WHAT IS BANKRUPTCY ALL ABOUT?

Bankruptcy can be a fresh financial start. It is designed to help those who are in debt beyond a reasonable means to repay.

There are consequences to filing bankruptcy, such as long-term damage to your credit and a reduced ability to make major purchases on credit, such as a home, car, etc. for a period of time.  However, if your debt problem is overwhelming, bankruptcy is a legal and, for many, a sound financial choice.

The law states that a person is entitled to start over financially so long as they have not been dishonest in getting into debt. Bankruptcy will wipe out all of your unsecured debts and let you keep most, if not all, of your property.

People get in over their head financially for many reasons: loss of employment, cut in hours or pay, business failure. Most people would avoid bankruptcy if they could, but like many things in life, sometimes bankruptcy just cannot be avoided.

While it is not easy to make the decision to file bankruptcy, you will survive. Over one million Americans survive bankruptcy every year. The qualified Bankruptcy Paralegals at Attorney Alternative will help you get through the process, and will show you ways to re-establish your credit after filing.

Debt causes all type of problems: health, marital, physiological, work related and self esteem. In fact a recent medical study conducted by a major university shows that high debt causes health problems. While bankruptcy is not a medical treatment, when your finances are back on the mend, your stress level may become manageable again. And no more calls from those aggressive collection agencies!

TYPES OF BANKRUPTCIES

Chapter 7: Liquidation
Chapter 7 is designed for debtors in financial difficulty who do not have the ability to pay their existing debts. Under Chapter 7, you may claim certain property exempt (that is, you can keep the property) and a trustee may take possession of the remaining assets in order to liquidate them and pay your creditors according to priorities set forth in the Bankruptcy Code. In most cases, the debtor does not lose any property.

Chapter 13: Repayment of Debt
Chapter 13 is designed for individuals who are temporarily unable to pay their debts, but would like to pay them in installments over a period of time.

Chapter 11: Reorganization
Chapter 11 is designed primarily for the reorganization of a business. Its provisions are very complex and should be done only after consulting an attorney.

TYPES OF DEBT THAT CAN BE DISCHARGED IN BANKRUPTCY

• Almost all unsecured debt can be discharged in bankruptcy.

• Secured debt (debt in which some collateral has been posted) is not discharged in bankruptcy, unless the collateral is surrendered. If the collateral is surrendered, the deficiency balance (the amount that is owed after the creditor sells the collateral) would become unsecured and discharged in your bankruptcy.

• A discharge of a deficiency balance only occurs if you have not signed a reaffirmation agreement (an agreement to repay the debt).

• Debts that were incurred by fraud or as a result of drunk driving are not discharged in bankruptcy.

• Depending on the taxes, personal income tax may be dischargeable in bankruptcy.

• Property settlement agreements may be discharged in bankruptcy.

• Student loans are not dischargeable in bankruptcy, except in cases where it would create an extreme hardship on the debtor to pay back the student loan.

• Child and spousal support are not discharged in bankruptcy.

  Frequently Asked Questions (FAQ)

WHAT CAN YOU KEEP IN BANKRUPTCY?

CAN TAXES BE DISCHARGED?

CAN STUDENT LOANS BE DISCHARGED?

CAN CHILD AND SPOUSAL SUPPORT BE DISCHARGED?

CAN PROPERTY SETTLEMENT AGREEMENTS BE DISCHARGED?

WHO SHOULD CONSIDER BANKRUPTCY?

WILL MY CREDIT BE RUINED?

CAN I FILE BANKRUPTCY AGAIN?

WHAT CAN YOU KEEP IN BANKRUPTCY?
Most people do not lose any of their belongings in bankruptcy. The end goal of bankruptcy is to get you back on your feet financially. Therefore, your basic necessities are protected in bankruptcy, so as to help you re-establish yourself.

The equity in your home and most of your personal belongings will, in all likelihood, be protected in bankruptcy.

The exemptions (the bankruptcy law which protects your assets) are very complicated and you should consult an attorney to maximize the protection that you are afforded under Bankruptcy Law.

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CAN TAXES BE DISCHARGED?

Contrary to common belief, income taxes can be discharged in bankruptcy provided that:

• The taxes are at least three years old.
• The tax returns must have been actually filed at least two years ago.
• Any assessment was more than 240 days ago.
• The debtor did not engage in any type of fraud or tax evasion.

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CAN STUDENT LOANS BE DISCHARGED?

Student loans are not dischargeable in bankruptcy, except in cases where it would create an extreme hardship on the debtor to pay back the student loan.

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CAN CHILD AND SPOUSAL SUPPORT BE DISCHARGED?

No.

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CAN PROPERTY SETTLEMENT AGREEMENTS BE DISCHARGED?

There is a possibility that a property settlement agreement can be discharged in bankruptcy. The law in this area is somewhat unsettled, however an attorney could advise you as to whether there is a chance that the property settlement could be discharged in bankruptcy.

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WHO SHOULD CONSIDER BANKRUPTCY?

Anyone that is overwhelmed with financial problems should consider filing bankruptcy. Financial problems greatly affect your entire life causing some, if not all, of the following problems:

• Physical ailments (ulcers, high blood pressure, insomnia).
• Problems within a marriage and within a family due to the stress of the financial situation.
• Negative affect on your job performance.
• Depression and a feeling of being overwhelmed.

Bankruptcy should be considered as medicine for those who are financially ill.
Creditors can make you feel guilty and ashamed, but creditors are NOT on your side. They forget that it is a long-standing tradition in the United States, most other countries, and in most religions to forgive debts and let a person get a fresh start.

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WILL MY CREDIT BE RUINED?

Your credit is not hurt by the bankruptcy itself; what hurts your credit is that the debts are not paid. The way to rebuild your credit is to buy an inexpensive item on time and pay for it; then buy something else and pay for it, etc.

An automobile is one of the easiest items to buy after the bankruptcy is over. Check out the automotive section of the newspaper.

You can maintain your bank accounts and all of your utilities.

You can make arrangements to pay any creditor, if you want or feel obligated.

Bankruptcy will stay on your credit report for up to 10 years, but if you have a decent income, you will find credit. With over a million people a year filing bankruptcy, creditors would run out of customers if they refused to extend credit to everyone who has filed bankruptcy.

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CAN I FILE BANKRUPTCY AGAIN?

You can file bankruptcy more than once. To file another Chapter 7 bankruptcy, there must be at least six years time from discharge to discharge. You can file a Chapter 13 bankruptcy at any time, so long as you intend to pay your creditors 100%. If you are going to be paying your creditors less than 100%, then it needs to be at least six years from your last discharge.

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If you need a fresh start, and have come to the decision to file for Bankruptcy, let ATTORNEY ALTERNATIVE help you through a difficult time with caring, professional and responsive form and filing assistance.

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