Common Personal Bankruptcy Questions and Answers


Filing for bankruptcy can be a complicated process for all except the most highly trained individuals. Creditors and debt collectors want you to pay your bills on time, and don’t want you to know that bankruptcy may be a way to get out from underneath that financial burden. But before you make a decision, it’s important to understand a little about the bankruptcy process.

What is Bankruptcy?

Bankruptcy is a legal process that helps debtors release or repay their debts to creditors.

What are the Most Common Types of Bankruptcy?

The two most common forms of bankruptcy are chapter 7 (liquidation of assets) and chapter 13 (reorganization).  Under Chapter 7 bankruptcy, the court appoints a trustee who gathers and sells much of your assets so that the proceeds can be used to pay your creditors. But, the court does allow you to keep some exempt property so that you can get back on your feet. Under Chapter 13, individuals are allowed to keep much of their property, their debt is restructured, and creditors are paid (generally over 3-5 years).

What Type of Bankruptcy Can I Choose to File?

Generally speaking, you don’t choose the type of bankruptcy you wish to file. The type of bankruptcy you end up filing depends upon the amount of money and income you have, the kinds of assets you own, and whether or not you wish to keep some of your assets. First and foremost, if you have limited income and are unable to make reasonable payments to your creditors, the court will likely restrict you to filing chapter 7 bankruptcy.

What are Some of the Advantages of and Common Misconceptions About Bankruptcy?


  1. Prevent creditors from repossessing items such as cars and homes.

  2. Prevent creditors from harassing you through: phone calls; letters; and lawsuits.

  3. Allow bankruptcy filers to keep exempt property. Each state has its guidelines for what is considered exempt property. Furthermore, exempt property cannot be seized or sold to pay creditors.

  4. You may be able to discharge (not pay) debts that are considered dischargeable under bankruptcy law.

  5. Although bankruptcy typically stays on your credit for 7-10 years, it is possible to start rebuilding your credit immediately after a bankruptcy has been filed.

Common Misconceptions

  1. Some of your property may be seized and sold to pay creditors.

  2. Bankruptcy stays on your credit for approximately 7-10 years.

  3. The bankruptcy will likely make it more difficult to obtain more loans, including loans for cars, homes, and credit cards.

  4. Employers and landlords may not wish to take a chance on hiring and renting to you.

  5. State and federal governments may refuse to give you your tax refunds.

  6. Non-dischargeable debts cannot be discharged. Common non-dischargeable debts include spouse and child support, student loans, certain government taxes and debts, and personal injury debts.

  7. Under chapter 7, you are not allowed to file for bankruptcy again for eight years.

Talk with a knowledgeable professional about some of these misconceptions. They may or may not apply to your case.

Will I Be Able to Keep My House, Car, or Other Assets?

There are many factors utilized in deciding what and how much property can be retained by debtors. Two of the more common ones include the type of bankruptcy you file and whether or not you can continue paying your creditors. Bankruptcy laws can be very complicated and could be made more complicated, depending on where you live. If you have any questions, you may wish to consult a highly skilled bankruptcy attorney.

Will I Be Responsible for Future Debts?

Any debts that the court decides you must pay, as well as all debts that you incur after filing for bankruptcy, are your responsibility.

Someone Cosigned My Loan, Will They Be Held Responsible for My Debt?

Unless your bankruptcy specifically exempts them from paying it, they may be held responsible for that debt.

If you have been considering bankruptcy because you are unable to pay your bills and you don’t know what to do, you can contact us At Robert H. Solomon, PC, Attorneys at Law, our experienced bankruptcy attorneys understand how difficult it can be to navigate the bankruptcy process.

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