FAQs

There is no minimum debt amount required to file for a Chapter 7 or Chapter 13 bankruptcy. That being said, it’s important to consider your individual decision before choosing to file. While you can file with less debt, keep in mind that bankruptcy will require you to rebuild your credit afterward. Furthermore, individuals with less debt may have a harder time convincing the court that a discharge is needed.

If you file for a Chapter 7 bankruptcy, any nonexempt assets that you have will be liquidated to pay off your debts. These include all personal items that are not necessary for your daily life, such as personal electronics and jewelry. Conversely, exempt items – integral to your day-to-day life or your occupation – are safeguarded. These often include your household goods, your home, your vehicle, and any items you need to perform your job.

As soon as your bankruptcy is filed, an automatic stay is put in place. This court order prohibits your creditors from coming after you for repayment. If collection attempts continue after the automatic stay is effective, do not make payments. You have the right to sue your creditors for harassment. However, it is important to remember that not all debt collection efforts are halted by the automatic stay. You still have to make child and alimony payments.

No, the Bankruptcy Code does not require married couples to file together. 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 spouses to file their bankruptcy jointly.

Only you, the court, and anybody you choose to tell about the bankruptcy will know about your case. Although bankruptcy filings are available to the public, it is rare for people outside a case to search for this information.

Yes. However, it may become more difficult to have a lease application accepted if you have a poor credit history and a bankruptcy case on file. In some situations, though, using bankruptcy to reduce your personal debt can actually help you secure a lease – by relieving yourself of debt, you may be deemed a better credit risk than other applicants.

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.

Not at all. Bankruptcy is a tool to use to reduce your outstanding, insurmountable debt. Often, debt is the result of circumstances out of a person’s direct control. As an American citizen, you have the right to file for bankruptcy to have your debt discharged. We believe that everyone deserves a fresh start, and bankruptcy can provide a pathway to a better future.

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.

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. Making small purchases, knowing how much money you have in your bank account and paying your balance on time can all help you improve your credit after filing.

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.

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.

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. In other cases, a bankruptcy discharge may be rejected if the individual has a history of bankruptcy fraud, did not follow the court’s instruction or attempted to conceal or fraudulently sell property that was a part of the debtor’s estate.

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.

The process of filing for a Chapter 7 bankruptcy does not necessarily mean all outstanding debts will be discharged. Certain obligations remain non-dischargeable, meaning you are still responsible for their repayment. This includes alimony, child support, some taxes, student loans, debts for death or personal injury caused by your motor vehicle, debts for injury to another person, and others. It is crucial to understand that certain obligations, due to their nature and societal impact, remain beyond the reach of bankruptcy discharge. Therefore, careful planning and a comprehensive understanding of these nuances are essential when considering bankruptcy as a route toward financial recovery.

Once your bankruptcy has been finalized and the court has granted the discharge of your debts, creditors can no longer attempt to collect debts from you. However, if you’ve developed further debts after the bankruptcy, these can be collected. Overall, your task after a Chapter 7 bankruptcy is to rebuild your credit and develop healthy financial habits.