Common Bankruptcy Questions And Their Answers

Bankruptcy is a legal process through which an individual declares his or her incapability to pay creditors. It is a remedy for the anxiety and tension that builds up when creditors bother the debtor. In layman’s language, bankruptcy is a legal way of dealing with debts one cannot pay.

Here are some commonly asked and their answers.

1. What Is The Procedure For Filing Bankruptcy?

First, you have to look for a well qualified bankruptcy lawyer. The lawyer will give you a questionnaire to fill out to determine whether bankruptcy is a feasible option for you or not. Next you will have to decide under which chapter you will file for bankruptcy. The lawyer will help you file voluntary petition in bankruptcy court. Once the documents are filed, you will be assigned a trustee who will ensure that all the information has been collected and is accurate. The bankruptcy court will now notify all the creditors about your . This will make your creditors discontinue whatever action they had intended to take against you in order to get their payment. Next, you will be required to meet all the parties including your creditors, involved in your bankruptcy. You may also be required to meet the lawyers of your creditors.

2. What Is Chapter 7 Bankruptcy?

Filing under is the most common procedure. This chapter is best suited for individuals who cannot repay their debts and are looking for a fresh start. Under this procedure the trustee appointed by the bankruptcy court will take charge of your assets and sell your non-exempt assets. The money received from the sale of such assets will be used to pay your creditors. The creditors paid off under this procedure are not entitled to take any action with regard to these discharged debts. The debts not mentioned in the bankruptcy petition and those incurred as a result of cheating a creditor are not dischargeable.

3. What Is Chapter 13 Bankruptcy?

Chapter 13 bankruptcy is geared to help homeowners. Under this type of bankruptcy, the individual or couple is allowed to pay the entire debt or a portion of the debt under the supervision of U.S bankruptcy court. The process allows the debtor to use future income to pay off the creditors. It is thus applicable for a debtor who has a regular income and can afford this kind of debt restructuring. The United States bankruptcy court gives a period of 5 years to the debtor within which they are required to pay back his or her debtors. The creditors have to strictly adhere to the repayment plane approved by the court. A good bankruptcy lawyer will help you prepare a repayment plan that suits you.

4. How Long Will The Take?

A Chapter 7 bankruptcy takes 4-6 months while a Chapter 13 bankruptcy takes 3-5 years.
5. What Will Be The Impact Of Bankruptcy On My Credibility?

Filing for any kind of bankruptcy will take toll on your ability to get credit. However, your credit rating will not be hit for ever. You are on a path to financial recovery . Most people start getting credit offers a few months after their discharge. While the bankruptcy will be in your records for 10 years, it will not have any effect on your ability to get credit for your entire life.

6. Will I Lose My Job?

It is illegal for an employer to discriminate against an employee because he or she has filed for bankruptcy. In case you are searching for a new job it is not mandatory for you to disclose bankruptcy information to your potential employer.

7. Are There Any Alternatives To Bankruptcy?

You can take help of a . The advantage of this alternative is that your records will not show bankruptcy. The disadvantage of this plan is that you will not be given the protection of “Chapter 13” and “Chapter 7” bankruptcy. You should take the advice of an attorney to decide whether to go for Chapter 5 or 13.

It is very difficult to deal with debt issues. In some cases filing for bankruptcy has been known to aggravate financial agonies. Hence it is very important for you to seek expert opinion on whether bankruptcy is suitable in your case or not. Have a secure financial life ahead.

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Posted in Bankruptcy, Bankruptcy Basics | 1 Comment »

One Response to “Common Bankruptcy Questions And Their Answers”

  1. alphonsa says:

    Very informational article. This article gives a clear overview of how to file for bankruptcy. First of all we have to hire a lawyer who will analyze the situation and he will work out the situation whether any other alternative can be there other than declaring a person to be bankrupt. So court petition is filed and a guarantor will verify the validity of the documents. There can be chapter7 and chapter 13 to file bankruptcy. In chapter 7 all the non exempt assets of the debtor will be sold and the amount will be paid to the creditor. Under this the creditor will not take any legal action against the debtors. Under chapter 13 the debtors are allowed to increase the tenure and will use the future income to pay off the creditors. So 5 years are extended to the debtors to pay off the amount and the funding agency has to abide by this rule.

    If a proper channel is followed for filing bankruptcy the credit score will not affect. The only problem is we cannot apply for a fresh loan for some time but after some time this problem is also resolved. And the employees will not lose the current job. If the user has potential and is searching for a new job for growth purpose he can apply for the same without disclosing that he has been declared as a bankrupt.

    By the court intervention some relief is given to the debtors otherwise creditor can take control of his existing assets by illegal means which is mental and physical harassment to the debtors and their family. This will affect the social status. And also future benefits of other utility services are devoid of them. So its better not to do out of court settlement always involve the law while taking such actions.

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