Frequently Asked Questions

What is bankruptcy?

Bankruptcy is a federal court process enlisted to eliminate or repay the debts of consumers or businesses under the protection of the bankruptcy court.

What is the difference between Chapter 7 and Chapter 13?

Chapter 7 is also called Liquidation Bankruptcy.  Except for specific nondischargeable debts (such as child support and alimony, student loans, debts for personal injury or death caused by your intoxicated driving, recent income tax debts, and fines and penalties imposed for violating the law) Chapter 7 bankruptcy monitors the liquidation of other assets after which the proceeds are used to pay off creditors.

Chapter 13 is commonly called Reorganization Bankruptcy.  A plan is filed with the court which proposes how you will repay your creditors.  There will be a portion of the debts repaid in full, others will be dismissed or only partially repaid.

How long will bankruptcy stay on my record?

Both liquidation and reorganization bankruptcies stay on your credit record for ten years.

Can filing for bankruptcy stop a foreclosure or repossession?

Yes, Chapter 13 bankruptcy plans can arrange for car and mortgage payments in the reorganization, and the creditor is expected to accept these payments in lieu of foreclosure or repossession.

How can I re-establish my credit after filing bankruptcy?

Secured credit cards (in which the debtor deposits funds with the credit card issuer) can be obtained to begin the process of rebuilding credit.  Also, working with a debt management organization, or successfully completing debtor education programs will improve your credit risk rating.

How long is the bankruptcy process?

Typically, a Chapter 7 bankruptcy case takes about four months, while a Chapter 13 filing, because it involves long term repayments, can run as much as five years.

How much will it cost me?