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Frequently Asked Questions:
Q: Do you need to file
bankruptcy?
A: Deciding to file
bankruptcy can be a tough decision. Almost everyone confronting
the decision vacillates from "Fight" to "Flee":
struggle to pay the debts versus get relief from the constant
pressure and start over.
To decide, you need to know:
- What are an individual's alternatives to bankruptcy?
- Which chapter is best suited to my situation?
- What debts will be discharged in bankruptcy?
The alternatives:
Can you avoid bankruptcy on your own:
To explore non bankruptcy alternatives, create a budget for your
realistic, monthly expenditures for current living. Include mortgage
and car payments, but exclude all other existing debt service.
With the money you have available each month after
paying your current living expenses, can you pay off your existing
debts at the current interest rates in 3 years?
Forget minimum monthly payments:
calculate what it really takes to pay off credit cards at credit
card interest rates.
Q: Will
bankruptcy stop wage garnishments?
A: Yes. Once your case is filed, creditors are
no longer entitled to garnish your wages for debts that existed
at the beginning of the case. The only exception may be for on-going
child or family support ordered by a court.
Q: Can I keep
my car?
A: Yes.
What you must do to keep the car varies depending on whether there
is non exempt equity in the car.
Q: Will the
trustee take the car?
A: If
there is no equity in the car, after subtracting any car loan
and exemption from the car's present value, the bankruptcy trustee
will not take the car.
If there is equity in the car over and above the
value of the exemptions available, a debtor can usually buy any
unprotected equity from the Chapter 7 trustee.
Q: Will the
creditor take the car?
A: If
you still owe money on the car, you can choose to reaffirm the
debt to the secured lender, keep the car, and continue paying
under the existing terms; or you can buy the car from the secured
creditor in a single payment for its present value (redemption).
In some jurisdictions, you don't even have to reaffirm the debt:
you can keep the car if you continue to make the payments called
for in the contract.
If you choose, you can surrender the
car and be free of any obligation to pay for it.
Q:
How do I know which chapter to file?
A: Choosing
which chapter of bankruptcy is best for you depends on what kind
of debts you have, whether you are behind on secured debts, and
whether you have the regular income necessary for Chapter 13.
Q:
What do I have to do to file bankruptcy?
A: A
bankruptcy case is begun by filing a petition, schedules of assets
and liabilities, and a statement of financial affairs with the
bankruptcy court and paying the filing fee. Browse downloadable
versions of the official bankruptcy forms. The official instructions
to the official forms are officially here.
You will be required to attend at least one meeting
of creditors (the § 341 meeting), in which the trustee and
creditors who choose to come can ask you questions under oath
about your financial affairs.
Q: How long does it take?
A: The process in Chapter
7 from filing to receipt of the discharge order is between 3 and
6 months, usually. During that period, the debtor generally does
not have to do anything other than attend the first meeting of
creditors. The most time consuming part of filing bankruptcy is
usually preparing the schedules necessary to file the case.
The discharge affects debts that existed on
the date the case was filed or have their origin in facts that
occurred before the case was filed.
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