- What is bankruptcy?
- How can bankruptcy help me?
- How do I start the process of bankruptcy filing?
- When can I file for bankruptcy?
- What are the various types of bankruptcy?
- What is a chapter 7 bankruptcy?
- What is a chapter 13 bankruptcy?
- How much will filing for bankruptcy cost?
- What is “exempt” in the state of Texas?
- What happens after I have filed for bankruptcy?
- Will bankruptcy remove all my debts?
- Will my credit be negatively affected if I file for bankruptcy?
- Will I be able to get a credit card after filing for bankruptcy?
- Do I have to go to court to file for bankruptcy?
- How do I file for bankruptcy if I am married and do not want to affect my spouse?
- Will creditors stop calling me if I file for bankruptcy?
- Will filing for bankruptcy eliminate my student debt?
- I have moved in the last few months, where do I file for bankruptcy?
1. What is bankruptcy?
Bankruptcy is a legal declaration that an individual or organization is unable to pay his or her creditors. If you are unable to pay your bills, you may be eligible to file for bankruptcy. The purpose of bankruptcy is to give you a “fresh start.” Federal law gives you the right to file for bankruptcy if you meet certain criteria. Filing for bankruptcy will grant you an automatic stay, which means all creditors will have to stop harassing you to collect their debt until you legally sort out your debt.
2. How can bankruptcy help me?
Filing for bankruptcy can help you
- Legally clear most of your debt, also known as “discharging your debt,”
- Stop foreclosure on your home and come up with a payment plan that works for you
- Stop wage garnishment
- Stop your vehicle from being repossessed
- Stop creditors from harassing you
- Create a financial plan that works with your current income
3. How do I start the process of bankruptcy filing?
You can read the official Bankruptcy forms. They can be found at the United States government website under Bankruptcy Forms
4. When can I file for bankruptcy?
You can file for chapter 13 bankruptcy at any time. For a chapter 7 bankruptcy, you must wait at least 8 years from the last date of filing before you can re-file.
5. What are the various types of bankruptcy?
You should look into the following types of bankruptcy cases:
Chapter 7 bankruptcy is also known as “liquidation” because property is sold to pay creditors, subject to certain limitations.
Chapter 11 bankruptcy is often used by individuals and businesses who are struggling with extremely large amounts of debt, it is also referred to as “reorganization.”
Chapter 13 is also known as “debt adjustment” because it adjusts the debt and works out a payment plan for the debtor based on his or her current income.
For more information, visit our bankruptcy page.
6. What is a chapter 7 bankruptcy?
An individual may be eligible for chapter 7 “liquidation” only by showing that he or she lacks the means to make some payment on those debts. The debtor will file a petition under chapter 7 requesting that the court discharge his or her debt. Under chapter 7, your debt is wiped out in exchange for your property, which is sold, and the proceeds are used to pay the creditors. However, some property is exempt, meaning you do not have to legally sell it to pay back your debt. At NNK, we can help you determine which property would be exempt and which would be sold.
7. What is a chapter 13 bankruptcy?
Chapter 13 bankruptcy basically allows you to catch up on payments you are behind on and draft a payment plan over 3-5 years. The advantage of a chapter 13 claim is that, unlike chapter 7, it allows you to keep your property and assets if you can come up with a payment plan. However, it is important to have a source of income to be eligible for a chapter 13 claim because you have to be able to support yourself and have some extra cash to keep up with the monthly payments you have missed.
8. How much will filing for bankruptcy cost?
For a chapter 7 bankruptcy claim, it costs $299 and it is $279 for a chapter 13 claim. This is in addition to attorney’s fees should you choose to hire one.
9. What is “exempt” in the state of Texas?
As mentioned above, when you file for chapter 7bankruptcy, there is certain property which is “exempt” meaning the law allows you to keep it and it cannot be sold to repay creditors. Your homestead, certain personal property, insurance plans, pension plans, wages and other miscellaneous property may be exempt, if it meets certain criteria. An NNK attorney can complete a full evaluation of your property and help you determine which of your property would be exempt under Texas law.
It is also important to remember that your property is valued in terms of its current value, the price you paid for it is irrelevant.
In a chapter 7 case, exemptions do not prohibit the right of the mortgage holder or a car loan holder from seizing the property to cover the debt. Therefore, if you want to be absolutely sure that you keep certain property, you should consider filing for chapter 13 bankruptcy.
10. What happens after I have filed for bankruptcy?
Many people mistakenly believe that once you file for bankruptcy, your reputation and your credit will be forever tarnished, but that is simply not the case. After all, the purpose of bankruptcy law is to help individuals and businesses obtain a “fresh start.” You can keep your exempt property throughout the bankruptcy process, or you can keep all your property under chapter 13.
It is important to remember, however, that if you obtain property through a settlement, or a sum of money through life insurance or inheritance, than that money and property may be subject to the claims of creditors if it is not considered exempt. For a full evaluation of your specific circumstances, you should contact an attorney.
11. Will bankruptcy remove all my debts?
Maybe. It depends on your particular situation. Bankruptcy will generally not eliminate:
- Child support obligations
- Alimony
- Taxes and outstanding money owed to the IRS
- Student loans
- Mortgages
- Certain liens
- Loans you obtained through misrepresentations
- Debts not listed in your bankruptcy petition
12. Will my credit be negatively affected if I file for bankruptcy?
Maybe. The fact that you filed for bankruptcy stays on your credit card report for ten years from the date of filing. However, since bankruptcy helps eliminate your debt and helps you get caught up in terms of your current bills, it may help our your overall financial position.
13. Will I be able to get a credit card after filing for bankruptcy?
You will most likely be able to get a credit/debit card through your bank. Additionally, you may be able to keep certain credit cards if the credit approves it. You will also likely be able to get a credit card that you can put funds on in advance of using it through your bank.
14. Do I have to go to court to file for bankruptcy?
You will have to attend a meeting of the creditors, which involves appearing in court to meet with the trustee, and creditors that wish to attend. This meeting is usually straightforward. You will simply need to explain your financial situation and present appropriate bankruptcy paperwork.
In rare and complicated instances you may have to appear before a judge to sort out a dispute. If this is the case, you will be given a time and court date.
15. How do I file for bankruptcy if I am married and do not want to affect my spouse?
Filing for bankruptcy will affect your spouse in that he or she will be liable for any joint debts. However, filing together may allow you to double your exemptions. It is important to remember that if only one spouse files for bankruptcy, it may show up on the other spouse’s credit report
16. Will creditors stop calling me if I file for bankruptcy?
Yes, filing for bankruptcy grants you an automatic stay meaning creditors are not permitted to call or take any further action to try and collect their debt.
17. Will filing for bankruptcy eliminate my student debt?
Student loans are usually not dischargeable under bankruptcy, however, it is not impossible and there are 2 limited exceptions to this general rule. The first exception is if the student loan was not insured or guaranteed by a governmental unit. The second exception is if not discharging the student loan will be extremely burdensome and impose undue hardship on the debtor or the debtor’s dependants. Each case is reviewed on its merits and depends on its unique circumstances.
18. I have moved in the last few months, where do I file for bankruptcy?
The law states that a debtor should file bankruptcy in the district in which he or she has lived the longest in the last six months. Specifically, 28 U.S.C. §1408 says that a bankruptcy petition should be filed where the debtor "lived for 180 days preceding such commencement or for a longer portion of such 180 day period."
