Bankruptcy Frequently Asked Questions

What is Chapter 7?

Chapter 7 is what most people think of when they think of bankruptcy. Chapter 7 is available to individuals, married couples, corporations and partnerships. If the debtor has non-exempt assets that can be used to pay creditors, the bankruptcy estate will be liquidated and creditors paid. Most Chapter 7s, however, are no assets, meaning that the debtor does not have any assets to liquidate. Your debts are discharged and you are given a fresh start and a new life.

What is Chapter 13?

Chapter 13 is sometimes referred to as a “wage earner’s bankruptcy” because a Chapter 13 debtor has to have income to repay his debts. Basically, Chapter 13 is a long term repayment plan. The debtor makes payments to his secured creditors and a Chapter 13 Trustee. At the end of five years, the debtor is granted a discharge.

Can I keep my house?

Yes! If you intend to keep your house, you should continue making payments to your mortgage company. You will also need to file a reaffirmation agreement with the court.

Can I keep my car?

Yes! If you intend to keep your car, you should continue making your car payment. You will also need to file a reaffirmation agreement with the court.

Will my utilities shut off my service if I file bankruptcy?

No, but you will have to pay all bills for charges incurred after the date of filing. Some utility companies may require you to give a security deposit.

Can I keep my pension or retirement accounts?

Yes, if your pension or retirement is a qualified retirement account.

Will my student loan be discharged?

No. As a general rule, student loans cannot be discharged.

What other debts cannot be discharged?

Child and spousal support obligations

Most taxes

Debts incurred as a property settlement in a divorce

Debts for personal injury and death caused by a debtor who was driving a motor vehicle while under the influence

What effect will filing Bankruptcy have on my credit?

The stigma of bankruptcy is not nearly as great today as it was a few years ago. Although your bankruptcy will remain on your credit report for 10 years, you will be able to obtain credit after filing bankruptcy. It may take some time, but you will be able to reestablish your credit rating. In fact, we recommend that you do use some credit – within reason – after your bankruptcy to establish a payment history and increase your credit score.

What does a Bankruptcy cost?

To file a bankruptcy, you need to pay a filing fee to the court and you also need to pay your attorney for the legal services that were provided. The filing fee for a Chapter 7 bankruptcy is $306; the filing fee for a Chapter 13 is $281.

Legal fees will vary depending on the complexity of your case. In a Chapter 7, your legal fees must be paid before the New Life Bankruptcy Center can begin preparing your bankruptcy petition. In a Chapter 13, you may be able to make installment payments after the New Life Bankruptcy Center has filed your bankruptcy petition.

Can Bankruptcy stop a lawsuit against me?

Yes! The automatic stay is one of the most beautiful elements of bankruptcy. From the moment your bankruptcy is filed, your creditors cannot take any further action against you without permission of the court. Filing bankruptcy can even stop the foreclosure of your home or the repossession of your car.

Exemptions

The law allows debtors to keep some property. As a general rule, debtors can exempt some of the equity in a personal residence, in a vehicle and in a qualified retirement account.

Will my boss and neighbors know that I have filed bankruptcy?

No, unless you tell them about your bankruptcy filing or they are a creditor in your bankruptcy.

What happens if I receive an inheritance or win the lottery after I file bankruptcy?

If you come into a sudden windfall within 180 days of filing bankruptcy, you will need to inform the court. If the funds are not protected by an exemption, the Trustee may use them to pay your creditors.

Disclaimer

The New Life Bankruptcy Center is a Debt Relief Agency. We help people file for relief under the United States Bankruptcy Code. The information contained on this website is intended to provide general bankruptcy information and does not constitute legal advice or form an attorney-client relationship.

 

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