BANKRUPTCY ASSISTANCE

Frequently Asked Questions About Information on Bankruptcy

Bankruptcy is the legal process of discharging debt or liquidating assets to settle debts.  It is provided for under federal bankruptcy law for all citizens.  It is a process that involves a lot of paperwork and attendance at court hearings.

It can sometimes be difficult to understand everything involved in filing bankruptcy.  Getting information on bankruptcy will help you to understand the process better.  Here are some of the common questions asked about information on bankruptcy.

What is the difference between a Chapter 7 and Chapter 13?

Chapter refers to the bankruptcy code for each type of bankruptcy.  Chapter 7 bankruptcy is a liquidation bankruptcy.  Under a Chapter 7 your assets that are not exempt are sold and the money is used to pay for your debts.  A Chapter 13 is a reorganization bankruptcy.  Under a Chapter 13 you create a repayment plan to repay debts without having to liquidate your assets.

What is credit counseling and why do I have to attend before filing?

Credit counseling is a requirement under the new bankruptcy laws.  Credit counseling helps you understand debt and why you ended up in trouble.  It also helps you learn ways to prevent debt from occurring in the future and learn to handle debt better.

Are all debts discharged through bankruptcy?

Not all debts can be discharged through bankruptcy.  Student loans, child support and money owed to governmental agencies are often unable to be discharged through bankruptcy.  You may also end up with some creditors fighting to get paid back for your debts instead of them being discharged.  Also under certain Chapters you will not have debts discharged at all.

What are exemptions?

Exemptions are the assets that you own that can not be liquidated to pay back debt.  Each state and the federal bankruptcy laws allow for exemptions.  Normally your home, your vehicle and personal possessions will be exempt.  There are strict rules on exemptions, though.  You may not be able to keep everything you own.  You get to choose either state or federal exemptions.  You should choose the exemptions that save the most of your assets.  Make sure you get information on bankruptcy exemptions for both state and federal.

Are there costs involved in filing bankruptcy?

You will have to pay the filing fees with the bankruptcy court.  You also have to pay for the two mandatory credit counseling sessions.  You will also have to pay attorney fees if you choose to use an attorney.