Yes. If you file for Chapter 7 bankruptcy, your nonexempt assets will be liquidated to repay your creditors. These include all personal items that are not necessary for your daily life, such as personal electronics and jewelry. Exempt items include your household goods, your home, your vehicle, and any items you need to perform your job.
Frequently Asked Questions
Click for answers to the questions we hear frequently.
When Do I Get Relief from Creditor Harassment?
As soon as you file for bankruptcy, the automatic stay goes into effect. This is a court order that prohibits your creditors from attempting to collect your debt. If collection attempts continue after the automatic stay goes into effect, do not make payments. You can potentially sue your creditors for harassment. However, it is important to remember that not all debt collection attempts are suspended by the automatic stay. You still have to pay your child and spousal support.
Does my Spouse Have to File Jointly with Me?
No. If most of the debt is in your name only, you can file your bankruptcy case alone. Certain debts, like medical bills and debts made in both spouses’ names, are both parties’ responsibility. In cases like this, it can be beneficial for spouse to file their bankruptcy jointly.
Who Knows About my Personal Bankruptcy Case?
Only you, the court, and anybody you choose to tell about the bankruptcy will know about your case. Although bankruptcy filings are public record, it is rare for parties outside a case to seek this information.
Will I Be Able to Rent After I File for Personal Bankruptcy?
Yes. However, it can be difficult to have a lease application accepted if you have bad credit and a bankruptcy case on your credit history. Using bankruptcy to reduce your personal debt can actually help you secure a lease in some cases – by removing your debt, you can appear to be a better credit risk than other applicants.
How Do I Know if I Should File for Personal Bankruptcy?
If you are facing a level of personal debt that you cannot realistically repay on your own, bankruptcy might be the right course of action. If you are facing threatening collection calls, wage garnishment, foreclosure on your home, or repossession of your vehicle, filing for bankruptcy can be a way to make these actions stop.
Is Filing for Personal Bankruptcy Immoral? Does it Make me a Bad Person?
Not at all. Bankruptcy is a tool to use to reduce your outstanding, insurmountable debt. As an American citizen, you have the right to file for bankruptcy to have your debt discharged.
Can I Get Rid of Student Loans or Tax Debts?
Generally, student loan debts cannot be discharged through bankruptcy. In cases where they can be demonstrated to cause an “undue hardship,” though, it is possible to have them discharged.
Handling tax debts through bankruptcy is a bit more complicated. Tax debts older than three years can generally be discharged through bankruptcy, but this depends on the circumstances of your case’s filing. If a tax debt cannot be discharged through bankruptcy, it can be part of a Chapter 13 repayment plan.
Can I Get Credit After Filing for Personal Bankruptcy?
Yes. In fact, you are encouraged to seek new credit after you file for bankruptcy in order to rebuild your credit score. Credit is your ability to borrow money. Certain financial institutions specifically seek individuals who have filed for bankruptcy to offer them credit.
Chapter 7: What Discharge Means for Liability and Creditors?
A Chapter 7 bankruptcy discharge releases you the debtor from liability for most of your debts, while also stopping collections against you by creditors. If you owe a creditor a large amount of money, they may still get some money, but only via the trustee selling nonexempt assets you have. They will have no basis for collecting past debts.
Chapter 7: What Debts are Discharged?
Typically, you need to talk with professional bankruptcy attorneys to help you with this part of Chapter 7 discharge. You can expect the majority of your debts to be discharged, but some of your assets may be too valuable and could be sold. For instance, if you live alone in your home valued well over $100,000, you lose it. There are ways around that, especially if you work with professional bankruptcy attorneys.
Grounds for Rejection of Chapter 7 Bankruptcy
You can be rejected for discharge in Chapter 7 bankruptcy via a variety of means, depending on your particular situation. If you, for instance, failed to keep adequate financial records, couldn’t explain your loss of assets, or committed perjury, you can be denied discharge.
Chapter 7: Secured Creditors
Secured creditors may still have the right to seize property in some cases. This is where counsel is most important. It gets complicated, but if you bought a car and made an outside agreement that you wanted to keep it, you could make payments on the debt. The creditor would have the right to repossess the car if you failed to make payments, even with the discharge.
Chapter 7: What Debts Aren’t Discharged?
You can’t be discharged of all outstanding debts. This includes alimony, child support, some taxes, debts for education or loans, debts for death or personal injury causes by by your motor vehicle, debts for injury to another person, and others.
Schedule A Free Consultation
At Whitten & Whitten, we offer a free consultation during which we will examine the facts of your case and advise you on how best to proceed