Why does anyone file for bankruptcy?

Most often, people file for bankruptcy when they have a large amount of unsecured debt which they cannot pay. Often, this debt is in the form of credit card debt, unsecured loans, or medical expenses. In many cases, the overwhelming debt has accrued due to divorce, loss of work, or unforeseen medical expenses. The debtor then seeks protection from creditors by filing for bankruptcy.

Who is eligible to file for bankruptcy?

Any person who resides in, does business in, or has property in the United States may file a Chapter 7 bankruptcy. The only exception is a person who has intentionally dismissed a prior bankruptcy case within the last 180 days. To be allowed to maintain a Chapter 7 bankruptcy, an individual must qualify under a procedure called “means testing.”

What property am I allowed to keep under a bankruptcy?

In a Chapter 7 bankruptcy case, you may keep all the property that is exempt from the claims of creditors, meaning property that is not encumbered by a valid mortgage or lien. Exempt property usually includes all or a portion of unpaid wages, jewelry, home equity, household furniture, and personal belongings. Attorney Chenelle can inform you specifically as to the property that is exempt in your particular case.

If I file a Chapter 7 bankruptcy, can I be discriminated against by future employers?

No, you cannot. It is illegal to discriminate against an individual seeking employment by private or government employers simply because that individual filed for bankruptcy. In addition, it’s illegal for local, state, and federal government agencies to discriminate against an individual in the granting of licenses, permits, student loans, and other grants simply because he or she has filed for bankruptcy.

What is the difference between secured and unsecured debt?

Secured debt is correlated with property such as your mortgage. In the event of bankruptcy, debtors are able to take their secured debts and use it to pay off other debts. Unsecured debt cannot be claimed or guaranteed to be exempt during bankruptcy and it is not tied to any specific property.

How often can you file for bankruptcy?

Hopefully you will never need to file more than once, but if you are filing for a subsequent Chapter 7 bankruptcy, you are permitted to file a petition every 8 years or 6 years if you filed for a prior Chapter 13. When it comes to Chapter 13 bankruptcy, you are allowed to file again 4 years after filing Chapter 7 and only 2 years after filing a prior Chapter 13 petition. Contact Attorney Chenelle to figure out the best option for your case.

What kinds of debt can be discharged through bankruptcy?

By filing for bankruptcy, you will be able to eliminate most, if not all, of your unsecured debts. There are some exceptions however, including: Local, Federal or state taxes, debts obtain fraudulently, debts that aren’t in your bankruptcy petition, debts owed for child support or spousal support, debt for person injury claims, debts from some student loans, debts cause by drunk driving, and debts accrued after filing.

Will I lose my home if I file for bankruptcy?

There are certain steps you can take to protect your property such as your home or your car, but there are certain factors that can influence this. The state you live in makes a difference, so check to see what bankruptcy exemptions are permitted. The status of your mortgage loan can also have an impact, are you current or in foreclosure? Lastly, the type of bankruptcy you file can affect this. Filing Chapter 13 bankruptcy is much more common for people at risk of foreclosure or car repossession because you can better protect your property and your assets, unlike Chapter 7.

Will bankruptcy stay on my credit history forever?

No, when you file for bankruptcy it will remain on your credit report for ten years. The nice thing about bankruptcy as well is that not everyone has to know that you have filed. The only people who are notified are the creditors, the bankruptcy court, the IRS and any bank or credit card company that asks to see your credit history report.

When can I apply for credit again?

Creditor companies vary on this but some will give you credit almost immediately. There is no law that prevents you from obtaining credit but on that same token, creditors are not obliged to give you credit. Studies show however, that many bankruptcy applicants can see their credit score improve after only 2-4 years after filing. It is definitely in your best interest to obtain a secured credit card as soon as possible and make timely payments on it so you can prove to the creditors that you are a responsible debtor.

Can creditors continue to contact me after I file for bankruptcy?

Fortunately no! Once you have filed your petition you are protection under what is called the “Automatic Stay,” found in 11 USC § 362 which legally prohibits creditors from pursuing a lawsuit, garnishing your wages, continuing with foreclosure, contacting you or doing any collection actions against you. If creditors call you or mail you letters while the stay is in effect then they may face punishment by the courts. This is one major perk that bankruptcy provides and it also gives you peace of mind, freedom from their scrutiny and your rightful privacy.

For more information about filing for bankruptcy in Massachusetts, contact Attorney Chenelle for a free case review today!

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The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.