When should I file bankruptcy?
This completely rests on your financial situation. If you are
neck deep in debt and trying to overcome the state of affairs,
you get various options to choose from e.g. debt management,
debt consolidation and settlement. When none of these programs
work for you and you are not in a position to pay a dime the
only option that remains open is Bankruptcy.
Do I need to record all my debts?
Yes, you do need to file all your debts inclusive of non-dischargeable
and secured ones. Exclusion of debts is criminal offense and
you can be denied discharge.
Is an attorney required?
This is solely your decision in case of a personal bankruptcy.
You can be a Pro Se. For business debtors having an attorney
is a must. Bankruptcy is not a simple procedure and requires
a lot of knowledge and education to fight on the own. Therefore
decision should be prudent.
What is the difference between Bankruptcy Chapter 7, 11 and
13?
- Chapter 7 is liquidation: A trustee is appointed as in
charge of your “estate” and he has the sole liberty
to sell all your assets to pay the creditors. Law may allow
you to keep a part of your property and the rest will be sold.
- Chapter 11 is reorganization: This is primarily intended
to restructure business debts. Success depends on the filing
of a “reorganization plan” with the approval of
the creditors and permission from the court to proceed with
such a plan.
- Chapter 13 is modification of debts for an individual with
regular source of income: A court supervised plan is made for
the debtor to repay the creditors within 30days of the commencement
of the case. The period allowed for repayment is 5 years and
the plan initially made by the debtor has to be approved by
the court. The payments go to a trustee who on behalf of the
debtor pays the creditors.
What information are required to file bankruptcy?
- Residential address
- SSN
- Employer’s name and address
- Salary details
- The list of debtors
- A list of all the major assets that you own
- List of personal source of income
- List of all financial accounts
- Complete monthly expenses
- Federal and state tax returns for last two years.
Does filing bankruptcy protect me from wage garnishment?
The answer is yes. Immediately after you file the BK you are
under protection of the court. Now you can inform your wage garnishing
creditor and the Sheriff of filing bankruptcy.
Is a Bankruptcy case public information?
Yes it is. Anyone can gather information from the court and
verify your filing. They can review the file as well.
Will I have to face a judge?
Once you are into a case you have to. Mainly in case of a Pro
Se you will be given dates and will be expected to attend.
Are all debts eliminated by the court?
No, there are certain debts that cannot be
discharged, e.g. Tax liens, student loans, debt from fraud,
alimony, and child support.
Do creditors get notified of discharge?
Yes they do.
When does the case close?
In case of chapter 7, the case get closed from 90 days of filing
if no objections are raised or disputes are caused. In case of
chapter 13 the case continues for the full term of the payment
plan. For chapter 11 the case becomes complicated and do not
close even in 3 years despite confirmation of a plan.
Do I lose my house in case I file bankruptcy?
If you do not have any equity in that case the court allows
you to keep the house as long as you are paying your mortgage
on time. If you do have some equity and it keeps lower than the
exempt available to you then you can keep the house otherwise
not.
Is it necessary for my spouse to file along with me?
The answer is no unless it is really required. The effect on
your spouse will depend on the marital property laws of your
state.
Which bankruptcy to file?
This is completely depends on your financial status and the
kind of debt that you owe. Whether you are defaulting on secured
loans, whether you have a fixed income, are considered important
while opting for a chapter of bankruptcy.
Am I eligible for credit after bankruptcy?
Yes you are. However getting a credit will be tougher than usual
considering your financial history. It depends whether the
creditor wants to take the risk or no.
RESOURCES: Personal Bankruptcy
United States Bankruptcy Courts
U.S. Courts: Periodicals: Bankruptcy Basics
Cornell University Law School: Bankruptcy Overview - Legal Information Institute
 |
Personal Finance Money Tip: Have a personal debt management plan in place to pay back before you borrow. The easiest way to lose control of your money is to let your lender make the decisions about your monthly payments. This is especially true for credit card debt. |
|
