Q.
What is bankruptcy?
A. Bankruptcy is a federal law established to assist individual
consumers and businesses facing financial difficulties. The
goal is to help consumers and businesses obtain a financial
fresh start.
Q. What are the different types of
bankruptcy?
1.
Chapter 7
2.
Chapter 11
3.
Chapter 13
Q. Does bankruptcy prohibit creditors
from calling and harassing me?
A. Yes. Once a debtor files a bankruptcy petition, the court
grants the debtor with an automatic stay. The stay is an
injunction that prohibits creditors from contacting or taking
action against a debtor.
Q. Can bankruptcy stop creditors from
garnishing my wages and freezing my bank account?
A. Yes. As indicated above the automatic stay
prohibits creditors taking or continuing to take any action
against a debtor.
Q. Do I get to keep any assets?
A. Yes. A Chapter 7 debtor can keep assets that are
classified as exempt under the bankruptcy code. A Chapter 13
debtor may potentially keep of his or her assets upon the
completion of a court approved payment plan.
Q. Can I keep my house?
A. A Chapter 7 debtor can keep up to $50,000
($100,000 for spouses filing jointly) worth of equity
(equity=fair market value of a home minus
any and all outstanding mortgage balances) in a home. A
debtor who maintains equity in a home in excess of the exemption
limit will most likely be a better candidate for Chapter 13
Bankruptcy. A debtor in Chapter 13 bankruptcy may keep a house
upon approval and completion of a court approved payment plan.
Q. Can I keep my car?
A. A
debtor can keep a motor vehicle with equity up to $2,400 ($4,800
for spouses filing jointly)
Q. Does bankruptcy stop foreclosure proceedings?
Yes.
Upon the filing of a bankruptcy petition, mortgage foreclosure
proceeding by a lender are stayed (unless there is a prior order
by the bankruptcy court allowing the creditor to continue
foreclosure proceedings against the debtor)
Q. Can I keep a bank account?
A.
Yes. A debtor can maintain a bank account and claim up to
$2,500 as exempt assets.
Q. Do I have to include all my debts?
A.
Yes. A debtor must identify all of his or her creditors ina
bankruptcy petition.
Q. If you are married, do both spouses have to file?
A. No.
There is no rule that requires both spouses to file bankruptcy.
The decision concerning whether or not a spouse should take a
joint bankruptcy petition should be evaluated based upon the
circumstances of the particular case.
Q. After the bankruptcy process, can I get credit again?
A.
Yes. An individuals bankruptcy can be reflected on a credit
report for up to ten years. However, that does not mean that an
individual will not obtain credit again. There a re many
mortgage lenders, motor vehicle financing companies and credit
card companies that do not automatically disqualify an applicant
because they previously filled bankruptcy. In fact it is
possible that a consumers credit score may remain level if he or
she did nothing at all as opposed to filing bankruptcy and then
paying his or her bills on time after filing. Additionally, it
is important to note that if someone is delinquent on their
bills their credit score may already be negatively impacted by
late payments.
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