10 Things You Should Know About Bankruptcy

10 things you should know about bankruptcy – What you should know: Frequently Asked Questions (FAQ)

What is bankruptcy?

Answer: Bankruptcy is a legal process that allows individuals or businesses to eliminate or restructure their debt.

What types of bankruptcy are there?

Answer: There are two main types of bankruptcy for individuals: Chapter 7 and Chapter 13. Chapter 7 is a liquidation bankruptcy that wipes out most unsecured debt. Chapter 13 is a reorganization bankruptcy that allows you to keep your assets while paying off your debts over a period of three to five years.

How does bankruptcy affect your credit score?

Answer: Bankruptcy can have a negative impact on your credit score initially, but the exact impact will depend on your individual circumstances. Generally, a bankruptcy will remain on your credit report for 7-10 years. Your credit score will start to improve though, often going up 50-100 points in the year after filing.

Can you keep your house and car in bankruptcy?

Answer: It depends on the type of bankruptcy you file and the equity you have in your house and car. In Chapter 7 bankruptcy, you may have to surrender non-exempt assets, including your house and car. In Chapter 13 bankruptcy, you can usually keep your assets if you can continue to make payments on them.

Can you file for bankruptcy more than once?

Answer: Yes, but there are certain restrictions on how often you can file. In general, you must wait eight years between filing for Chapter 7 bankruptcy and four years between filing for Chapter 13 bankruptcy.

How long does the bankruptcy process take?

Answer: The length of the bankruptcy process can vary depending on the type of bankruptcy you file and your individual circumstances. Chapter 7 bankruptcy typically takes 3-4 months, while Chapter 13 bankruptcy can take 3-5 years.

Will all of your debts be discharged in bankruptcy?

Answer: Not all debts can be discharged in bankruptcy. Some debts, such as student loans and tax debts, are generally not dischargeable in bankruptcy.

Will you have to go to court for your bankruptcy case?

Answer: Yes, you will have to attend a meeting of creditors, but this is only an interview with a trustee, not the judge. You will be asked questions about your finances and bankruptcy case. There are several court hearings for chapter 13, but your bankruptcy attorney can often handle these for you.

Can bankruptcy stop creditor harassment and wage garnishment?

Answer: Yes, filing for bankruptcy can stop creditor harassment and wage garnishment by imposing an automatic stay that prohibits creditors from taking collection actions against you.

Can you choose which debts to include in bankruptcy?

Answer: No, you must include all of your debts in your bankruptcy filing. You cannot pick and choose which debts to include.

For any other things you should know about bankruptcy, reach out to a local bankruptcy lawyer for a free case analysis to see if bankruptcy is right for you.

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About Author

Terrance Leeders

Chicago Bankruptcy Attorney, husband, father, Cubs fan.