Consumers typically file Chapter 13 bankruptcy, where repayment is made to creditors, or Chapter 7 where the debts are dismissed. Each chapter of bankruptcy spells out:
The type depends on your circumstances and if you have assets available to repay all or part of the your debts. Bankruptcy laws can be tricky and involved, so determining if, when and which type of bankruptcy you need should be made with careful thought or the input of a bankruptcy lawyer.
A: Filing bankruptcy can adversely affect your ability to obtain future credit, rent housing and even negatively impact a job application. Any decision to file must be carefully considered.
A: No. The debts that can't be discharged vary slightly between the different chapters of bankruptcy. Generally, the following cannot be discharged:
Exemptions allow an individual to "exempt", or keep, certain kinds of property. State law defines what assets are considered "exempt," but typically include:
A: There are many factors that impact the ability to keep your home, including:
The bankruptcy court notifies, by mail, all creditors advising them of:
The exact information in the notice may be slightly different depending on the chapter under which the case is filed.
The trustee's job is to:
United States Trustees are appointed by the bankruptcy court, but aren't necessarily lawyers. Their fees are covered by the bankruptcy filing fee or are a set percentage of the money distributed in the bankruptcy.
A: Yes. Bankruptcy filings allow creditors to object to specific debts in the plan or the repayment or cancellation in its entirety.
Once you declare bankruptcy you must attend the creditors' meeting conducted by the trustee appointed to their case. You must answer questions concerning:
Failure answer truthfully can result in the petition being dismissed or, in extreme cases, a charge of perjury. Creditors may attend and question you about the assets or any other matter relevant to the bankruptcy. A creditor doesn't waive any rights by not attending the creditors' meeting.
After filing the petition, if you discover that an entry is inaccurate or missing, you may typically file an amendment to correct it. Remember, you're submitting the petition under the penalty of perjury, so take care with the initial filing. Also, any debt that isn't on the list can't be discharged and you'll be responsible for it.
As soon as you anticipate filing bankruptcy, stop using your credit cards. Bankruptcy law allows the review of questionable purchases for potential fraud. If purchases are made 40 days prior to filing or cash advances taken within 20 days of filing, the debt may possibly be excluded from the bankruptcy and it can be dismissed.
Reaffirming a debt is voluntary and isn't required by bankruptcy codes. You may voluntarily repay any debt instead of signing a reaffirmation agreement, but there may be other reasons for wanting to reaffirm a specific debt, such as a vehicle loan or student loan.
Yes. Typically, a bankruptcy case is reopened by the trustee when questions arise concerning what was included or possibly omitted, or any other irregularities that surface.
How an inheritance is treated in bankruptcy depends on when you become entitled to receive it and what type of bankruptcy relief you're seeking.
Chapter 7 - if you become entitled to an inheritance within 180 days of your filing date, the inheritance will be a part of your bankruptcy estate, and can be used to pay your debts. The important date is when your right to the inheritance is fixed, which is typically on the date of a person's death. You might not receive property or money from someone's estate for many months.
Chapter 13 - your inheritance can be used in determining how much you have available to pay creditors under your repayment plan, and the 180-day limit doesn't apply.
In either type of bankruptcy, you must inform the bankruptcy trustee about the inheritance. If you're thinking about filing for bankruptcy, ask a bankruptcy lawyer how an expected inheritance might factor into your plans.