Here is a list of a few bankruptcy questions that we deal with on a regular basis. They are intended to be quick answers not complete answers or legal advice concerning your particular situation. Please do not try to substitute this web site for legal advice. Bankruptcy is a complex area of the law. One simple fact can change everything. Use this site for general information, then talk to us about your specific situation and how the laws apply and affect you.
1. Can I file bankruptcy?
You can probably file bankruptcy, unless you have filed bankruptcy again and again recently (serial filings).
2. Am I eligible for a Chapter 7 Bankruptcy?
First, Let’s go through the steps:
Step 1 — You must be an individual, a partnership, or a corporation or other business entity.
Step 2 — If you are an individual you must have received credit counseling from an approved credit counseling agency within 180 prior to filing.
Step 3 — A prior bankruptcy or yours can not have been dismissed within the last 180 days.
For a failure to appear before the court or a failure to obey the court’s orders, or
A voluntary dismissal after a creditor had filed for relief from the court to recover property encumbered by liens
Step 3 — The Bankruptcy can not be an “abuse” of the bankruptcy process
Such as repeated and regular filings
And the debtor’s failure to “pass” the “means test” (see below)
3. What is the means test?
The Means Test was enacted in 2005, because Congress was convinced by the credit industry that too many people who could pay their debt were filing bankruptcy. If a debtors’ family’s income is less than the median income for the size and location of the family, the debtor can file either a Chapter 7 or a Chapter 13. If they make more than the median income, then a complicated set of calculations based upon the actual and allowed expenses of the family are performed to determine if “there are sufficient funds to repay” a significant amount of the debt. This is called the “Means Test” – if a debtor has enough disposable income then the only kinds of Bankruptcies which they can file are Chapter 13, Chapter 11 or for family farmers, Chapter 12.
4. Can I file a bankruptcy again?
If you obtained a Chapter 7 or 11 discharge in a case that that filed within the last 8 years or a Chapter 12 or 13 discharge in a case that was filed within the last 6 years, you can still file a Chapter 7, however the Chapter 7 will not eliminate the liability on the debts.
5. Do I have to give up all my stuff?
NO! Bankruptcy is supposed to give you a fresh start. You keep exempt property and property that has no value or can not be sold. Even though you will be able to keep this property, be aware that you should NOT try to sell anything until the case is closed.
6. Can I pick and choose what debts I want to list?
The answer is simple, NO. You must list ALL of your debts even the debts that you want to pay. If you leave out some debts and list others, this is perjury and can result in you losing your bankruptcy discharge. Many clients ask me if they can keep one of their credit cards. However, not listing a credit card company on your bankruptcy does not mean that you will continue to be able to use the credit card. Most major credit card companies discover who has filed bankruptcy, whether or not they are listed. They then cancel cards of everyone who has filed bankruptcy, whether or not a balance is owed.
7. Do married couples both have to file a bankruptcy?
No, one spouse can file alone.
8. Will a bankruptcy stop a wage garnishment or a foreclosure?
Yes for garnishments, unless the garnishment is for child or family support.
Yes, at least temporarily for foreclosures. The automatic stays stop the foreclosure until or unless the Court lifts the stay or the property has been abandoned and your discharge has been received.
9. What happens to my credit if I file a Bankruptcy?
Filing bankruptcy does not prevent you from getting new credit. In fact many lenders target people who recently filed a bankruptcy as customers, since they have no other debt, they can not easily file bankruptcy again recently and are anxious to reestablish credit. BUT you can expect credit to be more difficult to get, more expensive, and limited in amount.
Usually, within two years after a bankruptcy discharge, debtors are eligible for mortgage loans on terms just as good as those with the same financial characteristics who have not filed bankruptcy.
Although a bankruptcy stays on your credit report for 10 years, it becomes less important to creditors the more time elapses. In fact, you are probably a better credit risk after bankruptcy than before.