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Bankruptcy FAQs Many People Feel Overwhelmed When They File Or

Bankruptcy FAQs Many People Feel Overwhelmed When They File Or

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12/11/2009

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Bankruptcy FAQsMany people feel overwhelmed when they file or start thinking about filing forbankruptcy. Things tend to get worse when they ask their attorney questionsbecause many of the answers are filled with “if this” and “It depends”. What youneed are straight forward answers that actually answer your questions. I’ve comeup with a few general questions to start, but if you have any specific questions feelfree to ask in the comment section or email me at lisa@randolphgoldberg.com.Within any case, there are uniqueness's that exist that must be taken intoconsideration, therefore it is difficult to say these will answer every question,however they should help provide you with more of a general understanding.
1.Do I have to go to court?
a.Yes, you will have to appear in court when filing for bankruptcy. Theonly way this can be avoided is if there are extenuating circumstancessuch as you are serving in the military overseas, you are in jail, or if you are medically unable to leave the hospital or other care facility. You will have to attend at least one hearing called the Meeting of Creditors.
2.How long does this all take?
a.Well this actually does depend on your case and which chapter you arefiling. A Chapter 7 usually takes about five to six months once filed aslong as there are no problems that would cause your discharge to bedenied. With a Chapter 13, which is a repayment plan rather thanliquidation like the Chapter 7, you will be making payments for up tofive years. After you finish the repayment plan it takes an additionalfour months to close the case on average. However, based on yourunique circumstances and based on the number of bankruptcy casesthat the court hearing, the time may increase or decrease.
3.Can I transfer my property to friends or family to keep from losing it?
a.No, this is called fraudulent transfer and it cannot be reversed. Manytimes people will end up transferring property that they would be ableto keep anyway. In general this is just a bad idea and there is noturning back once it is done, please make sure that you ask yourattorney about the specific setup of ownership on you properties andpossessions.
4.How much do I need to owe to file for bankruptcy?
a.This is actually no qualifying amount to file for bankruptcy; you don’teven have to be behind in payments to file for a bankruptcy. However,you may have so little debt that a Chapter 7 does not make since and
 
a Chapter 13 would serve your needs better, but if you feel pressuredby your financial situation bankruptcy can be your way out.
5.Is all that paperwork really necessary?
a.All of the paperwork has a purpose, even though it may not seem likeit to you. The information gathered by your attorney, whether viaquestions or documents, is absolutely vital and needs to be attained.Like with most things, there is an easy way and a hard way and withbankruptcy it is best to make things go as smoothly as possible.
6.What is the difference between secured and unsecured debt?
a.The term “secured debt” means that the debt is “secured” by physicalproperty like a house, car, or piece of furniture. Unsecured debts are just the opposite; these are your credit cards, phone bills, and otherthings of that nature. An easy way to tell the difference between thetwo is to ask yourself, “Can this be repossessed?” If yes, then it’s asecured debt.
7.Are co-signers responsible for the loan if the primary files for bankruptcy?
a.Yes, any and all co-signers are responsible for the loan if the primarydefaults on it. The lender can make you make the payments in lieu of the primary, especially if they file for bankruptcy on the debt. Alwaysconsider the financial position of the person you are co-signing forbefore you agree to attach yourself to the loan. Also, be prepared tomake a payment or two if the primary cannot make the payment toprotect your credit.
8.Who tells my creditors that I’ve filed for bankruptcy?
a.The bankruptcy courts will notify the creditors by mail that you havefiled for bankruptcy. The information included in this notification is:i.The case numberii.The automatic stayiii.What type of bankruptcy filediv.The name of the trusteev.The date of the creditors meetingvi.And other information depending on the type of bankruptcyfiled
9.Will I be able to keep anything?
a.Yes, you will be able to keep some things after bankruptcy. These are“exemptions” and are defined by the state and usually include yourcar, your house or the equity in the house, and anything required foryour job i.e. “tools of the trade”.
10.Will I lose my job?
a.No employer can fire you because you have fired for bankruptcy. Thiswill, however, not protect you from being fired for any other reason. In
 
fact, your employer will not be informed of your bankruptcy unlessyour wages are being garnished or they are otherwise involved withyour creditors.
11.Is there any way to remove a bankruptcy from my credit report?
a.No, there is not. However, you can file an explanation to as why youfiled for bankruptcy in the first place citing your situation at that timeand any extenuating circumstances. As for removing it there is notmuch you can do other than just waiting until it is taken off yourrecord.
12.How long will a bankruptcy stay on my record?
a.This really depends on what type of bankruptcy you filed, and thecredit agency is reporting it. All three of the major credit agencies willreport your bankruptcy, but may keep it on your record for differentamounts of time. Most bankruptcies are removed from your recordsafter seven to ten years,
13.Can one of those credit repair companies save me from a bankruptcy?
a.Most of what is done by those “credit repair” companies can be doneby yourself. It just takes time and patience. There are non-profitcompanies that will offer guidance for a small fee which can prove tobe very beneficial. Those credit repair companies offer a small amountof services for the amount of money they charge.
14.What do I need to do to start the bankruptcy process?
a.First, you should make a list of all your debts. Include what the debt isfrom i.e. a car, credit card debts, loans, etc, how much you owe, andthe value of the debt if it is secured. Then, you should take thisinformation to a bankruptcy attorney and have consultation with thatattorney. They will tell you what type of bankruptcy you should file,what you should be able to keep, and, in some cases, how much youwill owe after the bankruptcy.
15.When can I apply for credit again?
a.There is no time restraint on when you can reapply for credit. That isgenerally up to the company issuing the credit. However, many creditcompanies are willing to extend you a line of credit after yourbankruptcy case is settled because many people come out of abankruptcy with better spending habits then before, but these secondchances only come once. If you show that you cannot handle crediteven after going through a bankruptcy then it will be very difficult toget credit from other companies for increase your credit limit.

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