can I apply for credit
again?
There is no law that prevents anyone from extending credit to
you immediately after the filing of a bankruptcy, but creditors
aren’t required to extend you credit. A number of banks
now offer "secured" credit cards where a debtor puts
up a certain amount of money (as little as $200) in an account
at the bank to guarantee payment. Usually the credit limit is
equal to the security given and is increased as the debtor proves
his or her ability to pay the debt. Steady repayment of these
debts after a bankruptcy can help a person rebuild their credit.
Q: When do I have to stop using
my credit cards if I'm planning on filing for bankruptcy?
As soon as you anticipate filing bankruptcy, you should stop using
your credit cards. Bankruptcy law allows the review of questionable
purchases for potential fraud. A bankruptcy filing is not meant
to be a windfall to a person rewarding them for a credit transaction
made in anticipation of a bankruptcy filing.
Q: When will I be discharged
from bankruptcy?
One of the major purposes of bankruptcy legislation is to afford
the opportunity to a person hopelessly burdened with debt to reduce
or eliminate his or her debt and thereby get a fresh financial
start. A person's debt is reduced or eliminated pursuant to the
bankruptcy filing when he or she receives the discharge in bankruptcy
from the Court. In a Chapter 7 bankruptcy the debtor is typically
discharged 3 months after bankruptcy is filed. In a Chapter 13
bankruptcy the debtor is typically discharged upon the completion
of the Chapter 13 Plan.
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