Bankruptcy Frequently Asked Questions
I filed in the past. When can I file again?
If you previously filed a Chapter 7 and received a discharge, you need to wait four years since the filing date to be able to file a Chapter 13, and eight years to file another Chapter 7.
How is this going to affect my credit?
The law states that a bankruptcy, either Chapter 7 or 13, can be listed on your credit report for up to 10 years. However, many Credit Bureaus list a Chapter 13 for only 7 years. Either way, a bankruptcy will negatively affect your credit. However, if you are considering bankruptcy, your credit is probably poor or about to become so, and your credit begins to restore after a few years. Many filers are able to buy a house a few years after filing for bankruptcy.
Will I lose my house? Or my car?
It depends. In a Chapter 7, you need to be current on your house or car payment at the time of filing, and you will of course have to continue to make regular payments. If you stop making payments, even if you are in bankruptcy, the secured creditor has the right to repossess or foreclose. Also, you need to keep in mind that in a Chapter 7, if you have excess equity in a house or car (equity above the exemption amounts), then the trustee could sell the property in order to use that excess equity to pay your creditors. One advantage of filing for Chapter 13 relief is that no property will be taken by the trustee and you can be behind in your payments and still keep the car or house.
What debts are discharged?
It is likely that most of your debts will be wiped out by the bankruptcy. As a general rule, unless your debt is one listed below, it will be discharged by the bankruptcy.
- Child support or alimony debts
- Debts owed to the government, like taxes or fines
- Most student loans
- Debts involving fraud, embezzlement, larceny
- Debts incurred by driving under the influence causing personal injury
- Debts incurred for luxury goods or cash taken immediately before bankruptcy from a credit card.
Will I lose my tax refund?
It is likely that you will lose either your entire refund or a portion of your refund if you file your taxes within several months of filing for bankruptcy. In a Chapter 13 bankruptcy, you will keep the first $1,000 of your refund each year, but must surrender anything over that amount to the trustee to be applied to amount you agreed to pay back through your plan.
Can I file with or without my spouse?
Yes. You can file a joint case which may be the best choice if each has debts or there are joint debts. However, you can also file alone without harming your spouse’s credit.
Will bankruptcy affect my spouse?
If you file for bankruptcy without your spouse, your spouse’s income will need to be reported, but the bankruptcy will have no meaningful impact on your spouse. Your spouse’s credit will not be harmed, and your spouse will not be required to make any appearances, sign any documents, or otherwise be involved in the case.
What if I cosigned for someone else, or someone else cosigned for me?
If you cosigned on a debt for someone else, your liability on that debt will be wiped out by the bankruptcy. This means that that particular creditor can only collect from the signor. It will not affect the signor if the signor can continue to make payments. If someone else consigned for you, that person will then become the only person from whom the creditor can collect. That means that if you have been making regular payments, and wish to wipe out the debt, the cosigner will then the only one liable on the debt and will be responsible for its payment.
How long does it take to file?
It depends. There are a few things that you must do before your case can be filed. You must complete an online or telephonic debt counseling course, complete a “bankruptcy interview” over the internet, as well as deliver to your attorney verification of your last six months of income, and copies of your last filed tax returns. Then your attorney will prepare the filing papers and then contact you to sign all of the papers. If the attorneys’ fees and court fee have been paid, then your case is ready to be filed.
How long does the whole bankruptcy process take?
It depends. It usually takes 3-4 months in a Chapter 7 to receive your discharge. However, the case may not officially close until many months later. In a Chapter 13, you must complete the entire plan which will last 3-5 years.
Can I get out of a lease?
Do I have to go to court?
Probably not. In a Chapter 7, you should only have to attend a meeting with the trustee about 5 weeks after filing. The trustee is not a judge, but you will be placed under oath to answer questions about the papers that are filed in your case. The creditors are invited but very few if any will attend. In a Chapter 13, you will also have to attend a meeting with the trustee. If the plan cannot be confirmed by consent, there is a small chance that you will have to appear with your attorney at a bankruptcy court hearing.
Can I keep certain debts out of the bankruptcy?
All of your debts need to be listed in your filed paperwork. However, you can elect to “reaffirm” certain secured debts which means that you will keep the property securing the debt, and the debt will survive the bankruptcy.
I signed a document that said I wouldn’t file—can I still file for bankruptcy?
Yes. There are many people out there that think that if you sign a document that says you won’t file for bankruptcy, then you lose that right. It doesn’t matter what you have signed. You can still file for bankruptcy.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.