Frequently Asked Questions About Bankruptcy
- What is bankruptcy?
Bankruptcy is the process in which a person legally declares they are unable to pay outstanding debts. Filing bankruptcy does not necessarily indicate failure or mismanagement of money. Debt problems can arise from situations over which a person has no little or no control such as a divorce, death of a spouse, loss of a job, reduction in income, business failures, etc. The Bankruptcy Code allows for various protections for people and businesses with the same goal in mind – the organized payment through either Chapters 13, 12 or 11 of some or all debts when repayment is an option, or a fresh start discharge in Chapter 7 when there is no means of paying off debt. In all cases, property such as homes and vehicles can be protected. A business may also declare bankruptcy, under the terms of which they will either liquidate their assets and close or restructure and continue to operate as they offer payments to creditors.
- How do I file for bankruptcy?
To file for bankruptcy, a debtor, whether an individual or business, will have to gather documents to help in the creation of bankruptcy schedules and states. Some of these documents will be provided to certain entities such as the United States Trustee, the Trustee for the type of case you file and sometimes the Court. For example, such documents include monthly debt statements, dunning letters, letters from debt collectors and debt buyers, tax returns or transcripts and w-2’s, etc. An experienced bankruptcy attorney can provide you with a list of documents needed to complete your schedules. With these documents and through meetings with you, an attorney can create the necessary schedules; statements; and, when appropriate, plans of reorganization. This will provide you, your creditors, and the court the best possible understanding of your exact financial situation. A potential bankruptcy filer must also receive mandatory credit counseling from a court-approved provider within 180 days before filing their case with the court. Counseling can be conducted by email or phone in individual cases.
- Questions about Chapter 7 bankruptcy?
Visit our specialized Chapter 7 Bankruptcy FAQs page for more information about what it is, how to qualify, how your assets are affected, and what will happen when you file.
- Questions about Chapter 11 bankruptcy?
Visit our specialized Chapter 11 Bankruptcy FAQs page for more information about what it is, how long it lasts, and what will happen when you file.