Bankruptcy FAQ
FREQUENTLY ASKED QUESTIONS
How do I know if Bankruptcy is right for me?
We want to help discuss your individual situation, to help you make the choice that works best for you. If your monthly bills exceed your income, if you have become disabled or unemployed, or if you have incurred large medical expenses or other unforeseen expenses, then Bankruptcy is certainly an option. Also, if you are in foreclosure or need some protection from the IRS, bankruptcy can help.
I have heard that the Bankruptcy laws have changed. Can I still file?
While the Bankruptcy laws did change in 2005, Bankruptcy discharges are still available. Even with these changes, most people still qualify to file. We offer free consultations to help you determine if you qualify.
I already filed Bankruptcy. Can I file again?
You can file Chapter 7 Bankruptcy once every eight years.
If I file bankruptcy, will the creditors stop harassing me?
Under the law, creditors are required to immediately stop trying to collect on debts once a bankruptcy case is filed. This is called the automatic stay. Once you tell your creditors you are filing and give them your attorney’s name and phone number, they must stop all contact with you.
How does bankruptcy affect my credit?
It is reported for 7-10 years. However, during that time bankruptcy does not affect your credit. After a Chapter 7 discharge, you can begin immediately rebuilding your credit through proper money management. Remember, any past due accounts will discharge, so they stop creating further negative history.
What is a discharge?
A discharge is a court order releasing a debtor from any further obligation for all dischargeable debts included in the case. Once a debt is discharged, it is no longer legally enforceable against the debtor. The associated creditors cannot collect those debts.
What are “dischargeable” and “non-dischargeable” debts?
Dischargeable debts include credit card bills, past due utility bills, and medical bills. You can discharge debts on secured property, but you will be required to return that property. Income faces can be discharged in bankruptcy. Trust fund taxes and penalties cannot.
Non-dischargeable debts include alimony, child support, student loans, taxes, parking/traffic tickets, and fraudulently obtained loans.
What happens to secured items?
If you are paying on a car loan, furniture loan, etc., you will probably have to return the secured item unless you choose to "reaffirm" the debt. Reaffirming the debt means that you and your creditor agree that, even though you have filed bankruptcy, you do not want to include that particular debt in your bankruptcy discharge. This requires a Reaffirmation Agreement to be filed with the Bankruptcy Court. You then keep paying the debt on that property as if you had not filed bankruptcy. You must keep the payments current, or the creditor can move to repossess the property.
Can a bankruptcy stop a foreclosure sale on my home?
Yes, if the necessary paperwork is filed PRIOR to the foreclosure sale date and you qualify to file. The foreclose can even be stopped, AFTER the sale date, in some instances.
What if I can no longer afford my house or car?
If you cannot afford or do not wish to keep the property any longer, you can surrender it to the creditor or let the foreclosure/repossession occur.
If you voluntarily surrender (or experience repossession on) a vehicle because you can no longer afford it, the lien holder will likely charge you with a deficiency balance of the loan. That is, the difference between what you owed on the loan and what they were able to sell it for at public auction. This deficiency balance is dischargeable in bankruptcy.
In the cases of high deficiency balance(s), or second mortgages on your home that are not included in the foreclosure or a judicial foreclosure - you may want to file Chapter 7 to also discharge these debt obligations.
Will I ever be able to buy a house after I file for Bankruptcy?
In most cases, after 2 years (if not sooner) bankruptcy doesn't hurt your chances of buying a home, as long as you are otherwise qualified.
Can I file for my business debts?
Business can file for Chapter 7 bankruptcy also. Most business liability can be included. Upon filing, the US Bankruptcy Court Trustee will require that the business immediately discontinue to operate.
What if my debts are both business and personal?
Bankruptcy protection is available for both types of expenses. But often, business liability creates layered problems for the owner. Consult with a law firm, such as ours, that handles both.
Can I file bankruptcy anywhere?
You must file in the state of your primary residence. You must tell which county you live in.
What if I have property in different state?
Bankruptcy will cover and protect your property in any state, and even in multiple states. So an Illinois-filed case still protects real estate in another state.
