FAQ Bankruptcy Law
WHAT IS BANKRUPTCY?
Bankruptcy is a legal process that helps people who are unable to repay their debts. It provides a fresh start by either eliminating or restructuring your debts. There are two main types of bankruptcy for individuals: Chapter 7 and Chapter 13.
Chapter 7 is known as liquidation bankruptcy. It eliminates most of your unsecured debts, such as credit card debt, medical bills, and personal loans. However, you may have to surrender some of your assets, such as your car or home, to pay off your creditors.
Chapter 13 is known as reorganization bankruptcy. It allows you to keep your assets and create a plan to repay your debts over a period of 3 to 5 years. You must make regular payments to your creditors, and you may be required to sell some of your non-exempt assets.
HOW DO I KNOW IF I SHOULD FILE FOR BANKRUPTCY?
There are several factors to consider when deciding whether or not to file for bankruptcy. Some common signs that you may need bankruptcy relief include:
- You are unable to pay your minimum monthly debt payments.
- You are being harassed by creditors.
- You have been sued by creditors.
- You are facing foreclosure or repossession.
- You are overwhelmed by debt and are feeling hopeless.
WHAT ARE THE BENEFITS OF FILING FOR BANKRUPTCY?
There are many benefits to filing for bankruptcy, including:
Elimination of debt: Bankruptcy can eliminate most of your unsecured debts, giving you a fresh start.
Stop creditor harassment: Bankruptcy stops creditors from harassing you, such as by calling you or sending you letters.
Protection from lawsuits: Bankruptcy protects you from lawsuits by creditors.
Keep your assets: You may be able to keep your assets, such as your car or home, if you file for Chapter 13 bankruptcy.
Improve your credit score: Filing for bankruptcy can actually improve your credit score in the long run.
