Bankruptcy is an emotionally strenuous process and one which no one would want to occur. However, financial distress is just as demeaning and the thought of a new start is enlightening for many.
Debt Relief USA is happy to aid your questions and help you simplify the complexities associated with bankruptcy. That’s why below you’ll find quick, straightforward answers to frequently asked bankruptcy questions.
Basic Bankruptcy Laws
In the United States, bankruptcy is governed by the Bankruptcy Code, which is a notable under Title 11 of the United States Code. The bankruptcy law is positioned under Federal Jurisdiction as per the United States Constitution.
Bankruptcy - What are the Types
In the Bankruptcy Code, there are 6 Chapters which preside over filing bankrupt. The most regularly known are Chapters 7 and 13. There are other Chapters under which bankruptcy may be filed by only such individuals as are prescribed in the respective Chapters. These Chapters are 9, 11, 12 and 15.
Bankruptcy - What is Chapter 7
Chapter 7 bankruptcy is one of the most widespread types of bankruptcy. Chapter 7 of the Bankruptcy Code consists of Liquidation. When a person files for bankruptcy under Chapter 7, all the non-exempt assets are seized by the Bankruptcy Trustee. The included assets of the filer are then sold and the funds collected are distributed among the filer’s creditors. The creditors accept this amount as a full and final settlement – plain and simple.
Bankruptcy - What is Chapter 13
Chapter 13 bankruptcy gives the filer an alternative to keep his / her property on the condition that he / she will fully discharge all the debts within the next 3 years. This repayment period can be extended up to an upper limit of 5 years. Chapter 13 is known as reorganization of debts. This selection is made available to the bankrupt person when they can prove to the Court that they have a steady source of income and a proper debt management plan in place to pay off the aforementioned debts or accounts in regard.
Bankruptcy - What is it
Bankruptcy is the failure of an individual or an organization to repay its financial obligations. You are said to be bankrupt if on the maturity of all your debts, you do not have enough resources to repay all your creditors or lenders. The two most frequently utilized types of bankruptcy are Chapter 7 and 13. Bankruptcy needs to be filed with the United States Bankruptcy Court.
Bankruptcy - Why File
Bankruptcy is a situation where the individual or the business entity is beset with overwhelming fiscal responsibilities and have no last resort but to file for bankruptcy. The bankruptcy court will make the individual prove he or she cannot afford to meet their financial obligations through debt management before proceeding. This test is also known as the Means Test, and associated with accredited consumer credit counseling agencies.
Bankruptcy – Your Credit Score
Bankruptcy adversely affects your credit score and chances of obtaining any credit in the future, housing on rent and job applications too will not be viewed in a positive light. Hence, a decision to file for bankruptcy must be taken carefully and any other options should be exhausted before filing takes place. Here the US Treasury depicts the negative credit affects of bankruptcy. They also clearly recommend debt management plans, and other forms of debt arbitration besides bankruptcy with regards and concern for the individuals credit score.
Bankruptcy – Getting Started
To file for bankruptcy, you need to assemble an inventory of past and present debts along with a statement of your assets and liabilities. You‘re required to fill out the various bankruptcy forms. The total cost of filing for bankruptcy includes the filing fee and the fees payable to the bankruptcy lawyers, as well as a means test. Filing fees alone are $299.00, an additional $50.00 fee from an accredited credit counseling agency which is required then your bankruptcy attorney fee if applicable – which varies per attorney or firm.
Bankruptcy – Spousal Affect
The respond to this question depends on whether your spouse is a co-debtor on your debts. If he / she are not a co-debtor, it is not required for the spouse to file for bankruptcy. If in fact your spouse chooses not to file for bankruptcy, the spouse could still be responsible for some part of the debt depending upon the marital land laws in the state which you reside.
Bankruptcy Question - Retirement Accounts - Social Security
Normally, a person who has filed for bankruptcy does not lose retirement accounts or payments from social security. Social security benefits are also excused from debt garnishment. Retirement accounts too are not liable and are not considered as property or assets during the course of bankruptcy.
Bankruptcy – Transferring Assets in Someone Else's Name before Filing
Yes you can, however these transfers will not be able to defend your assets. The law states that unless the bankrupt person has a reasonable equivalent value for the transfer of assets they will be treated as a way to minimize asset loss due to bankruptcy, and will be seized by the bankruptcy trustee. The trustee looks back at the property transactions for a year, or even more if the trustee believes that the bankrupt person has made any such dealings that would reduce loss of assets during liquidation which could lead to disapproval.
Bankruptcy - Will you Lose your Home If you File for Bankruptcy
This is probably the most common fear, and question in doubt that is asked by those pursuing bankruptcy. The question answered in whole is; you may not lose your home if you file for bankruptcy under Chapter 13 and vice versa if you file under Chapter 7. The state laws also play a part in whether or not your home is seized so it’s recommended to contact a local attorney or law firm that knows state mandated laws concerning bankruptcy.
Bankruptcy – Can Your Employer Fire you if you file for Bankruptcy
No, under U.S. Laws your employer is not allowed to discriminate against you on the grounds of bankruptcy. However, future career opportunities can be hindered if your credit report is ran by a prospective employer. Unfortunately; aside from bankruptcy, foreclosure is frowned upon by larger corporations and they may in fact deny you as an employee.
Bankruptcy - Creditor Harassment Stoppage
As soon as you file for bankruptcy, there is a stay put on all your debts. Creditors by law can no longer call you asking for their money however they may not be aware of your filing so don’t hesitate to inform them. If the petition for bankruptcy is rejected by the court, then in most cases the creditors or collection agencies that’ve purchased your accounts may call you in collection attempts. In case the court accepts your petition, then the creditors have to go to the court to make their claims.
Bankruptcy - Stop Wage Garnishment
Yes, after you’ve filed for bankruptcy, you will no longer be harassed by creditors or collection agencies unless they’re misled or misinformed of your bankruptcy filing. Meaning no wage garnishment will legally take place. On filing for bankruptcy, there is an automatic stay on all put on your debts.
Bankruptcy - How Long Does a Bankruptcy Stay on Record
A bankruptcy remains on the filer’s record for 7 to 10 years from the date of filing for bankruptcy.
Bankruptcy - Remove a Bankruptcy from Credit Report
Regrettably, an instance of bankruptcy cannot be removed from your credit report. The only thing you can do after bankruptcy is to make a sincere attempt to improve your credit score so that you become eligible for financing in the future.
Bankruptcy - Credit Approval after Bankruptcy
An occurrence of bankruptcy does not make you 100% unsuitable for credit but establishing credit approval and extension will most likely take more time. You can gain credit, but it may benefit you to take advantage of credit repair, as bankruptcy adversely impairs your credit score.
Bankruptcy - File without a Lawyer
Yes, you can absolutely go at it yourself. But bankruptcy is a very complex especially when you have several assets and multiple accounts. Also the expressively devastating procedure itself can be Haunting, therefore it’s safe to advise an experienced bankruptcy lawyer in your state who is familiarized in with the courts bankruptcy proceedings.