What is bankruptcy?
A bankruptcy is an action through the federal court system where you can get rid of debt that you may have. During a bankruptcy process there’s many different chapters. There’s a way to protect your assets while getting rid of the debt. There’s a way to restructure repayments if you need to pay back some debts such as taxes, home loans, car loans, actions like that. A bankruptcy’s a fresh start whether you repay or you completely discharge your unsecured debt like credit card debt.Return to top
Do I qualify for bankruptcy?
Technically, anybody can file a bankruptcy. The question isn’t whether or not you qualify, it’s a question of what type of bankruptcy you can file. There’s technically, like 6 kinds of bankruptcy. For most people, it’s either going to come down to a Chapter 7 or a Chapter 13.Return to top
How do I file for bankruptcy?
Well first, I strongly recommend that you consult a bankruptcy attorney as there are two forms of bankruptcies for individuals, Chapter 7 and Chapter 13. Chapter 7 is a liquidation of debts while Chapter 13 is a reorganization of debts. It is important that before you file for bankruptcy you consult an attorney regarding the right bankruptcy to file, as filing the wrong type of bankruptcy may have unintended consequences.
It begins with the filing of a petition with the court that discloses all of your income, expenses, assets, and debts; and ends with an order of discharge from the bankruptcy judge stating that many of your debts have been wiped away.Return to top
How often can I file for bankruptcy?
A Chapter 7 bankruptcy, which is a liquidation where you wipe out your debts and walk away, can be filed every 8th year by an individual debtor. A corporate debtor can only file a Chapter 7 bankruptcy generally one time. It has to do with the discharge provisions.Return to top
What is a Chapter 7 bankruptcy?
In many ways, a Chapter 7 is the most simple form of bankruptcy. The main purpose of it is to discharge debts like credit cards, lawsuits…
Chapter 7 bankruptcy can make sense for a lot of debtors. The real issue is whether or not a person has a significant amount of assets. In some cases, a Chapter 7 can be dangerous, not in all cases. And if they are, you have other options, for instance a Chapter 13. What first thing we would do is take a good look at your situation and try to figure out whether or not a Chapter 7 makes sense for you and if it does, it is very often the quickest, easiest, simplest way to deal with wage garnishments and credit card debt and medical debt. Things of that nature.Return to top
What is a Chapter 13 bankruptcy?
A Chapter 13 bankruptcy is where we do a reorganization of debt. So, in a Chapter 13 bankruptcy you’re able to get current on home loans, auto loans, and even tax debt. While restructuring your finances for a monthly payment that you can afford. In a Chapter 13, you can still get rid of your credit card debt and your medical bills, but you’re able to keep all of your assets and restructure repayment that’s within your own budget.Return to top
Can my business file for Chapter 11 Bankruptcy?
A Chapter 11 Bankruptcy is the type of bankruptcy that’s used specifically for corporations. The reason it exists is to allow your business to reorganize itself, come to some sort of a reorganized payment plan to different types of creditors and in some cases, creditors will be wiped out entirely. But the whole purpose of it is to allow your business to restructure that debt and get back on good footing, go back into the world and be still a functioning corporation.
In some cases, if a person is ineligible for a Chapter 13 bankruptcy, maybe they have too much debt to fit into a Chapter 13, an individual person CAN file a Chapter 11, although that is rare. Chapter 11 is a very powerful form of bankruptcy, but it’s also very complicated. So, it’s definitely the sort of thing that you would want to have an in-depth discussion with your attorney before you decide to go that way.
So, in many cases, a Chapter 11 bankruptcy can make sense for you. In some cases, the business itself is no longer salvageable or if you tried a Chapter 11 and it, unfortunately, doesn’t work out, another option would be the filing of a Chapter 7 bankruptcy, which is a safe way to bring the business to an end, to finish the corporation if you feel like it’s no longer a functioning business.Return to top
Can a bankruptcy eliminate medical bills?
Yes, it can and in fact, even if you want to deal with your same medical provider or doctor, you still can file bankruptcy, get rid of the medical debt, and continue using your same doctor. I have this happen all the time with clients who are in a chronic medical condition that have racked up a lot of medical debt and they don’t want to burn their bridges with their current doctor. That’s not a problem. We will be able to get rid of the medical debt and you’ll still be able to see your doctor.Return to top
Does bankruptcy stop wage garnishment?
Yes, when you file a bankruptcy it places what’s called an automatic stay. The automatic stay stops all legal action against you. So, when you have an automatic stay wage garnishments, lawsuits, and any other legal actions against you have to stop immediately.Return to top
How long does bankruptcy stay on my Credit Report?
This is a question I get a lot because people still want to have access to credit after they file for bankruptcy. Bankruptcy will last on your credit score for 7 to 10 years; however, you will be able to access new lines of credit immediately after filing for bankruptcy. And, in fact, you will receive a flood of credit card offers in the mail. So, if you do want to reestablish your credit, so for example, if you want to one day qualify for a mortgage loan, you will have opportunities to open up those new lines of credit and bring those credit scores up, so that one day you may be able to buy a home.Return to top
What is Unsecured Debt?
Generally speaking, unsecured debt would be personal loans, credit card debt, and debt of that nature. As opposed to secure debt which would be where you buy a car and you finance the car and your debt for the vehicle is secured against the car or you buy a house and your loan is secured against the property. Unsecured debt means there’s no security that a creditor can specifically come after should you fail to make the payment.Return to top