Bankruptcy FAQ
What Should I Know About Bankruptcy?
Bankruptcy is the legal process that essentially allows an individual or
business to eliminate or repay debts under the protection of the court.
There are two main options: liquidation or reorganization. Under either
Chapter 7 or Chapter 13, the consumer will file for bankruptcy through the federal
court. You must qualify for Ch. 7 under the means test and must have sufficient
income to file for Ch. 13, as a repayment plan is involved. Overall, bankruptcy
can put a stop to creditor actions and help you discharge or pay back
reduced debts.
Will Bankruptcy Eliminate All My Debts?
While most people imagine that bankruptcy is the cure-all solution to their
financial difficulties, this is simply not the case. Bankruptcy isn’t
an option for everyone. In most cases, you won’t be able to eliminate
all your debts—especially not secured ones. If secured creditors
have taken a mortgage or other lien on your property for collateral, you
will likely still have to pay back these debts, though they may be reduced.
Further, bankruptcy cannot eliminate certain debts or payments like child
support, alimony, and some student loans.
If I’ve Already Filed for Bankruptcy in the Past, Can I File Again?
Yes. After filing for Chapter 7 bankruptcy, you will have to wait 8 years
prior to filing under this chapter again. You can file for
Chapter 13 again after 6 years. However, if you didn’t receive a discharge the
last time you filed for bankruptcy, there are no time restrictions on
filing again.
What Different Types of Bankruptcy Should I Consider?
Under the law, there are four different types of bankruptcy available.
The most common for consumers include Chapter 7 and Chapter 13. The other
two are Chapter 11, known as a “reorganization” option used
for businesses / individuals with large debts, and Chapter 12, for family
farmers. Chapter 7 is also referred to as “liquidation,” as
the individuals non-exempt assets liquidated to pay off debts that cannot
be discharged. A means test must be passed to file this type of bankruptcy.
Chapter 13 is used for consumers who have some disposable income. Some
debts may be discharged while others must be paid off in full or partial amounts.
What Does it Cost to File for Bankruptcy?
The total costs involved in the bankruptcy process will vary depending
on an individual’s unique situation. To file for bankruptcy under
Chapter 7, you will need to pay a fee of just over $300. To file for Chapter
13, it costs $281. If you are unable to pay the full price at the time
of filing, you may be allowed to pay in installments.
What Happens to My Home? What About My Car?
When a person’s equity in the property is exempt (depending on state
exemptions), they will likely be able to maintain control over that possession. This
goes for cars, vehicles, homes, and other properties. If your home or
vehicle is not fully exempt, you may still be able to keep it so long
as you pay the remaining non-exempt value back to creditors. You will
still need to make payments on the debt of your mortgaged property after
filing for bankruptcy if you wish to keep your home.
Have more questions?
Call Arnold Law Group, APC to talk with a Fresno bankruptcy lawyer.