What is Personal Bankruptcy?
Bankruptcy is a way to get relief from your debts, either by discharging (stopping collection of) most or all of your debts, or by paying a portion of what you owe over time.
Are There Different Forms of Personal Bankruptcy, and If So, How Do They Work?
The two most common forms of personal bankruptcy are Chapter 7 and Chapter 13.
In Chapter 7, the goal is to discharge most or all debts without paying creditors. However, a Chapter 7 does not force a mortgage holder or auto lender to give you additional time to catch up on payments. In addition, some kinds of debts, like child support, alimony, student loans and some taxes, are not discharged in Chapter 7.
Another option is Chapter 13, which gives you an opportunity to pay back some of your debts over time. It is most often used to give you time to bring past-due payments on a mortgage or car loan current, or when you have property that you want to keep.
If your debts are very large, you operate a business that has financial problems, or your financial situation is very complicated, you may need to consider the form of bankruptcy known as Chapter 11.
How Do I Know If Filing Bankruptcy is the Solution to My Financial Problems?
Your financial problems are unique. Only you can decide whether bankruptcy is your best option. You should consider these warning signs:
- If you are facing foreclosure or repossession;
- If your creditors have attached your wages or your bank account;
- If you can’t catch up with your bills no matter how hard you try; or,
- If you no longer answer the phone because creditors call you night and day.
You may wish to call Mr. Lloyd to discuss your situation. His job, as a bankruptcy attorney, is to consider your entire financial picture, explain all the options to you, and guide you as you make the decision that you think is best.
Will Bankruptcy Protect Me from Creditors?
The filing of a bankruptcy has the effect of a court order stopping every one of your creditors from taking any action to collect money. Creditors may not file or pursue lawsuits, foreclose on your home, repossess your car, or even call or write to you without the permission of the bankruptcy court.
Once your case is finished, any debts that are discharged by your bankruptcy are no longer collectible. Discharged creditors are prevented from harassing you for payment. Mortgages and car loans remain in place, though, and you must keep making payments if you want to keep the property.
If I File Bankruptcy, Will I Lose My Home and/or Car(s)?
If you choose the right form of bankruptcy for your situation, you are in a better position to keep your house, car, and other property.
Will Filing Bankruptcy Ruin My Credit Rating Forever?
Bankruptcy is a negative on your credit report, just as judgments, foreclosures, and repossessions are. Bankruptcy does not permanently ruin your credit rating, and many people who file bankruptcy can buy houses and cars, and obtain loans and credit cards. By law, credit reporting agencies can carry a bankruptcy on your credit report for up to 10 years.