Common Questions About Bankruptcy
Our attorneys recognize that filing for bankruptcy can be a difficult decision, but we work hard to help you regain financial stability.
Below are a few questions we frequently hear from our clients:
What Is Bankruptcy?
Bankruptcy is when an individual or business legally declares an inability to pay outstanding debts. It provides a solution to debt by allowing debtors to repay their creditors through liquidation (Chapter 7) or reorganization (Chapter 13). It allows debtors to have a fresh start and regain financial stability over time.
Will Filing For Bankruptcy Erase All My Debts?
A bankruptcy filing will not eliminate all debts. Bankruptcy laws do not forgive certain debts, such as child support, alimony and most student loans. It also cannot stop secured creditors from foreclosing or repossessing property.
How Do I Know Which Chapter Of Bankruptcy To File For?
Each financial situation is unique. Therefore, you need to be familiar with your options. Our experienced bankruptcy attorneys can assist you in filing for the bankruptcy most suitable to your circumstances.
What Assets Will I Lose If I File For Bankruptcy?
When thinking about filing for bankruptcy, a common concern is the possibility of losing your home. While there are situations where this might happen, it’s important to remember that the purpose of bankruptcy isn’t to leave you without a place to live. In Chapter 7 bankruptcy, you can keep your “exempt” assets, which usually include most of what you own. If you still owe money on your home or car and want to keep them, you’ll need to continue making your usual payments or pay the lender the “fair market value” of the item. On the other hand, Chapter 13 bankruptcy involves setting up a repayment plan with the court to gradually pay back your debts. During this time, your creditors can’t contact you, sue you, or take away your property. Chapter 13 gives you the chance to catch up on any late mortgage or car payments.
Can I File For Bankruptcy More Than Once?
Yes, it is possible to file for bankruptcy multiple times. However, if you cleared your debts in a past bankruptcy, you must wait a specific period before you can file again. Whether you can file for another bankruptcy and have your debts cleared depends on:
- The kind of bankruptcy you filed before and want to file now.
- The outcome of your previous bankruptcy, whether you completed it, had it dismissed, or had it dismissed with prejudice, affects your ability to file again.
- The timing of your last bankruptcy filing.
What Is The Main Difference Between Chapter 7 And Chapter 13?
Chapter 7 bankruptcy, often referred to as “liquidation bankruptcy,” is suitable for people without a steady income and whose debts are mostly unsecured. This type of bankruptcy allows for the discharge of most unsecured debts, like credit card balances and medical expenses, though certain debts, such as some taxes, fines, and student loans, are typically not discharged. Individuals can keep “exempt” assets such as their home, vehicles, personal belongings, and retirement accounts, while “nonexempt” assets are sold by the court to pay off creditors.
On the other hand, Chapter 13 bankruptcy is more appropriate for those with a consistent income, as it enables them to pay pay their disposable income to their creditors over the course of a three- to five-year repayment plan. Instead of liquidating assets, it allows for a reorganization of debts.
If you have further questions regarding bankruptcy, please do not hesitate to contact our attorneys by calling 908-454-3200. We will assist you in any way that we can.
Wilhelm & Roemersma, P.C., is a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.