Bankruptcy Frequently Asked Questions and Answers

Legal Tips and Resources

There are few stresses in life that are as difficult to handle as substantial financial debt. Knowing that you have bills to pay and also knowing that you are not able to pay them can leave you feeling totally out of control of your own life.You may find yourself thinking, “If only I could have a fresh start, a second chance to do it all again the right way.” If you have felt this way, you are likely considering filing for bankruptcy. Filing for bankruptcy is not a decision that you should make lightly. However, if you think you might be ready and that you may qualify for the relief that filing for bankruptcy may provide, consider reaching out to a qualified bankruptcy attorney who will be able to answer your questions about the process.

In the meantime, however, consider these frequently asked questions and answers about bankruptcy:

  1. What is bankruptcy? Bankruptcy is a legal status that means the debtor (the person who owes money) can no longer pay your bills or debts, and that you have asked the court system to intervene. Through a formal bankruptcy process, the court will identify all your income, savings, and other assets and use them to help you pay back as many creditors (people to whom you owe money) as possible. This may mean that the bankruptcy court will order you to sell certain assets to pay back your debts, and will tell you who to pay and in what amount. After the court is satisfied that you have done everything you can under bankruptcy law to repay your debts, most of your debt will be forgiven.
  1. Can anyone file bankruptcy? No. Not all debtors qualify for bankruptcy. You must show the court that you qualify for bankruptcy by giving the court a full accounting of your income, savings, assets, and debts. Even if you qualify for certain types of bankruptcy, you may not qualify for others. Different types or “chapters” of bankruptcy have certain advantages and disadvantages and it is important that you choose the best one for you situation. Consult with a bankruptcy attorney to determine if you able to file for bankruptcy, if you should, and, if you should file for bankruptcy, which type of bankruptcy you should assert.
  1. What are the negative effects of bankruptcy? Filing for bankruptcy is not an easy process. It can take time, it involves turning over your whole life to the court, and it may involve painful parting with some of your assets, possibly including your home. Filing for bankruptcy will also very likely have a long term effect on your credit, which may prevent you from being able to rent certain homes, buy a new home, finance a vehicle, or take out other loans. Bankruptcy will also not get you a completely clean slate. Some debts, student debt, for example, will not be forgiven during the bankruptcy process.

Remember, if you are seriously considering filing for bankruptcy as a way to relieve your substantial debt, call an experienced bankruptcy lawyer today.