Question: How do I know when I should file bankruptcy?
Answer: The first step is to explore your other options to see if they would be of any help to you. By filling out a form on our site, we can match you with pre-qualified providers of credit card debt help and debt consolidation. After receiving a free consultation from an expert in debt help, you will have a better idea of whether filing bankruptcy is the right direction for you.
Q: Who can file for bankruptcy?
A: With a rare exception, any person or business that owes a particular amount of money to one or a number of creditors can file bankruptcy as a debt help option.
Q: How often can you file for bankruptcy?
A: Chapter 7 bankruptcy can be filed eight years following a previous Chapter 7 filing and six years after a previous Chapter 13 filing. Chapter 13 Bankruptcy can be filed four years after a previous Chapter 7 filing and two years after a previous Chapter 13 filing.
Q: Where can I find the necessary paperwork or forms to file bankruptcy?
A: You can access the paperwork via internet on www.uscourts.gov or by going to legal stationary stores who typically carry that paperwork.
Q: What are my bankruptcy alternatives for credit card debt help?
A: The most common credit card debt help options are credit card debt settlement, consumer debt counseling, and debt consolidation. For more information on regarding your alternative debt help options check out our additional resources available here on our website.
Q: Is the process of filing bankruptcy a difficult one?
A: Filing bankruptcy became more difficult in 2005. At that time, bankruptcy courts forced the debtor to enter a government approved credit counseling program prior to filing for bankruptcy bankruptcy. During this arrangement, counseling agents work with the debtor to make sure filing bankruptcy is their best debt relief option In part, a debtor must now “qualify” in a sense in order to file bankruptcy.
Q: What is the first step I must take in order to file?
A: Make a list of all of the debts you have, past and present. In addition, you will eventually need to include your financial affairs, assets, and liabilities in a petition that you will sign and submit to a bankruptcy court.
Q: Can you tell me every piece of information I will need to have in order to file?
A: Yes. You will need to have all of the following: home address, social security number, employer’s name and address, salary and wage description, a list of all the creditors you owe, a list of your major property, a list of all your personal means of income, a list of your financial accounts, a list of your monthly expenses, and a copy of your state and federal tax returns from the previous two years.
Q: What is a joint petition?
A: A joint petition is submitted by a married couple who wish to file bankruptcy. The couple must be married at the time that thejoint petition is submitted to the bankruptcy court.
Q: Is there a minimum amount of debt I must owe in order to file bankruptcy?
A: No there is not. Make sure that you are confident that your financial situation is not a temporary one before you consider bankruptcy as your top debt help option, however.
Q: Do I need a lawyer to represent me if I file Bankruptcy?
A: No, you do not. Individuals can represent themselves, which is referred to as “Pro Se.” Businesses however, if filing bankruptcy, must have a lawyer representing them.
Q: If I file bankruptcy, is that public information?
A: Yes, anyone who wants can call the bankruptcy court and ask if you have ever filed. In addition, anyone may come to the bankruptcy court and review your case file.
Q: What is Chapter 7 Bankruptcy?
A: When a person files Chapter 7 Bankruptcy, they are forced by the bankruptcy court to turn over all of their non-exempt property to a court appointed trustee. The proceeds made from the sale of this property are used to pay off their unsecured creditors. In turn, your debts are eliminated and your creditors consider the debts paid off.
Q: How do the new bankruptcy laws influence my ability to file Chapter 7?
A: It makes it more difficult to clear your debts through bankruptcy. Under the new bankruptcy laws, in order to qualify for Chapter 7 Bankruptcy your income must be at or below the state median. If your income is above the state median, then you must pass the Means Test in order to file for Chapter 7 Bankruptcy.
Q: What exactly is the Means Test?
A: The debtor must subtract certain allowed expenses as well as the outstanding debt that is owed from their current monthly income. If the remaining figure is below a certain value, then you pass the Means Test and are able to qualify to file Chapter 7.
Q: Can my wages be garnished if I file for Chapter 7?
A: No, your wages cannot be garnished if you opt for Chapter 7 as a credit solution. This is why many consumers find Chapter 7 Bankruptcy an appealing solution to rid their debts.
Q: Will the collection agencies continue to hound me if I file for Chapter 7?
A: Collection agencies are required under law to cease all collections activity once a consumer files for Chapter 7.
Q: What is the role of the trustee appointed by the bankruptcy court who would handle my case if I file for Chapter 7?
A: The bankruptcy court appointed trustee pays off your creditors with the proceeds made from the sale of your non-exempt property. In addition, often times the debtor must have every financial transaction he or she makes approved by the trustee from the time you file for Chapter 7 until the case is considered closed by the court.
Q:Can private employers deny me a job if they know I filed Chapter 7 Bankruptcy?
A: Yes, private employers reserve the right to refuse jobs to anyone who has filed Chapter 7 Bankruptcy in the past. For more information about this topic, check out our article about life after bankruptcy.
Q: How long after I file Chapter 7 Bankruptcy does it appear on my credit report?
A: Filing Chapter 7 Bankruptcy remains on your credit report for approximately 10 years. (This doesn’t answer the question—the answer should be “typically within 30 days your credit report will reflect that you filed Chapter 7 bankruptcy, and it will stay on your credit as such for 10 years”).
Q: How long after I file Chapter 7 Bankruptcy does it appear on my court records?
A: Filing Chapter 7 Bankruptcy remains on your court records for approximately 20 years.
Q: Can future potential employers ever find out if I filed Chapter 7 Bankruptcy?
A: Yes, they can. On many job and loan applications, there is a question that reads, “Have you ever filed bankruptcy?” You are required to answer “Yes” to this question. If you do not, you have technically committed criminal fraud. In addition, the employer will most likely pull your credit report anyway and find out that you have indeed filed Chapter 7 Bankruptcy.
Q: Will I have difficulty receiving loans in the future if I file Chapter 7 Bankruptcy.
A: It is nearly inevitable that future potential lenders will be extremely hesitant to provide loans to any consumer who has filed Chapter 7 Bankruptcy. Again, you must answer “Yes” to the question, “Have you ever filed bankruptcy before?” that will appear on most loan applications. In simple terms, you may be considered financially irresponsible in the eyes of these lenders. Typically, they will not want to loan money to anyone they feel could not have the ability to pay back the loan.
Q: Can I ever be forced to file Chapter 7 or Chapter 13 Bankruptcy if filing bankruptcy is something I am moving forward with as a credit card debt help solution?
A: Yes, you can. If your income is above the state median where you live, you will be forced to file for Chapter 13 Bankruptcy. The bankruptcy court will assume you have the income to pay off your creditors without liquidating your non-exempt property.
Q: What is Chapter 13 Bankruptcy?
A: When a person files Chapter 13 Bankruptcy, the bankruptcy court sets them up on a monthly installment plan that typically lasts five years to pay off their outstanding debts. All of the consumer’s disposable income during that five year period must be turned over to the program to help pay off the creditors. These payments are turned over to a court appointed trustee who pays off your creditors over that time period.
Q: If I file Chapter 13 Bankruptcy, will I have to make payments for a minimum of five years?
A: If you’re able to pay off the creditors faster due to a number of reasons (i.e. generating a higher income), then you won’t have to remain in the program for at least five years. The bankruptcy court will adjust your installment plan so you may complete the program faster.
Q: How likely is it if I file Chapter 13 Bankruptcy that I will be able to complete the installment program?
A: Unfortunately, roughly 50% of people who file Chapter 13 Bankruptcy do not complete the five year installment program and are forced to drop out.
Q: What happens if I file Chapter 13 Bankruptcy and miss a payment or two?
A: Missing even one payment can lead the bankruptcy court to order you to pay back the full debt amount that you owe.
Q: After I file Chapter 13 Bankruptcy, how long does that appear on my credit report?
A: Filing Chapter 13 Bankruptcy remains on your credit report for approximately seven years. Read this article or more information about your credit after bankruptcy. .
Q:After I file Chapter 13 Bankruptcy, how long does that appear on my court records?
A: Filing Chapter 13 Bankruptcy remains on your legal records for approximately 20 years.
Q:When should I really consider debt help bankruptcy alternatives?
A: If you are generating enough income to afford a monthly payment for a debt settlement or credit counseling organization, you really want to avoid filing Chapter 7 or Chapter 13 Bankruptcy. That way, you do not turn over your property or income and you can avoid the catastrophic affect that Chapter 7 and Chapter 13 Bankruptcy have on your credit report.
Q: What are bankruptcy exemptions?
A: Bankruptcy exemptions vary from state to state. They are laws that ensure that particular assets of a debtor who files bankruptcy are protected so the debtor has a chance to start fresh after the bankruptcy case is complete.
Q: What does “Home exempt up to X dollars” mean?
A: Bankruptcy exemptions are also meant to ensure that debtors who are solvent (have assets worth more than what they owe) are not simply avoiding their payments to their creditors. For example, if you live in a state with a home exemption of 20,000 and your house is worth 80,000, you may be forced to sell your home in order to pay back your creditors what you owe in debt. In this case the debtor would be entitled to the 20,000 dollar exemption, and the remaining 60,000 would be dispersed among their creditors.
Q: What are federal bankruptcy exemptions?
A: A number of states are allowed to make a choice between their state bankruptcy exemptions or federal bankruptcy exemptions.
Q: What states are eligible to use federal bankruptcy exemptions?
A: The states that are eligible to use state or federal bankruptcy exemptions include: Arkansas, Connecticut, Washington D.C., Hawaii, Massachusetts, Michigan, Minnesota, New Hampshire, New Jersey, New Mexico, Pennsylvania, Rhode Island, Texas, Vermont, Washington, and Wisconsin.
Q: So what actually is included in the federal bankruptcy exemptions?
A: 1) Real Estate, Personal Property, and Automobiles including:
-Real property, including mobile homes, burial plots, and co-ops up to $18,450
-Automobiles up to $2950
-Animals, books, clothing, musical instruments, crops, and household goods up to $9850 ($475/item)
-Jewelry up to $1225
– Personal injury recovery up to $18,450
-Wrongful death recoveries for a dependent
-Lost earnings payments
2) Insurance including:
-Veteran’s benefits pension
-Crime victim’s compensation
-ERISA qualified benefits needed as a support
3) Tools of trade including:
-Tools, implements, and books up to $1850
4) Others include:
-Child support and alimony
Q: Is the federal bankruptcy exemption system better the state bankruptcy exemption system?
A: It ultimately depends on what state you live in and what your assets are worth. It may be beneficial to contact a bankruptcy attorney in your state for additional debt help advice regarding bankruptcy exemption systems.
Q: How does the federal bankruptcy exemption system work if I am married?
A: You are able to double the amounts of each of the exemptions if you are married and file under a federal bankruptcy exemption system.
Q: Are the amounts protected under a federal bankruptcy exemption system ever changed?
A: Yes they are. The government adjusts the amounts on April 1st every three years to accommodate the Current Consumer Price Index.
Q: What states have the best bankruptcy exemption systems?
A: Obviously this depends on your situation, but many experts believe the states that have the best bankruptcy exemption systems include Florida, Texas, South Dakota, Iowa, Oklahoma, and Arkansas.
Q: What are federal non-bankruptcy exemptions?
A: Federal non-bankruptcy exemptions are protections against certain aspects even if the debtor files under a state exemption system. They also pertain to legal judgments and garnishments.
Q:What exactly are the federal non-bankruptcy exemptions?
A: 1) Pensions including:
-Civil Service employees
-Foreign Service employees
-Military Medal of Honor
-Military service employees
2) Public Benefits including:
-Government employee disability and death benefits
-Longshoreman employee disability and death benefits
-War hazard, risk, injury, or death compensation and benefits
-Lighthouse worker’s service benefits
-Military service survivor’s benefits
-Judges, US court and judicial center directors, administrative assistants to US Supreme Court Justice survivor’s benefits
-Seamen’s wages under written contract while on voyage
-Military group life insurance
-Railroad worker’s unemployment insurance
-Military deposits in savings accounts while on permanent duty outside of the US
-Klamath Indian tribe benefits for Indians living in Oregon
-Indian lands or homestead sales or lease products
Q: What is tenancy by the entirety?
A: Tenancy by the entirety is a property ownership status applied only in some states. With tenancy by the entirety, if one spouse files for bankruptcy and the properties in question are under both spouses name, then that property is protected by this status.
Q: If both spouses file bankruptcy, is some property protected under tenancy by the entirety?
A: No it is not. If both spouses file bankruptcy then the property in question may be liquidated in order to pay back the creditors who are owed.
Q: Is all property protected under tenancy by the entirety?
A: In some states, yes. These states include Alaska, Arkansas, Delaware, District of Columbia, Florida, Hawaii, Maryland, Massachusetts, Mississippi, Missouri, New Jersey, Oklahoma, Pennsylvania, Rhode Island, Tennessee, Vermont, Virginia, and Wyoming.
Q: Are there states where only some property is protected under tenancy by the entirety?
A: Yes, there are. In these states, only real estate is protected by tenancy by the entirety. These states include Illinois, Indiana, Kentucky, Michigan, New York, North Carolina, and Oregon.
Q:Is bankruptcy an efficient debt relief option if I have a lien on my home?
A: If you are in a situation where you cannot afford the monthly payments of a bankruptcy alternative debt help program, then liens can potentially be eliminated through filing bankruptcy.
Q: If I am going to file bankruptcy, what is my first step in eliminating the lien?
A: While elimination of the lien is not guaranteed or required, you should contact your lawyer who submits a request for the termination of the lien through bankruptcy.
Q: How do I know if I am going to be able to avoid the lien through bankruptcy?
A: Ultimately it depends on the state you live in and the bankruptcy exemption system of that state. If your property value is worth less than the bankruptcy exemption in your state, the bankruptcy court will allow you to avoid the lien.
Q: If I file for bankruptcy, am I free of my child support and alimony obligations?
A: No you are not. These debts remain as if you had never filed for bankruptcy in the first place. If you file Chapter 13 Bankruptcy, the installment plan will include these payments. Bankruptcy may be an efficient credit card debt help solution but in no way does it free you from these obligations.
Q: If I file for bankruptcy, will that eliminate my student loans?
A: If you can prove to the bankruptcy court that paying back the loan would cause you “undue hardship,” then you may be freed of this obligation. However, these are very difficult standards to meet in a bankruptcy court and typically debtors who have student loans that file for bankruptcy must pay those debts as well.
Q: If I file for bankruptcy, will that eliminate my tax debt obligations?
A: At times, it is possible that you meet the requirements for facing no obligation to pay back older income tax debts. However, the criteria for meeting this standard is also very difficult and the majority of tax debt obligations will remain throughout the bankruptcy process.
Q: If I file for bankruptcy, will that stop a mortgage foreclosure?
A: Filing Chapter 13 Bankruptcy is the only way to stop a mortgage foreclosure. Filing Chapter 7 Bankruptcy will not prevent this from happening.
Q: Can I convert from one chapter bankruptcy to another?
A: Yes you can, and this is typically a very easy process. Normally you must submit a document requesting the conversion and the reason for the request.
Q: If my ex-spouse filed bankruptcy, am I protected under my divorce decree from their debt obligations.
A: This depends. If you are a co-signor on your ex-spouses accounts, then your divorce decree does not protect you from these obligations. You may be forced to pay off a portion or all of the debt that your ex-spouse has compiled.
Q: Am I able to file bankruptcy on only a portion of the accounts that I have?
A: You must include all debts owed on your original petition. However, if you can “re-affirm” the debts to the bankruptcy court, you may be able to keep those debts open.
Q: Can a credit repair company prevent me from having to file bankruptcy as a debt help option?
A: Credit repair companies most likely will not be able to clear your report to the extent where you would no longer have to file bankruptcy. In addition, most consumers can do exactly the same thing that these repair companies do in order to improve their report without paying any fees.
Q: Can creditors object to a debtor filling bankruptcy as a means of eliminating their debts?
A: Yes, they can. In Chapter 7 Bankruptcy filings, the creditors have 60 days to respond with an objection. In Chapter 13 Bankruptcy filings, the creditors may dispute the installment plan the bankruptcy court sets up for you.
Q: When will my bankruptcy case be closed?
A: That varies depending on which bankruptcy chapter you have filed. Chapter 7 Bankruptcy cases rarely close before 90 days, and since the debtor is required to liquidate all non-exempt assets to pay of the debt, it can take as long as a few years before the case is closed. Chapter 13 Bankruptcy cases will typically not close for three to five years which is the usual length of the installment program the debtor is set up on by the bankruptcy court.
Q:What is a discharge from bankruptcy?
A: Once discharged, the debtor is considered free from most debt obligations they are facing.
Q: Do I have to go to court if I file bankruptcy to eliminate my credit card debt?
A: Technically, there is no court date that you must attend. However, in both Chapter 7 and Chapter 13 bankruptcy cases, you are required to attend the initial “creditor’s meeting” that normally takes place at the appointed trustee’s office. This meeting is also known as “a meeting under 341” or “the first meeting of creditors.” If you do not attend this meeting, your bankruptcy case will automatically be dismissed.
Q: When does the first meeting of creditors take place?
A: Typically the first meeting of creditors will take place six weeks after a debtor has filed for bankruptcy. The court will mail you a notification stating the date and location of the meeting.
Q:Can the date of the first meeting of creditors be changed?
A: Technically the date of the first meeting of creditors cannot be changed. However, your court appointed trustee can submit a request to set the meeting for another date if there is a genuine reason for doing so. However, there is an additional charge for even making the request to change the date.
Q: What are my options if my bankruptcy case is dismissed?
A: If your bankruptcy case is dismissed, you have two options: move to reinstate your case or re-file under a different bankruptcy chapter. You must wait 180 days after your initial bankruptcy case was dismissed in order to re-file under a different bankruptcy chapter or move to reinstate the original bankruptcy case.