Bankruptcy Questions and Answers… Before you file for bankruptcy, there are some basic questions that need immediate answers without having to visit a lawyer. Here are the most frequently asked questions regarding bankruptcy and its corresponding answers.
Q1: Will I lose my home if I file for bankruptcy?
A1: While there is a possibility of losing your home, this only happens in rare cases. The federal and state laws have specific exemptions to allow you to keep your home during bankruptcy proceedings. In Chapter 7, only non-exempt assets are liquidated, and in Chapter 13, no assets are liquidated.
Q2: Will bankruptcy destroy my credit rating forever?
A2: Of course not! Although the bankruptcy case will remain in your record for 7 to 10 years depending on the bankruptcy program you availed, there are a lot of ways in which you can build your credit rating again. All you need to do is prove to the credit companies that you are paying all your bills and in time, you can restore your ratings.
Q3: Do I need to have a lawyer?
A3: While the court does not specify a lawyer’s presence in bankruptcy proceedings, the complexity of the bankruptcy process necessitates a lawyer. Not only will he be able to represent you in court, but there are other aspects of the process he can help you with.
Q4: When I file for bankruptcy will the credit companies stop hounding me?
A4: Should your case be filed in the court, it is the duty of the judge to hand out a directive to your creditors to prevent them from communicating further with you while the proceeding is ongoing. Plus, they will not take any further action on you like repossessing or foreclosing some of your assets.
Q5: How do I file for Chapter 7 bankruptcy?
A5: To be able to qualify for this bankruptcy protection it is important to have a monthly income below your state’s median income level based on the current US Census Bureau data. This will be the basis of your eligibility. If you fail in this test, which means your income is higher than the state’s median, you may be recommended to file for Chapter 13 instead.
Q6: What are the types of bankruptcy programs I can apply for?
A6: A personal bankruptcy declaration may involve two types. Chapter 7 or the liquidation bankruptcy and Chapter 13 or the debt reorganization bankruptcy. Both programs use the means test as the basis of qualification and in the first program, your non-exempt assets are liquidated to pay off your debts, while the second program helps you reorganize your debts through a repayment plan.
Q7: What is the role of a trustee in a bankruptcy case?
A7: The trustee is a person randomly appointed by the bankruptcy court to help carry out the procedures involved in the bankruptcy case. He administers the means test, liquidates your assets in Chapter 7 and implements the repayment plan in Chapter 13.
Q8: How long does a bankruptcy case take?
A8: This depends on the type of bankruptcy applied for. A Chapter 7 may take between 3 and 6 months, while for Chapter 13 it takes longer.
There are so many questions that need to be answered. However, if you want to know everything involved in the bankruptcy process, ask your lawyer because with the way the laws are presented, you will surely need one.