What is bankruptcy?
Bankruptcy is the legal method for a debtor to discharge or relieve debt.  Bankruptcy is a way for people or a business that owes more money than they can pay to either work out a plan to repay the money over time or to have their debt wiped out.  While no debtor is guaranteed a total discharge, most debtors who file for bankruptcy are given such relief. One of the primary purposes of the bankruptcy act is to relieve the honest debtor from the weight of oppressive indebtedness and to provide the debtor with a fresh start. While the debtor is either working out a plan or the trustee is gathering the available assets to sell, the Bankruptcy Code provides that creditors must stop all collection efforts against the debtor.  The Bankruptcy Code regulates what chapter you must file under, what bills can be eliminated, how long payments may be extended, what possessions you may keep, and all other details concerning the bankruptcy.

 

Who can file for bankruptcy?
Any person, partnership, corporation or business trust may file bankruptcy. In addition, charitable or social organizations may also file for bankruptcy. United States citizenship is not a requirement for filing bankruptcy.

 

What if I am married?
If you are married, you may file a joint petition. A joint petition is the filing of a single petition by an individual and the individual’s spouse.  In order to qualify for a joint petition, you must be married on the date that the joint petition is filed. Unmarried persons, corporations and partnerships must each file a separate case. If you are an individual and have a business, you may not file a single petition for yourself and your business; each must be a separate bankruptcy case.

 

Will I lose my house, car, and other personal property?
Not necessarily, each state has laws that determine which items or property are exempt from being taken away.

 

Will filing bankruptcy affect my credit rating?
Unfortunately it will. However, most individuals are able to rebuild their credit within a few years. If you are currently contemplating bankruptcy, then it is likely that your current credit rating has already been affected. A discharge of your current debt may provide the opportunity to rebuild your credit with steady, regular payments on a new account.

 

Can I file for bankruptcy every few years?
No. Once a discharge is granted, a debtor who filed under Chapter 7 or 11 is prohibited from filing for another 6 years.