Bankruptcy Frequently Asked Questions

1. What is a Bankruptcy?
2. I'm an honest person and want to pay my bills, am I cheating my creditors by filing for bankruptcy?
3. Should I file for Bankruptcy?
4. Will I lose my Property?
5. Can I keep my house and car?
6. I'm married, can I file alone or does my spouse have to file a bankruptcy as well?
7. Will filing Bankruptcy mean I can't get credit for 7 years?
8. I'm current on all my payments. I've never been late. Can I still file Bankruptcy?



1. What is a Bankruptcy?

Bankruptcy is a right granted to you under the United States Constitution designed to get you a fresh start free from harassing creditor phone calls, lawsuits, repossessions and garnishments. It is a very powerful law because it forces your creditors to permanently wipe out your debts (chapter 7) or to accept a repayment plan which you have proposed (chapter 13).

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2. I'm an honest person and want to pay my bills, am I cheating my creditors by filing for bankruptcy?

First understand that bankruptcy is not about cheating your creditors. Bankruptcy laws are designed to provide a person facing financial difficulty with relief from the stress and burden of debt to allow that person (or family) a "fresh start". Chapter 7 Bankruptcy will remove your legal obligation to pay your debts. This means that creditors cannot call you at home or at work to try to collect the debt, they cannot garnish your wages or seize money out of your bank account. They must leave you alone permanently. If after the bankruptcy you win the lottery or come into money and wish to repay those creditors, you may do so of your own free will.

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3. Should I file for Bankruptcy?

The decision to file bankruptcy is a serious one, and not one that should be made lightly or without adequate information.

Financial problems lead to great stress and can disrupt one's life, yet many people are scared at the thought of having to file for bankruptcy relief. They believe bankruptcy will cause them to lose all their property and ruin their financial future. This is exactly what your creditors want you to think. They do not want you to use your right under the law. They would much rather you pay the minimum monthly payment for the rest of your life at 20 to 25% interest!

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4. Will I lose my Property?

No, as long as you tell the court what you own and what you think it's worth, the law will allow you to keep your property as the basis for your "fresh start" subject to certain limitations. The law is very generous in allowing you to exempt your home equity, automobiles, household goods and furnishings, clothing, jewelry, bank accounts, stocks and bonds, pension and 401k plans, etc.

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5. Can I keep my house and car?

Yes, even under a Chapter 7 liquidation you can often keep your house and car provided you reaffirm the debt and continue to make payments to the finance or mortgage company.

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6. I'm married, can I file alone or does my spouse have to file a bankruptcy as well?

There is no requirement that your spouse must file a bankruptcy with you. However, if you are married, the law recognizes you as one entity and can file together as a couple if you wish. This should be evaluated on a case by case basis to see which is more advantageous for you and your family.

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7. Will filing Bankruptcy mean I can't get credit for 7 years?

I have heard this wives' tale so many times and cannot figure out where it came from. Straight bankruptcy is called Chapter 7, maybe that is where the seven years came from, but the truth is that many people have a better chance of getting credit after they file Bankruptcy. Bankruptcy is definitely a negative mark on a credit report and can be reported for 10 years after filing. However many (but not all) people who are considering filing Bankruptcy already have a negative credit report due to non or late payments, repossessions, charge offs or judgments. A bankruptcy which wipes the slate clean will be an improvement, and you can begin rebuilding your credit after filing debt free.

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8. I'm current on all my payments. I've never been late. Can I still file Bankruptcy?

I have many clients who look good on paper and appear to be "making it" but realize that the house of cards is about to come crashing down. Seek relief before you drown in debt.

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