Filing for bankruptcy is a difficult decision and one that you’ll want to make wisely. You likely have plenty of questions regarding the process, filing procedures and potential outcome.
To put your mind at ease, we’ve gathered and answered the most frequently asked questions regarding bankruptcy below.
Can I keep my house?
One of the biggest concerns when filing bankruptcy is do I need to sell my property. For those who file Chapter 13 bankruptcy, the answer is an easy yes. That’s because this form of bankruptcy allows you to repay your debts in installments over 3 to 5 years. Keep in mind that you will need to keep making payments on loans related to your property.
If you plan to file for Chapter 7, you’ll need to plan ahead. Because the majority of your debts will be discharged, trustees can use your property to pay off creditors. In some cases, the equity in your home will be exempt from collection. Be sure to consult with an experienced bankruptcy attorney if you are considering filing Chapter 7 and want to keep your property.
Do I qualify?
When people ask about qualifying for bankruptcy, they’re usually thinking about the infamous means test. This test is used to determine if you qualify for Chapter 7 bankruptcy based on your income. However, there is some confusion about just how low your income has to be to qualify.
If you make less than the median income in your state (in accordance with your household size), you should qualify for Chapter 7. On the other hand, if you make more than the median income, your disposable income will be taken into consideration. Essentially, the courts want to know if you have enough money left over after paying your basic monthly expenses to pay off some or all of your unsecured debts.
Will I lose my job?
It makes sense that anyone dealing with financial issues would be concerned about the security of their employment. Know this first—an employer may NOT fire you because of a bankruptcy filing under any circumstances. They may also not do other things to discriminate against you including lowering your pay or position in the organization. This law applies to government and private employers.
If you feel like your position was terminated due to a bankruptcy filing, it’s time to consult with a lawyer about the possibility of illegal discrimination.
What are the different types of bankruptcy? How long does each one take?
Chapter 7 is what people often think of when considering bankruptcy. This straight bankruptcy helps debtors discharge unsecured debts quickly. The process typically takes 3 to 6 months.
Chapter 11 bankruptcy is typically used by large businesses and sole proprietors. It allows organizations to remain in operation and pay back debts over a period of time through reorganization. The process generally lasts 6 months to 2 years.
Chapter 13 proceedings are some of the longest, lasting up to 5 years. Payments are made to discharge debts through installments during this time. Individuals do use some of their future income to pay down debts.
Will I have to go to court?
You may be required to attend a section 341 meeting. During this time, you will verify the accuracy of the information in your bankruptcy filing by testifying under oath. You also have to go to court if ordered to do so by the judge or for adversary proceedings.
How much does it cost to file bankruptcy?
The Court filing fee for Chapter 13 bankruptcy is $310 and cannot be waived. The Court filing fee is $335 to file for Chapter 7. The legal fees for filing bankruptcy are in addition to the filing fee, and vary according to your circumstances.
At Tyler, Bartl & Ramsdell, P.L.C., we work with our clients to achieve financial stability and relief through Chapter 7, 11, 12 and 13 bankruptcies. Schedule a free consultation with our firm by calling 703.549.5001 today.