15 Facts About Bankruptcy
1. Stops a foreclosure of your home.
2. Stops repossession. For instance, if your car is being repossessed, Bankruptcy can stop your creditor from repossessing your car and possibly lower your payment.
3. Stops bill collectors. If you happen to be behind in your bills and your creditors are constantly calling you, that will definitely stop once you declare bankruptcy.
4. Enables you to keep your car as well as your home. Most people who declare bankruptcy do keep their home and their car while they are paying down their debt.
5. The new bankruptcy laws actually help people more than the old laws.
6. When you are married, you can file individually if the debts are mostly in one of the names.
7. Bankruptcy is not published in the newspaper.
8. Fast filing is normal. Some worry it will take forever to file, but that isn’t the case. Usually it can be within 1-2 days, as long as you provide the necessary documentation.
9. Bankruptcy laws are federal laws and the cases are brought into federal court.
10. You have to petition for bankruptcy with a judge.
11. Not all debts are forgiven when you file
12. Student loans and tax debt usually can’t be eliminated in any bankruptcy.
13. Your credit report will show Bankruptcy for 10 years after you file.
14. Filing Bankruptcy can Lower Payments…
15. Debtors must meet with a credit counselor six months prior to applying for bankruptcy and must attend money management class.
As a Bankruptcy Attorney I receive calls everyday from people that want to know if bankruptcy is right for them. This is a question that is much more complex than it may seem. Bankruptcy has many variables, as do the clients. Certain clients might benefit from filing for bankruptcy under Chapter 7 of title 11 of the Bankruptcy code, while others might find Chapter 13 to be more beneficial. Unfortunately I won’t be able to provide you with all the answers in a simple article right now. But I will provide a little bit of direction that will help get you started.
Before we get started you should understand the different Chapters of bankruptcy. For most individuals you will only need to know about two – Chapter 7 and Chapter 13. Chapter 7 is the liquidation of one’s debts. In other words it will usually allow a debtor to wipe out his/her debts without having to make any additional payments. It does get more complicated than that, specifically when you have equity in some of your properties. We will go into that a bit more later. Chapter 13 bankruptcy requires a debtor to propose a payment plan to the United States Trustee. This payment plan will be used to pay a percentage of your debts, sometimes all of them, over the next 3-5 years. There are many other differences between the various chapters of bankruptcy but that should be good enough to keep us moving right along!
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