Bancarrota FAQ

Below are answers to some common questions regarding bankruptcy and the process of filing for bankruptcy.

What is the advantage of filing bankruptcy?

A: As soon as you file for bankruptcy a “stay” is issued by the judge. This will cease all harassing phone calls from creditors. Bankruptcy also erases all your debt.

What is Chapter 7 Bankruptcy?

A: Chapter 7 is also known as “straight bankruptcy.” Your assets are sold to repay your debts.

What is Chapter 13 Bankruptcy?

A: Chapter 13 is known as “reorganization bankruptcy.” With Chapter 13 you are allowed to keep your assets as long as you follow the payment plan laid out in the case.

How does bankruptcy affect my credit?

A: No matter how you look at it filing bankruptcy is bad for your credit. However, a lot of the negative stigmatism that goes with it has gone away.

What Type of Bankruptcy is cheapest?

A: Chapter 7 is the cheapest bankruptcy, followed by Chapter 13.

Will my creditors stop harassing me?

A: Yes. Once you file the judge will issue a “stay order” which will stop all attempts to collect your debts.

Who will know I filed bankruptcy?

A: When you file bankruptcy it is entered into the public records. Although it is unlikely anyone will know you filed, your credit record will show the bankruptcy.

What debts cannot be discharged by bankruptcy?

A: Things that cannot be discharge include: mortgages, some federal and state tax claims, custom duties, spouse and child support, student loans, fines imposed by government agencies, drunk driving financial obligations. Non-dischargeable debts are ones that will survive the bankruptcy proceedings. The creditors have every right to pursue collecting the debt.

When can I start rebuilding my credit?

A: You can start rebuilding your credit immediately, even before the bankruptcy is done. Obtaining secured credit cards and loans will start the credit rebuilding process. You can expect it to take on average 1-3 years before your credit is back to full strength.

Do I have to appear before a bankruptcy judge?

A: No. You will meet with the trustee and your creditors in a 341 meeting.

Should I include all my debts in my bankruptcy?

A: Yes.

Can bankruptcy stop foreclosure?

A: When you file a stay is issued stopping foreclosure. However, a creditor can request a lift of stay and if granted by the judge can proceed to collect the debt.

Can I choose what assets to put in bankruptcy?

A: No. After you file you are allowed to declare certain items as exempt.

If I declare my car as exempt what happens?

A: If your car loan is worth $24,000 and you still owe $8,000 you can keep your car but you still are responsible for making payments. If your car is worth $24,000 and you owe $27,000 you can declare it an asset and owe nothing. This is one good advantage of bankruptcy.

How long until my debts are discharged?

A: Filing for Chapter 7 is the fastest, usually taking about 3-8 months to complete. Chapter 13 bankruptcy can take several months just to settle on a payment arrangement. Once that is done it isn’t considered finished until you make all your payments. This can take 36-60 months.