Bankruptcy FAQs
Q: What are the different types of bankruptcy and which type should I be filing?
A: The main types of bankruptcy are Chapter 7, Chapter 13 and Chapter 11. Chapter 7 bankruptcy and Chapter 13 bankruptcy is generally for consumers and Chapter 11 bankruptcy is for businesses. There are many factors that must be considered when making a decision on what Chapter bankruptcy you should file. It is best to consult with a bankruptcy attorney to determine the type of bankruptcy that is appropriate for you.
Q: What is the difference between Chapter 7 and Chapter 13 bankruptcy?
A: Chapter 7 bankruptcy eliminates all unsecured debt. This includes credit cards, loans, medical debts, old phone bills and any debt left over after a car is repossessed. In most Chapter 7 bankruptcy cases, the debtor is allowed to keep their bank accounts, household cars and home. Chapter 13 bankruptcy is mainly designed to save homes from foreclosure and also for individuals who can afford to pay some money back to their creditors.
Q: What debts can I eliminate with a Chapter 7 bankruptcy?
A: By filing Chapter 7 bankruptcy, you can eliminate all credit card debts, personal loans, medical bills, old phone bills and any debt left over after a car is repossessed.
Q: Can I get rid of my student loans if I file for bankruptcy?
A: No, filing bankruptcy does not help with student loans.
Q: Can I get rid of my tax debts if I file for bankruptcy?
A: In most situations, bankruptcy does not help with tax debts. Older tax debts can be discharged though bankruptcy in some situations.
Q: Does filing bankruptcy stop lawsuits and judgments?
A: Yes, bankruptcy stops all lawsuits and eliminates all judgments.
Q: Does filing for bankruptcy stop a wage garnishment?
A: Yes, wage garnishments usually stop within two pay periods from the time your bankruptcy is filed with the Bankruptcy Court.
Q: If I file for bankruptcy, will my frozen bank account be released?
A: Yes, your bank account will usually be released within two weeks from the time your bankruptcy is filed with the Bankruptcy Court.
Q: If I file for bankruptcy, can I keep my car?
A: If your car is already paid off, whether or not you can keep your car will depend on how much your car is worth. If you are still making payments on your car, you can generally keep your car so long as you stay current on your car loan payments.
Q: Does bankruptcy have any effect on immigration?
A: No, filing for bankruptcy does not affect your immigration status in any way.
Q: Is it true that if I file for bankruptcy, I cannot have credit for 7 to 10 years?
A: No, this is a myth. If you take the proper steps to start rebuilding your credit after your bankruptcy is over, you can typically have good credit after 2 years. It usually takes 3 years for your credit to recover enough to be approved for a mortgage.