Notice for Individuals Considering Bankruptcy
The following information is not intended as legal advice and should not be relied upon. Individual circumstances vary and laws change. If you are considering bankruptcy, you need to consult with an experienced bankruptcy attorney who can evaluate your individual financial circumstances.
Q: Can a bankruptcy filing stop lawsuits and foreclosures?
A: Yes, it can. When the petition in bankruptcy is filed all other legal proceedings, including foreclosure are stopped.
Q: Will the filing of a bankruptcy stop a wage garnishment?
A: Yes, in most cases. However, there are exceptions.
Q: Will I have to give up my pension or retirement benefits?
A: Retirement, pension, and 401k plans are generally protected in bankruptcy. This means you can keep your pension benefits and retirement plan.
Q: What debts are not impacted by bankruptcy?
A: Student loans, child support, alimony, certain motor vehicle, and criminal penalties usually aren't cleared. You will still owe tax debts, but there are limited exceptions.
Q: If I file bankruptcy, will I lose my house?
A: Bankruptcy doesn't necessarily mean you lose your home. It depends upon your financial circumstances and the nature of the bankruptcy chapter you file under. Chapter 13 bankruptcy filings are designed to allow an individual or families with sufficient income to pay their current mortgage obligations and to catch up on past due mortgage payments.
Q: I owe money on my car. If I file bankruptcy, do I have to give up my car?
A: Generally, the choice is yours as to whether you want to keep the car or give it back. If you want to keep your car, you must continue to make your lease or loan payments. If you wish to give up the car, you can surrender the car and eliminate out the balance of any financial obligation owed on the car.
Q: Are there income limits that prevent some people from filing for bankruptcy?
A: No, effective October 17, 2005, the bankruptcy code was amended to impose maximum income limitations on individuals filing for Chapter 7 bankruptcy. The formula to determine if an individual qualifies for Chapter 7 bankruptcy is known as the "Means Test." This is a complicated formula best left to a bankruptcy attorney. On the other hand, Chapter 13 bankruptcy filing is not limited by income. It does require that the individual have regular periodic income.
Q: How does filing bankruptcy impact my future credit?
A: Filing a bankruptcy can remain on your credit history for up to 10 years. It also has an adverse impact on your credit score. However, individuals who file bankruptcy generally have or anticipate that they will have credit problems, which have or will adversely impact their credit score. Bankruptcy should be viewed as the means to an end to improve your credit by giving you a fresh start.