FAQ – Bankruptcy Law
Bankruptcy is a "last resort" method that is designed to allow the government to provide debt repayment or settlement to those who are unable to pay money that is owed. There are different types of bankruptcy, and there are rules in which to qualify for this service.
Generally, you must be in a situation where you have acquired debt that you can no longer repay due to a change in your financial capabilities. Often, bankruptcy occurs after a major life event such as death, divorce, illness, job loss, or any other hardship.
It is strongly encouraged to make bankruptcy your last resort. Attempt to make arrangements with your debtors first by contacting each one of them directly and discussing reduced payments or the ability to defer payments for a period of time. Many debtors are willing to negotiate to some level to help those in need.
While it is possible to file for bankruptcy on your own, it is highly recommended to use legal assistance. Find a law firm that specializes in bankruptcy and can help you determine which type of bankruptcy is best for your situation. Then the firm can handle all of the needed paperwork throughout the process to make sure your bankruptcy runs smoothly.
The best bankruptcy attorneys will have an initial conversation with you at no charge. The attorney can provide advice on next steps and your alternatives. If you decide to proceed, you may have to pay a small initial fee to begin the filing process.
Bankruptcy can only be filed once every 6 years.
Discuss your situation with a knowledgeable attorney, who will also request for a list of all debts. The list should include the company or individual name, the amount owed, account number, and a phone number.
Depending on the type of bankruptcy, some of your assets can be exempted. This could include your home, vehicle, or certain personal debts such as child support.
With bankruptcy, it is very important to stick to the terms of your agreement. Discuss any situations with your attorney to determine how best to prioritize payments.
Because bankruptcy often results in debtors losing money, your credit score will be dramatically impacted. A record of your bankruptcy can remain on your credit report for as long as ten years.
How do I choose the right one? Choose a law firm that specializes in bankruptcy to help you determine which choice is best for your particular situation.
In a chapter 7 bankruptcy, virtually all of your assets are used to repay the debt, and then the remaining debt is put into structured payments that must be completed within a set period of time, typically 3-5 years. A chapter 13 bankruptcy allows you to retain some of your assets such as home and vehicle and restructured payments are put into place.
It depends on the type of bankruptcy, but your attorney can help you determine how best to keep the assets you need.
It is possible but the paperwork and legal process are extremely time-consuming and very complicated. In a vast majority of cases it is much easier to use a skilled attorney.
Everyone is always encouraged to use bankruptcy as a last resort. Some people may be able to repay debts simply by living within their means and adhering to a budget. Others may need to negotiate a reduced payment with their debtors. But in some cases, bankruptcy is the only alternative.