Common Bankruptcy Questions and Answers

The following article addresses some of the most common and basic bankruptcy questions. In practice, an answer to any bankruptcy question will require case-specific insight about a given debtor’s situation in light of a comprehensive understanding of state and federal bankruptcy laws. For more information and insight, getting legal help from a bankruptcy lawyer in your state of residence is advisable.

Can I get rid of all my debts in bankruptcy?

Depending on the type (chapter) of bankruptcy filed, a debtor may be able alleviate all or a significant portion of his or her debt obligations. If eligible and electing to file under Chapter 7, a debtor may discharge all unsecured debt obligations, such as credit card debts, certain contracts, and medical bills, among others. Secured debts can be relieved by repossession of asset underlying secured debt agreement, but cannot be discharged. Certain debts are never dischargeable in bankruptcy, including child support orders, alimony orders, most tax debts, and limited numbers of civil judgments. In Chapter 13, a debtor can alleviate most, if not all, of his or her debts via reorganization and repayment over a period of three (3) to five (5) years.

How often can I file for bankruptcy?

Under the current bankruptcy laws, debtors electing to file Chapter 7 may only do so, if they have not filed and received Chapter 7 protection within the last eight (8) years. Debtors seeking Chapter 13 protection cannot file, if they have received Chapter 13 protection within the last six (6) years.

How much does bankruptcy cost?

Contrary to the logic behind bankruptcy, the process does involve certain costs related at the very least to filing fees. Currently, filing Chapter 7 will incur an individual debtor filing fees of $299, and in Chapter 13, filing fees of $274 are assessed. These costs do not include the costs of legal counsel, which can widely vary from lawyer to lawyer. Depending on the case-specific nature of a given debtor’s case, the costs of legal counsel and filing fees will likely prove far less than the potential benefits obtained via discharge, automatic stay protection, or reorganization.

What is automatic stay and how can I get it?

In short, the automatic stay provisions of bankruptcy law affect both Chapter 13 and Chapter 7 filings, and in essence, pause any creditor collections attempts while a bankruptcy case is being resolved. What this means for debtors is that creditors must cease all collections efforts, including minimal attempts to contact the debtor about the debt all the way to legal action forcing a foreclosure or lien. The reprieve is only temporary and in place until the bankruptcy, case is resolved within the courts.