Bankruptcy FAQs
Personal bankruptcy is a legal process that provides individuals with a fresh financial start by wiping out certain debts or reorganizing them.
However, it's important to note that every person's financial situation is unique, and therefore the specific questions and answers that apply to you may be different from those listed here. It's recommended to speak with a licensed bankruptcy attorney who can evaluate your individual circumstances and provide personalized advice.
What is personal bankruptcy?
Personal bankruptcy is a legal process that helps individuals get relief from overwhelming debt and provides a fresh start for their financial future.
What are the different types of personal bankruptcy?
The two main types of personal bankruptcy are Chapter 7 and Chapter 13.
What is Chapter 7 bankruptcy?
Chapter 7 bankruptcy is also known as “liquidation” bankruptcy. It is a process where a person's non-exempt assets are sold to pay off their debts.
What is Chapter 13 bankruptcy?
Chapter 13 bankruptcy is also known as “reorganization” bankruptcy. It is a process where a person proposes a payment plan to repay their debts over a period of three to five years.
How do I know if I qualify for personal bankruptcy?
To qualify for Chapter 7 bankruptcy, most people must pass a means test to determine if, or how much, disposable income they have.
What debts can be discharged in personal bankruptcy?
Most unsecured debts, such as credit card debts, medical bills, and personal loans, can be discharged in personal bankruptcy.
What debts cannot be discharged in personal bankruptcy?
Student loans (although this may be changing!), child support, and some taxes may not be dischargeable.
Will I lose my assets if I file for personal bankruptcy?
That depends. In most cases, the answer is no, but it also depends on what assets you have. Each state has its list of assets that are exempt from being taken or sold by the Trustee in Chapter 7 Bankruptcies. In Chapter 13 Bankruptcies, assets generally are not sold or taken.
How does personal bankruptcy affect my credit score?
Bankruptcy can have a significant effect on your credit score, but that's only half the answer. For most people, who are considering Bankruptcy, their credit score has already taken a substantial hit from late payments, repossessions, or maxed out credit cards. Increasing your credit score after a Bankruptcy is often faster and easier than the alternative.
Can I file for personal bankruptcy more than once?
Yes, but there are time limitations that are dependent on which type of Bankruptcy you want to file for now and what types of Bankruptcy you previously filed for.