Top Five Questions About Bankruptcy

Five Top Questions About Bankruptcy

Bankruptcy is a means for a person who is facing insurmountable debts to be able to start anew. Unexpected medical bills, a job loss, a business failure or divorce can all be valid reasons to seek bankruptcy protection. Bankruptcy is a federal court issue. According to the U.S. District Court web site, about 1.13 million personal bankruptcy filings were made in the 12 months prior to March 31, 2013. This is a chilling statistic of how the damaging cycle of the Great Recession continues to wreak financial havoc on the personal finances of Americans. The laws of bankruptcy are quite complex and individuals usually need legal assistance. There are uncertainties about what happens in bankruptcy. Here are the top questions and answers.
  1. Is bankruptcy expensive? Not really. Filing fees are generally less than $300. Attorney’s fees are extra, and many attorneys offer repayment plans.
  2. Can I keep my property? Under Chapter 13, yes you can keep your property, if you complete the repayment plan. Under Chapter 7, most people can still keep most of their property, as state laws shield or exempt some property from being sold to satisfy creditors.
  3. What debts can be discharged completely and what must be repaid? It depends on the type of bankruptcy filing. Under a Chapter 7 bankruptcy, debts such as credit card, medical bills, past rent and business loans can be discharged. Under a Chapter 13 bankruptcy, an even broader range of debt can be discharged.
  4. Can all my debt be discharged? No, not all debt is dischargeable. Unpaid taxes, outstanding child support and student loans are prime examples of debts that cannot be discharged under a bankruptcy.
  5. Will bankruptcy stop those annoying collection calls? Absolutely. After creditors are notified of a bankruptcy filing, all debt collections must cease until the bankruptcy is over. It’s called an Automatic Stay.

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