Deciding on filing for bankruptcy can be one of the most important decisions in your life. Instead of losing valuable assets like your home and car, bankruptcy can allow you to maintain your standard of living while obtaining debt relief.
Our lawyers at Beehive Advocates, located in Salt Lake City, guide clients through the bankruptcy process and understand that you may have many questions along the way. Here are some answers to the most frequently asked questions about bankruptcy.
Q: What is bankruptcy?
A: Bankruptcy is a process under federal law that allows debtors who owe more money than they can pay to either eliminate their debts or work out a payment plan to pay a portion (or all) of their debts over a three to five year period.
Q: What is the difference between Chapter 7 and Chapter 13 bankruptcy?
A: Chapter 7 bankruptcy, also known as "liquidation", allows you to discharge unsecured debts such as credit card debt and medical bills.
In Chapter 13 bankruptcy, you establish a repayment plan with the court to pay off a portion or all of your debt over a period of time. The amount you owe depends on how much you make, the type of debt you owe and what kind of property you own. In most cases, you are allowed to keep your property but remain responsible for paying off your debt.
Q: Will bankruptcy stop all the harassing phone calls and mail from bill collectors?
A: Yes! An "automatic stay" will take effect when you file your case. It will stop creditor harassment and protect you throughout your active bankruptcy. Attempting to collect a debt after notification of a bankruptcy filing is illegal, and may result in monetary sanctions against the collector.
Q: Will bankruptcy stop a wage garnishment from a lawsuit over an unsecured debt?
A: Yes. The automatic stay will stop the garnishment. In some instances, you may be able to get this money back from the collection company – and directly into your own pocket.
Q: How long will bankruptcy remain on my credit report?
A: Bankruptcy can remain on your credit report for ten years.
Q: What does "secured" or "unsecured" debt mean?
A: Secured debt is debt that allows a creditor to make a claim on an asset (i.e. home, real property or car). Unsecured debt is held by creditors that have no claim to your assets (i.e. student loans, credit cards or medical bills).
Q: What happens if I file and discover another debt after filing?
A: Your lawyer can amend your case to include any additional debts you may find after the case is filed for up to forty-five days after filing.
Q: What happens when one spouse files without the other spouse?
A: You need to discuss this carefully with your attorney. The spouse that doesn't file may end up being responsible for some of the debts.
Q: Can I be held responsible for a debt that I co-signed?
A: Yes. You can be held responsible for any debt that you signed and said you would pay in the event that someone else failed to make the payments (co-signed).
Q: Can all debts be discharged?
A: Not generally. There are certain debts like student loans, government loans, back taxes and other debts that cannot be discharged without special application to the bankruptcy court. Although discharge of these debts is difficult, it is not impossible.
Q: Will I lose my social security payments if I file?
A: No. You, generally, can keep everything that is part of a qualified retirement plan.
Q: Am I going to lose my personal property if I file bankruptcy?
A: There are exemptions, both state and federal, that allow you to keep a certain amount of personal property. In many cases, you can keep your car, your house, and your personal belongings.
Q: Can I pick which debts to put in the bankruptcy?
A: No. You must include all of your debts even if you plan on keeping the property and making scheduled payments. All debt must be included.
Q: When will I get my discharge?
A: Generally a Chapter 7 bankruptcy discharge is received 60 days after the 341 meeting, or first meeting of creditors. In Chapter 13, your discharge will be sent to you once you have completed the payments under the Chapter 13 plan. Chapter 13 payments plans are scheduled to last between 36 and 60 months.
Q: How much does filing for bankruptcy cost?
A: Our law firm offers a low, flat-fee price along with several payment plan options to file a Chapter 7 bankruptcy and $250 to be your Chapter 13 petition. Beehive Advocates makes debt relief affordable for its clients.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.