Bankruptcy is not an easy situation to deal with. If you are facing a serious financial situation and have been advised to file for bankruptcy, you should know as much as possible about the process. To help you out, we’ve listed a few frequently asked bankruptcy questions that should prove informative.
FAQ #1 — What is Chapter 7 bankruptcy?
For most people, Chapter 7 bankruptcy is the best. It allows the court to deal with almost all types of unsecured debt like credit cards bills and medical bills. Mediators will use legal procedures to discharge all unsecured debt. Any assets that the debtor has are liquidated and sold to settle debts. The bankruptcy will also prevent your creditors from harassing you for payment through an automatic stay order. It will also protect exempt assets like your car and your home. However, individual cases may differ and we recommend that you consult with an attorney before proceeding.
FAQ #5 — Will I lose everything in a Chapter 7 bankruptcy?
The exact exemptions are different from state to state. Common exemptions include 401-K, IRAs, personal belongings and personal assets. Your house and car may be exempt but you may have to file additional paperwork to keep them protected.
FAQ #2 — Am I eligible for Chapter 7 bankruptcy?
Your income is compared with the average income in your state. If your income is much lower, then you can file for Chapter 7 bankruptcy.
FAQ #3 –Are there any other types of bankruptcy filings?
There are several different types of bankruptcy filings. However, these filings are slightly different and you should consult with your lawyer to understand the eligibility and requirements of these filings.
FAQ #4 — Do I need a bankruptcy attorney to help me?
Bankruptcy is a major financial decision that requires a lot of legal and financial knowledge. We do recommend that you hire a lawyer who will be able to assess your situation accurately.
FAQ #6 — Will someone come to my house to assess my belongings?
Your creditors will not be allowed into your home and assets but the court will appoint a Trustee to evaluate your assets and personal belongings. Its your job as the debtor to hire an independent appraiser who will appraise your assets and then list them out. This is better than relying on the court trustee as you will get an accurate idea of your assets and the eventual valuation.
FAQ #7 — Will I lose my job or do I go to jail on a bankruptcy charge?
Bankruptcy laws prevent employers from terminating employees who have filed for bankruptcy. You will not have to go to jail but the bankruptcy will require the debtor to appear in court for the court filings. You may also have to attend a Meeting of Creditors in which the court trustee, your lawyer and your debtors will discuss the easiest way to liquidate existing assets and pay off your debt.
FAQ #8 — Will the bankruptcy remain on my credit history?
Yes it will remain on your credit history for as long as 10 years. This will also affect the loans or mortgages you apply for in the future.