Frequently Asked Questions About Bankruptcy

WHAT IS A CHAPTER 7 BANKRUPTCY?

A chapter 7 bankruptcy gets rid of debt. Although you cannot get rid of certain debts (like child support), most people get rid of all debts.

WHAT IS A CHAPTER 13?

A chapter 13 is a plan to repay debt in part or in full over as many as 5 years. A chapter 13 can force a mortgage company to give you time (up to five years) to catch up on mortgage payments. Your plan can also force the IRS into a payment plan.

WILL I LOSE MY HOME, CAR OR OTHER PROPERTY?

Bankruptcy is designed to give you a fresh start. Most filers keep the property they want.

Each person is allowed to exempt property. This includes your home, car, 401(k) and other property.

Keeping secured property will require some action on your part. In a chapter 7 you may reaffirm (make payments), or possibly redeem personal property (pay only the actual value). In a chapter 13 your plan will require some payments but they may be lower than your contract payment.

WILL I BE ABLE TO GET RID OF MY DEBTS?

Most debts are discharged by filing bankruptcy - this includes credit cards, loans, and medical debts. Some debts, however, are not discharged - these include most student loans, certain taxes, child support and maintenance, and debts incurred by fraud or with a false financial statement.

HOW LONG DOES BANKRUPTCY STAY ON MY CREDIT?

A bankruptcy can stay on your credit report for 10 years. This is covered by the Fair Debt Reporting Act.