What are my bankruptcy options?
The two most common bankruptcy types are Chapter 7 and Chapter 13. Chapter 7 bankruptcy, also known as "straight bankruptcy", is available to consumers and businesses where nonexempt assets can be turned over to a trustee who would then pay creditors with the proceeds. After filing Chapter 7 bankruptcy, creditors are not allowed to collect funds directly from you. The rest of your debts are canceled and you’re no longer responsible for them when the assets have been liquidated and creditors have been paid.
Chapter 13 bankruptcy reorganizes your debt into a manageable repayment schedule over three to five years. Depending on the nature of your debt and your income, you will be required to repay from 10-100% of the debt.
What's the difference between secured and unsecured debt?
Whether it's through agreement or a court order, secured debt involves a claim that's secured by some type of property. Typically, creditors have the ability to claim this property in the event of bankruptcy. Unsecured debt doesn't involve any type of property and the creditor is not able to claim anything if you file for bankruptcy. For example, a mortgage is a form of secured debt on your property.
What if I am in debt with student loans?
It is very rare to have cases of student loan debt be cleared after filing for bankruptcy. Since most outstanding students loans are federally funded loans, they are not allowed to be cleared due to the federal bankruptcy code. Although there are a few exceptions to the rule such as Chapter 13 bankruptcy where you are capable of having more control over repayment terms.
Am I able to keep anything if I file for bankruptcy?
There are state law exemptions that allow for people to keep certain types of property including: jewelry, vehicles up to a certain amount, equity in a home up to a certain amount, and any tools or equipment necessary to allow the person to keep working.
How long will bankruptcy stay on my record?
A bankruptcy can stay on your record anywhere from seven to ten years. However, you are able to keep an explanation in your file for credit reporting agencies to briefly describe the events resulting in filing for bankruptcy.