Many people feel overwhelmed when they file or start thinking about filing for bankruptcy. Things tend to get worse when they ask their attorney questions because many of the answers are filled with "if this" and "It depends". What you need are straight forward answers that actually answer your questions. Within any case, there are uniqueness's that exist that must be taken into consideration, therefore it is difficult to say these will answer every question, however they should help provide you with more of a general understanding.
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1. Do I have to go to court?
Yes, you will have to appear in court when filing for bankruptcy. The only way this can be avoided is if there are extenuating circumstances such as you are serving in the military overseas, you are in jail, or if you are medically unable to leave the hospital or other care facility. You will have to attend at least one hearing called the Meeting of Creditors.
2. How long does this all take?
Well this actually does depend on your case and which chapter you are filing. A Chapter 7 usually takes about five to six months once filed as long as there are no problems that would cause your discharge to be denied. With a Chapter 13, which is a repayment plan rather than liquidation like the Chapter 7, you will be making payments for up to five years. After you finish the repayment plan it takes an additional four months to close the case on average. However, based on your unique circumstances and based on the number of bankruptcy cases that the court hearing, the time may increase or decrease.
3. Can I transfer my property to friends or family to keep from losing it?
No, this is called fraudulent transfer and it cannot be reversed. Many times people will end up transferring property that they would be able to keep anyway. In general this is just a bad idea and there is no turning back once it is done, please make sure that you ask your attorney about the specific setup of ownership on you properties and possessions.
4. How much do I need to owe to file for bankruptcy?
This is actually no qualifying amount to file for bankruptcy; you don't even have to be behind in payments to file for a bankruptcy. However, you may have so little debt that a Chapter 7 does not make since and a Chapter 13 would serve your needs better, but if you feel pressured by your financial situation bankruptcy can be your way out.
5. Is all that paperwork really necessary?
All of the paperwork has a purpose, even though it may not seem like it to you. The information gathered by your attorney, whether via questions or documents, is absolutely vital and needs to be attained. Like with most things, there is an easy way and a hard way and with bankruptcy it is best to make things go as smoothly as possible.
6. What is the difference between secured and unsecured debt?
The term "secured debt" means that the debt is "secured" by physical property like a house, car, or piece of furniture. Unsecured debts are just the opposite; these are your credit cards, phone bills, and other things of that nature. An easy way to tell the difference between the two is to ask yourself, "Can this be repossessed?" If yes, then it's a secured debt.
7. Are co-signers responsible for the loan if the primary files for bankruptcy?
Yes, any and all co-signers are responsible for the loan if the primary defaults on it. The lender can make you make the payments in lieu of the primary, especially if they file for bankruptcy on the debt. Always consider the financial position of the person you are co-signing for before you agree to attach yourself to the loan. Also, be prepared to make a payment or two if the primary cannot make the payment to protect your credit.
8. Who tells my creditors that I've filed for bankruptcy? The information included in this notification is, the automatic stay, the type of bankruptcy filed, the name of the trustee, the date of the creditors meeting, and other information depending on your case. The bankruptcy courts will notify the creditors by mail that you have filed for bankruptcy.
9. Will I be able to keep anything?
Yes, you will be able to keep some things after bankruptcy. These are "exemptions" and are defined by the state and usually include your car, your house or the equity in the house, and anything required for your job i.e. "tools of the trade".
10. Will I lose my job?
No employer can fire you because you have filed for bankruptcy. This will, however, not protect you from being fired for any other reason. In fact, your employer will not be informed of your bankruptcy unless your wages are being garnished or they are otherwise involved with your creditors.
11. Is there any way to remove a bankruptcy from my credit report?
No, there is not. However, you can file an explanation to as why you filed for bankruptcy in the first place citing your situation at that time and any extenuating circumstances. As for removing it there is not much you can do other than just waiting until it is taken off your record.
12. How long will a bankruptcy stay on my record?
This really depends on what type of bankruptcy you filed, and the credit agency is reporting it. All three of the major credit agencies will report your bankruptcy, but may keep it on your record for different amounts of time. Most bankruptcies are removed from your records after seven to ten years.
13. Can one of those credit repair companies save me from a bankruptcy?
Most of what is done by those "credit repair" companies can be done by yourself. It just takes time and patience. There are non-profit companies that will offer guidance for a small fee which can prove to be very beneficial. Those credit repair companies offer a small amount of services for the amount of money they charge.
14. What do I need to do to start the bankruptcy process?
First, you should make a list of all your debts. Include what the debt is from i.e. a car, credit card debts, loans, etc, how much you owe, and the value of the debt if it is secured. Then, you should take this information to a bankruptcy attorney and have consultation with that attorney. They will tell you what type of bankruptcy you should file, what you should be able to keep, and, in some cases, how much you will owe after the bankruptcy.
15. When can I apply for credit again?
There is no time restraint on when you can reapply for credit. That is generally up to the company issuing the credit. However, many credit companies are willing to extend you a line of credit after your bankruptcy case is settled because many people come out of a bankruptcy with better spending habits then before, but these second chances only come once. If you show that you cannot handle credit even after going through a bankruptcy then it will be very difficult to get credit from other companies for increase your credit limit.
16. What if I can't afford a bankruptcy?
If you truly cannot afford to file a bankruptcy due to hardship, many bankruptcy attorneys will offer you a free bankruptcy case if you meet their requirements. Some attorneys will even offer you payment plans rather than having you pay the entire cost all at once. This helps many families who have hit hardship and are filing at no fault of their own
There are more questions and answers to come so stay tuned. These answers may, however, change based on your particular case so always consult your attorney when dealing with bankruptcy.
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