Are you thinking about filing for bankruptcy?
Have you been advised that this is the best decision for you, your business, or your family? These bankruptcy FAQ will definitely help you to make a more informed decision, and to know what to expect if you have already filed.
First of all, you’ll need to understand exactly what bankruptcy is.
The procedure doesn’t simply involve selling everything you have, or having your wages garnished. When you file for bankruptcy, you are working out a detailed plan with your debtors to repay the debt that you owe, or to have your debt discharged.
You can do this by filing for: Chapter 7 bankruptcy, where you sell the nonexempt items that you own in order to have money to pay your creditors; Chapter 11 bankruptcy, which means you will have to own a business, and can use the business as collateral to reduce your debt; or Chapter 13 bankruptcy, which requires you to receive regular income so that you can have your wages garnished to begin repaying debtors on a regular basis.
Another bankruptcy FAQ is the difference between secured and unsecured debt. If you have secured credit cards or loans and are filing for bankruptcy, this means that the institution responsible for issuing the loan or credit card can revoke their property during the bankruptcy process.
So, if you have purchased a home or car with a secured loan, you will need to work out a payment plan with the creditor that issued the loan, so that you can either sell the property in order to repay your debt, or pay the debt in regular increments for a set period of time.
With a few exceptions, just about anyone who has significant debt can file for bankruptcy.
However, this decision could affect your ability to obtain credit from various sources in the future, so keep this in mind when filing; certain home loan and credit card companies do not offer lines of credit to those that have filed for bankruptcy in the past, or to those who have filed more than once.
However, there are companies who are willing to make exceptions, but you must adhere to the conditions of your bankruptcy, and have to demonstrate responsible spend habits after you have filed. You also don’t have to have a specific amount of debt in order to file for bankruptcy; but, if you know that your finances are low only temporarily, it may be better to make arrangements with individual creditors to pay off your debts.
If you want to know more about filing for bankruptcy, you can always contact a bankruptcy lawyer in your area to find out more about these and other bankruptcy FAQ.
For more information, visit www.caeb.uscourts.gov.