FAQ

Bankruptcy is a legal process designed to help individuals and businesses eliminate all or part of their debt or to help them repay a portion of what they owe. It typically involves the liquidation or reorganization of assets to pay off debts, and it can offer a fresh financial start.

Individuals often file for Chapter 7 or Chapter 13 bankruptcy. Chapter 7 involves liquidating assets to pay off debts, while Chapter 13 involves a repayment plan to creditors. Businesses may file for Chapter 7 to liquidate or Chapter 11 to reorganize and continue operating.

Filing for bankruptcy will negatively impact your credit score in the short term and can remain on your credit report for 7 to 10 years, depending on the type of bankruptcy. However, it can offer a clean slate to rebuild your finances over time.

Eligibility criteria for bankruptcy vary based on the chapter you're filing under. For example, Chapter 7 requires passing a means test, while Chapter 13 requires a steady income for a repayment plan. Consult a bankruptcy attorney for specific eligibility requirements.

Yes, both Chapter 7 and Chapter 13 provide for exemptions that allow you to keep certain types of assets such as household goods, a primary vehicle, or retirement savings. Specific exemptions vary by state.

The bankruptcy process generally includes credit counseling, filing a petition and financial statements, attending a meeting of creditors, potential liquidation of non-exempt assets (in Chapter 7), following a repayment plan (in Chapter 13), and completing debtor education courses.

Chapter 7 bankruptcy usually lasts 4 to 6 months, whereas Chapter 13 bankruptcy can last 3 to 5 years, depending on the repayment plan duration.

Upon filing, an "automatic stay" goes into effect which stops most collection efforts, harassment, and wage garnishments. It can also halt foreclosure and repossession actions temporarily.

Alternatives include debt settlement, debt consolidation, making arrangements directly with creditors, or getting assistance from a credit counseling service.

Filing fees vary depending on the type of bankruptcy, and there may be additional attorney fees, credit counseling fees, and other administrative costs.

While it's possible to file on your own, bankruptcy can be complex, and the guidance of an experienced attorney can be invaluable, especially to avoid any mistakes that could compromise your case.

Rebuilding credit post-bankruptcy involves taking steps to establish a positive payment history, such as using secured credit cards responsibly, paying bills on time, and keeping debt levels low.

Exemption amounts and types, certain procedures, and eligibility criteria can vary from state to state. It is essential to consult with a bankruptcy attorney who is knowledgeable about the specific laws in your state.