More people than ever are falling on hard times and considering filing bankruptcy to get out from under crushing debt, with Chapter 7 and Chapter 13 bankruptcy being the most common filings. If you are looking into this legal way to discharge the burden of debt that is plaguing your family, you probably have lots of questions and concerns. You should hire a qualified attorney to represent you in court when you're ready to file, but in the meantime, the answer to some common questions may help put your mind at ease.
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Can I Keep My House?
In most cases, you can keep the house you are currently residing in due to the Homestead Exemption, which allows you to remain in your house as long as you can continue to pay the mortgage. However, if another creditor was given a mortgage to your house as collateral, they may be able to take your home if you aren't able to keep up the payments on the loan.
Can I Keep My Car?
If you've fallen behind on your car payments, filing for Chapter 7 or Chapter 13 may give you the opportunity to reallocate some of the funds you were previously using to pay off credit cards and apply those to your car loan. Your attorney may also negotiate a settlement with the lender so that you can pay the fair market value for your automobile rather than the outstanding amount on the loan, which is usually higher.
Can Creditors Still Call Me After I've Filed?
No. Once your bankruptcy lawyer files for you, an automatic stay is put in place and all creditors are notified. If they continue to contact you, call your attorney and he will stop the harassment. Once the debts are discharged, creditors can no longer try to collect any of the money owed, as the debt has been wiped clean.
Does Filing Bankruptcy Mean I Can't Have Credit Cards?
The answer here is yes and no. You will have to close all of your current credit card accounts and agree to never using them again. Your credit score will also take a temporary hit, but by the time most people talk to a lawyer, their score is already pretty low. After your filing is completed, your rating will slowly improve because your debt is greatly reduced. While it can impact your credit history for up to ten years, in most cases your score bounces back much more quickly. Within a few years, you should be able to apply for new credit cards, although your bankruptcy lawyer will advise you to carefully review the interest rates and use credit cards cautiously.
Are There Debts That Aren't Covered?
There are a few obligations that aren't affected when you file Chapter 7 or Chapter 13 bankruptcy. It doesn't get rid of your obligation to pay child support or spousal support or most fines. If a debt isn't listed in the petition, creditors can continue to demand payment. In most cases, government backed student loans will need to be paid unless the court decides it would be an excessive hardship for the individual.
To get the answers to more of your questions, contact an attorney to schedule an appointment He can reassure you and determine which type of bankruptcy filing is most appropriate for your situation.
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