Bankruptcy can provide a fresh financial start, which is why you should not only feel confident in your legal representation, but understand the process and its impact on you. While our free consultation with a bankruptcy attorney is an opportunity to discuss the specifics of your situation, the following commonly asked questions will help prepare you for this visit.
Is Bankruptcy My Only Option?
Relying on the expertise of a skilled attorney is the single most important factor to answering this question. In cases of protracted unemployment or unexpected medical expenses, bankruptcy may be the best option. Alternative options to bankruptcy include debt consolidation, which is the negotiation of a debt settlement and/or credit counseling.
What’s the Difference Between a Chapter 7 or Chapter 13 Bankruptcy?
Individuals considering bankruptcy have two primary options: Chapter 7, also known as a liquidation bankruptcy, or Chapter 13, a sort of debt reorganization bankruptcy. What’s best for you depends on multiple factors, such as: if you own property, your household income, type and amount of debt, and what you hope to accomplish by filing bankruptcy.
Am I Eligible for a Chapter 7 Bankruptcy?
Chapter 7 bankruptcy lets you liquidate nonexempt items (unsecured debts/assets). In doing so it discharges you from having to pay-off these debts which usually include credit card debt and defaulted medical bills. Student loans, back taxes, and child support, however, are usually excluded from being discharged. To be eligible for Chapter 7 bankruptcy, your household income must qualify through an “income qualifying test” and must reflect your inability to meet your monthly financial obligations. Also, a “trustee” will be in charge of your debts and nonexempt assets, and how they are sold off. You are also usually able to keep many exempt assets in Chapter 7, including equity in your home (up to certain limits), equity in your car (up to $15,000), household goods, furniture, clothing, retirement accounts and life insurance policies.
How Can Chapter 13 Help Me Keep My House?
Chapter 13 lets you to negotiate your way out of debt. This is a good option if your monthly income exceeds your monthly debt obligations and you want to avoid home foreclosure. In Chapter 13, you and your Chapter 13 trustee mutually agree to a repayment plan that either reduces the amount you owe or stops all interest and penalties so long as you fulfill your obligation within the designated time span. This option may also discharge a second mortgage if the property is worth less than the first mortgage.
How Long Does A Bankruptcy Take? On average, Chapter 7 takes between three to four months from filing to discharge of debt. A Chapter 13 bankruptcy allows individuals to repay debts within 3 to 5 years, depending on your income and the amount of debt you are paying back.
What Property Can I Keep During a Bankruptcy?
There are exempt assets (items protected from creditors) and nonexempt assets (items that can be sold to pay a debt) property. In both Chapter 7 and Chapter 13, certain property, vehicles and other select assets may be protected from bankruptcy if payments are current and the value is in excess of the amount owed. Anything obtained after the bankruptcy is also yours to keep. Our expert counsel can determine the best course of action for your situation if preserving property is a high priority.
Will Bankruptcy Impact My Credit?
Since bankruptcy is a response to challenges meeting financial obligations, chances are your credit has already been compromised. While a bankruptcy may initially impact your credit score, many individuals are able to qualify for homes & rebuilt credit in about three years. You can start rebuilding your credit immediately. Many clients tell us the process lets them rebuild their lives without the burden of old debt and the stress of worry.
Will Bankruptcy Impact My Ability To Get or Keep a Job?
Government and private employers are prohibited from discriminating against an employee or job prospect based on their bankruptcy status. These rights are outlined by the U.S. Department of Justice. Bankruptcy is highly personal and unique to the individual. Ensuring you’re guided by a skilled bankruptcy lawyer in navigating the maze of financial relief strategies will ultimately help you achieve both your short and long term goals.