Bankruptcy FAQ
- What is bankruptcy?
- What's the difference between secured and unsecured debt?
- Which kind of bankruptcy should I file?
- Who can file bankruptcy?
- How often can you file for bankruptcy?
- Do you have to have a certain amount of debt to file?
- What can I keep, if anything, if I file bankruptcy?
- How long does a bankruptcy stay on my record?
- Can I do anything to remove a bankruptcy from my credit report?
- Can a creditor continue to contact me after I've filed for bankruptcy?
What is bankruptcy?
Bankruptcy allows individuals or businesses (debtors) who owe others (creditors) more money than they're able to pay to either work out a plan to repay the money over time or completely eliminate (discharge) most of the bills.
What's the difference between secured and unsecured debt?
Secured debt is a claim that's secured by some type of property, either by an agreement or involuntarily with a court judgment or taxes. Creditors can generally claim the property that secures the debt in the event of bankruptcy. Unsecured debt is not tied to any type of property, and the creditor doesn't have a claim to their property. A mortgage is a secured debt on your property.
Which kind of bankruptcy should I file?
Consumers typically file Chapter 13 bankruptcy where repayment is made to creditors, or Chapter 7 where the debts are dismissed. Each chapter of bankruptcy spells out the following:
- What bills can be eliminated
- How long payments can be stretched out
- What possessions you can keep
- Additional information
The type depends on your circumstances and if you have assets available to repay all or part of your debts. Bankruptcy laws can be tricky and involved, so determining if, when and which type of bankruptcy you need should be made with careful thought or the input of a bankruptcy lawyer.
Who can file bankruptcy?
With few exceptions, any person or business owing money to a creditor can file a bankruptcy petition.
How often can you file for bankruptcy?
Filing bankruptcy can adversely affect your ability to obtain future credit, rent housing and can even negatively impact a job application. Any decision to file must be carefully considered. Chapter 7 can be filed every eight years from a previous Chapter 7 filing or six years from a prior Chapter 13 filing. Chapter 13 can be filed four years from a prior Chapter 7 filing or two years from a prior Chapter 13 filing.
Do you have to have a certain amount of debt to file?
No. However, some situations may not warrant filing for bankruptcy. If your financial situation is temporary, you may consider making arrangements with individual creditors for a change in payment amounts or a reduction in the total amount due. If you have little property or money, filing bankruptcy may not be necessary, as the creditor may not be able to collect the debt.
What can I keep, if anything, if I file bankruptcy?
Exemptions allow an individual to "exempt", or keep, certain kinds of property. State law defines what assets are considered "exempt," but they typically include the following:
- Jewelry
- Vehicles up to a certain amount
- Equity in a home up to a certain amount
- "Tools of the trade" or tools and equipment necessary to allow the individual to continue working
How long does a bankruptcy stay on my record?
Bankruptcies remain on credit reports anywhere from seven up to ten years.
Can I do anything to remove a bankruptcy from my credit report?
No. Although at your option, you can file an explanation with the credit reporting agencies briefly describing the events resulting in your bankruptcy. If an account is reported inaccurately, you can request the record be updated to reflect the actual situation.
Can a creditor continue to contact me after I've filed for bankruptcy?
During the time the debtor is working out a plan or the trustee is gathering and preparing the assets to sell, the bankruptcy code dictates that creditors must stop all collection efforts against the debtor. As soon as the bankruptcy petition is stamped "Relief Ordered" upon filing, you are immediately protected from your creditors. This is called an automatic stay. After that time, if a creditor attempts to collect a debt, immediately notify the creditor in writing that you have filed bankruptcy, and provide them with either the case name, number and filing date, or a copy of the petition that shows it was filed. If the creditor still continues to collect, you may be entitled to take legal action against them.
Get out of debt and on with your life.
There is hope for eliminating debt. For Colorado residents seeking debt relief, the answer to your financial problems is as simple as contacting The Law Offices of Charles E. Longtine, PC today.
