Bankruptcy 101

Bankruptcy is a legal action that gives a "fresh start" to people with overwhelming debt. There are several types of bankruptcy, and debtors are eligible for certain forms of bankruptcy based on their financial situation, their income, their assets, and other factors.




How does filing bankruptcy stop creditor actions?
As soon as you file a bankruptcy petition, the court issues an automatic stay, which is a legal action that prevents creditors from pursuing collection activities or legal actions against you in an effort to collect debt. It even prevents creditors from calling or writing the debtor. If the creditor has seized funds after the petition was filed, in many cases, those funds must be returned to the debtor.

Can I keep my car and/or house?
Yes. There are several options with vehicles and homes that we can discuss at your free initial consulattion.

How frequently can I file for bankruptcy?
If you filed a Chapter 7 bankruptcy and received a discharge, you must wait eight years before filing another Chapter 7.

You cannot receive a discharge in a Chapter 13 case if you received either:
(1) A discharge in a prior case under Chapter 7, 11 or 12 that was filed within four years of the current Chapter 13; or
(2) A Chapter 13 discharge in a case filed within two years of filing the current Chapter 13.

Do I have to list all of my creditors in my bankruptcy petition?
Yes. A creditor is any company or person, even a family member or friend, to whom you owe money.

Will my employer discover that I filed for bankruptcy?
You usually don’t have to worry about your employer finding out about your bankruptcy unless your employer is one of your creditors or your wages are no longer being garnished, in which case your employer may follow up to learn why the garnishment ceased.

How will bankruptcy affect my credit rating?
Chapter 7 bankruptcy remains on your credit report for 10 years, and Chapter 13 remains for 7 years. You may start qualifying for loans as early as one year after filing bankruptcy if you meet the income requirements. However, the lender will likely charge you higher-than-normal interest rates.

Can I repay a creditor after I file for bankruptcy?
Under Section 524(f) of Title 11, you are authorized to repay any creditor you choose.

Do I have to go to court after I file for bankruptcy?
Generally, no. You must attend one meeting of creditors with your attorney. The meeting generally lasts less than 10 minutes and creditors rarely attend.

How can I re-establish my credit after bankruptcy?
You can re-establish your credit by getting a co-signer on a loan and also by getting a secured credit card. With a secured credit card, your credit limit is based on the sum of money you gave the creditor as security for your card.

Can I keep a credit card after bankruptcy?
Yes. If the credit card was not adversely affected by your insolvency, most credit card companies will continue to do business with you after filing for bankruptcy.

What are the signs that I may be in financial trouble?
You’re making balance transfers from one card to another card with a lower interest rate.
You are able to make only minimum credit card payments.
You have maxed out your credit cards.
You are covering basic living expenses, such as food, with your credit card.
You’re taking cash advances from one card to pay another.
You need a co-signer before you can qualify for a loan.
You cannot afford health insurance because all of your money is being used to cover revolving debt.
You are refinancing your house over and over again to pay down debt.
You are unable to develop a budget that will allow you to repay ALL of your unsecured debt within 24 months.

After filing for bankruptcy, what entries will appear on my credit report?
While creditors are supposed to notify credit-reporting agencies when debts are discharged, they do not always do so. As a result, you may have discharged debts still appearing on your credit report. You should send copies of the following documents to the three credit reporting agencies to ensure your credit report accurately reflects your discharges:

1. Discharge of Debtor and Order of Final Decree
2. Notice of Bankruptcy Case Filing (attached to the front of your petition)
3. Schedules D, E and F of your bankruptcy petition

PO Box 2104
Allen, TX 75013

Equifax Information Services
PO Box 105873
Atlanta, GA 30348

PO Box 1000
Chester, PA 19022