Bankruptcy
FAQ
Q: How much
will it cost for me to file bankruptcy?
A: The total cost will be determined by whether or not you hire a bankruptcy
attorney. The court will charge a set filing fee and a bankruptcy attorney
will charge a fee that is often based on the amount of your debt. In general,
a Chapter 13 bankruptcy is more expensive to file than a Chapter 7 case.
Q: What is
the difference between a Chapter 7 and Chapter 13 bankruptcy?
A: Simply put, a Chapter 7 bankruptcy is where the debts are simply wiped
away and the debtor receives a fresh start. This is much harder to receive
now that the bankruptcy laws changed in late 2005, but it is still possible
for some filers. A Chapter 13 bankruptcy is a repayment plan, which is
determined based on your disposable income each month.
Q: Do I have
to hire an attorney?
A: The short answer is no. Although you are not required to hire an attorney,
it is often recommended that unless you are very familiar with bankruptcy
laws, you enlist the help of a seasoned bankruptcy attorney to help you
through the process. This will help to ensure that your papers are filed
correctly and your exempt assets are protected.
Q: Will I
lose my home or car?
A: Every state has it’s own exemption limit, which is property that
a debtor is permitted to keep. Check with your attorney or state laws
in order to determine your exemption amount.
Q: What happens
after my bankruptcy petition has been filed?
A: Once your petition is filed, your local bankruptcy district court will
set a date for your Meeting of the Creditors, your anticipated discharge
and closing dates. This notice will be mailed to you, your attorney (if
applicable) and every creditor that is listed on your bankruptcy petition.
Q: Will I
have to go to court?
A: You will have to appear at least once during the Meeting of the Creditors.
For most, this is the only time that you will have to appear and/or answer
questions regarding your situation.
Q: What is
a Meeting of the Creditors?
A: During this appearance, you will be questioned by the court-appointed
trustee and will be required to answer truthfully as you will be under
oath. Although most creditors do not actually attend this meeting, they
are permitted to be on hand to ask you questions regarding your debt and
financial status. In most cases, the creditor most likely to appear will
be that which holds your home or car loan in an effort to learn of your
intentions with their debt.
Q: What is
a reaffirmation agreement?
A: A reaffirmation agreement is a contract that is signed where the debtor
agrees to reaffirm the debt. Some creditors will require that the debt
be reaffirmed at the previous interest rates and balance, while others
will offer a lower rate and/or reduced balance in exchange for an agreement
to repay. Not all states require that a reaffirmation agreement be signed
because mortgage companies, banks and other lenders will not generally
repossess an item if the debt continues to be paid. An example would be
a home or car. If you want to keep these, simply continue paying the loan
on time every month and you may not be required to sign a reaffirmation
agreement. Check with your lawyer for the requirements in your state.
Q: What is
the difference between my case being discharged and closed?
A: When your case is discharged, it means that you are no longer legally
responsible for the debts listed on your bankruptcy petition. This means
that creditors whose debts were discharged can never again attempt to
collect from you. When your case is closed, this means that the trustee
has abandoned any/all interest in your property and your bankruptcy ordeal
is officially over.
Q: How long
will bankruptcy remain on my credit report?
A: Bankruptcy can remain on your credit report for up to 10 years.
|