People from all walks of life file bankruptcy often for similar reasons. Most individuals, regardless of their background or education, never expect they will be laid off, divorced, or suffer a disabling injury. These are just a few of the challenges life can present that can create serious and immediate financial hardship. Even when a hardship is temporary, it may be difficult or impossible to resolve the financial damage it creates. If you find yourself in an unmanageable situation trying to pay bills with too little income or to negotiate with inflexible creditors, filing bankruptcy may provide the relief you need to get back on your feet. There are various types or Chapters of bankruptcy filings. Each Chapter is designed to offer relief for a different kind of financial problem.
If you are behind in payments on a secured debt such as your mortgage or car payments, you may be able to protect your property from creditors by filing for relief under Chapter 13 of the Bankruptcy Code and proposing a plan to pay back some of what you owe over three to five years. Under a Chapter 13 plan payments are sent monthly to a Trustee who pays your creditors. In most instances, filing a Chapter 13 will protect your home, car(s), bank accounts, retirement accounts and pensions, as well as your personal belongings.
If you earn below a certain amount of money per year, depending on the size of your household, you do not own property that you could sell for a substantial profit, and are not behind in payments for secured debt, you may qualify for relief under Chapter 7 of the Bankruptcy Code. The successful completion of a Chapter 7 Bankruptcy results in a discharge of unsecured debts such as credit cards, medical bills, certain loans and bills from utilities. Unlike a Chapter 13, there is typically no requirement to pay back creditors.
Although a bankruptcy filing will generally be reflected on your credit report for up to ten (10) years, there are few limitations on your future ability to acquire credit, real estate, or personal property.
If you need a fresh start and believe that bankruptcy may be key to regaining your financial stability, you should consult a lawyer. The proper legal advice will also allow you to understand your options, protect your interests, and get the peace of mind you deserve.
Frequently Asked Questions
Q: Will my employer know if I file Bankruptcy?
A: Although Bankruptcy filings are public records, unless your employer is one of your creditors or you are making Chapter 13 Trustee payments through wage garnishment, your employer is unlikely to know.
Q: Can I file Bankruptcy without affecting my spouse’s credit?
A: Yes. As a married person you must provide income records for your spouse to the court even if you are filing alone. However this is only to allow the Court, the Trustee and your creditors to understand your household’s financial position. Your spouse’s name will not appear on any documents filed with the court.
Q: Can I file Bankruptcy again if I’ve already filed before?
A: Yes. However there are restrictions. You can only receive a Chapter 7 discharge every 8 years and a Chapter 13 discharge every six years. Your lawyer will advise you how to calculate when you will be eligible for re-filing.
Q: Can all my debts be discharged in Bankruptcy?
A: No. Child support, court fines, court costs, restitution, parking tickets, traffic citations, most student loans and most kinds of tax debt cannot be discharged. Your attorney should advise you of any non-dischargeable debts.
Q: Can I keep my retirement savings and still file Bankruptcy?
A: Yes. Pensions, annuities, 401(k), 403(b), etc. are protected.
Q: Can I keep my home, car and personal property after I file Bankruptcy?
A: You may keep your home, car and personal property in a Chapter 7 as long as your equity in these items is exempt. If your property is not fully exempt (i.e., it could be sold at a greater profit than the Bankruptcy Code allows) you may still keep these items by filing a Chapter 13. Each state and the federal government have set guidelines or “exemptions” which explain how much personal property you are permitted to have in Bankruptcy without any consequence.
Q: If I know I’m going to file Bankruptcy, can I still use my credit cards?
A: No. If you know you will be filing, you should stop using your credit cards. Likewise, you should not borrow money prior to filing. If the Court finds that any debt was incurred with the specific intent of discharging it in bankruptcy instead of paying it back, the debt is not dischargeable. Also, “luxury” purchases over $1000 within 60 days of the bankruptcy filing are presumed non-dischargeable as are cash advances totaling over $1000 within 60 days of the bankruptcy filing.
Q: If my house is worth a lot of money can I transfer it to my family or friends before I file?
A: No. If you transfer property for the purpose of protecting it from creditors, it may be considered a fraudulent transfer that could result in your losing both the property and your right to a bankruptcy discharge.
Attorneys at Freedman & Lorry, P.C. Will Help You Make a Fresh Start
The attorneys at Freedman & Lorry, P.C. parlay their experience in bankruptcy litigation to assist you when filing for bankruptcy is your only option. For legal counsel or to schedule your free consultation, call our office at 215-925-8400 or 888-999-1962 or contact us online. We represent clients in Philadelphia, Eastern Pennsylvania, Southern and Central New Jersey, and North Carolina.