Frequently Asked Questions

What is Bankruptcy?

If a debtor’s expenses exceed his income, then he is bankrupt. Bankruptcy is the process of petitioning the Bankruptcy Court to get relief from paying burdensome debts.

Who Qualifies for Bankruptcy?

All Debtors experiencing extreme financial hardship, for whatever reason, including but not limited to loss of employment, the death of a spouse, etc., may file for bankruptcy.

What is the Difference Between Chapter 7 and Chapter 13 Bankruptcy?

Chapter 13 Bankruptcy (or wage earner’s bankruptcy) allows the debtor to obtain some relief of certain debts, including but not limited to stripping the second mortgage lien. In a Chapter 13 Bankruptcy, the debtor must have an approved Plan whereby the debtor pays back the creditors (some-times pennies on the dollar) over a 3 or 5-yr. Plan.

In Chapter 7, debtors can get rid of all of their unsecured debts.

How Does Divorce Impact My Filing for Bankruptcy?

Couples experiencing financial hardship file for bankruptcy as well as a divorce. The Bankruptcy Court is interested only in properties that constitute a part of the Bankruptcy Court’s estate. Sometimes after judgment has been entered in the divorce court regarding the division of debts, the parties may subsequently petition the Bankruptcy Court for relief from these debts.

How Often Can I file for Bankruptcy?

An individual who has filed for Chapter 7 Bankruptcy, and received a discharge, may file for another Chapter 7 Bankruptcy 8 years after the discharge has been granted.

What is the Difference Between a Dismissed Bankruptcy and a Discharged Bankruptcy?

When a Debtor obtains a dismissal, it means that the debtor has not received the relief sought for whatever reason, such as the debtor’s failure to attend the Trustee’s Hearing, his failure to cooperate with one or more requests of the Bankruptcy Trustee, etc.

When a Debtor complies with all of the Trustee’s requests (Trustee may request more paperwork) and attends the 341(a) Hearing (Creditor’s Meeting), then she will receive a discharge (relief from the debts) for e.g. in a Chapter 7 case, and is not required to repay the unsecured debts. Creditors can no longer pursue claims for payment of the listed debts.

Who Is the Bankruptcy Trustee?

The Bankruptcy Trustee is one of many qualified individuals appointed by the Bankruptcy Court to sit in the 341a Meeting (Creditors’ Meeting). He or she will review the debtor’s petition, and accompanying schedules, ask the debtor pertinent questions regarding his or her current financial status and make recommendations regarding the debtor’s eligibility for a discharge of debts.

How long does the bankruptcy process take?

Once the bankruptcy has been filed with the court, and all of the documents requested by the Trustee have been submitted and approved, the process could take as little as 3 months, sometimes less.

What happens if I am being garnished?

The faster you file for bankruptcy, the faster garnishment will stop! Your employee will be immediately advised of the bankruptcy case number and the garnishment should stop immediately.

What if my car is repossessed?

If you have filed bankruptcy and have a case no. prior to the repossession of your motor vehicle, and you wish to keep the car, the bankruptcy court will order the return of the vehicle. However, you must re-affirm the auto debt with the creditor.

How will I know If I am eligible to file for bankruptcy?

Your bankruptcy assistant service will conduct a means test. Once your income and expenses have been ascertained, your legitimate expenses exceed your income, the size of your family is taken into consideration, and you have not filed for bankruptcy in the past 8 years, you may be eligible for bankruptcy.

Can I file for bankruptcy without my spouse?

Yes. One spouse may petition the court for a bankruptcy, but if you are still living with your current spouse, that spouse's income will be taken into consideration when determining monthly income and your eligibility for filing bankruptcy.

How long will bankruptcy affect my credit?

Once you have received a discharge from the bankruptcy court, some individuals have been able to obtain fresh credit shortly thereafter, since the wiping off of our debt drastically increases your FICO scores. So, some are able to purchase a home within 2 years, and even purchase a new car within months after the discharge.

Will I lose my house or my car?

You can keep your house and car. But you must be regular with your payments.