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Bankruptcy FAQ

Q. Will I lose my home if I file for bankruptcy?

A. Usually not. Under Chapter 7 bankruptcy, if your home equity falls under the exempted amount and you can quickly catch up on payments, you can continue making payments, keep the home, and get other debt discharged. If that is not the case, a Chapter 13 filing will probably be necessary to save the home and give additional time to avoid foreclosure and catch up on payments.

Q. How do I get calls from collections agencies to stop?

A. As soon as the petition is filed with the bankruptcy court, an automatic stay goes into effect. The court clerk will notify all creditors listed on the bankruptcy petition that the action has been filed and no further collections activity is allowed. These includes phone calls from the creditor and any collection agencies.

Q. Which is better, Chapter 7 bankruptcy of Chapter 13 bankruptcy?

A. It depends. Chapter 7 is much quicker and discharges most debts. However, if you have property you wish to keep and its value exceeds the allowable exemptions, Chapter 13 may be a better option. So long as you can afford to make payments under the bankruptcy plan, Chapter 13 potentially allows you to keep everything. KYA Law will perform a full analysis and assist you in determining the best option for your specific circumstances.

Q. How long does a typical bankruptcy case take?

A. A Chapter 7 case is usually discharged 4 to 6 months after filing. A Chapter 13 filing requires a repayment plan of either 3 or 5 years and the case is not discharged until the agreed-upon payment plan is completed.

Q. Will I lose all my property if I file for Chapter 7 bankruptcy?

A. No. There are state exemptions and federal exemptions that allow you to keep certain property so long as you continue making payments on any secured debt such as a house or car. There are also exemptions for household goods, IRA/401K accounts, college savings accounts and many more. KYA Law will assist you in determining which property you would be able to keep.

Q. Will filing for bankruptcy ruin my credit?

A. Temporarily, yes. A bankruptcy case will stay on your credit report for 7 to 10 years and will affect your credit score. However, there are ways to begin rebuilding your credit immediately after a discharge. Also, if you have numerous overdue bills, your credit score has likely already taken a significant drop and will only continue to decline if you default on obligations, so the impact of a bankruptcy filing may not do significantly more damage to you score.

Q. Are bankruptcy filings public?

A. Technically yes. Under federal law, bankruptcy filings are public record. However, as a practical matter, there are no published lists of individuals who file for bankruptcy so it is highly unlikely that anyone other than your creditors or people you choose to tell will ever be aware of the proceedings.

Q. Can my employer fire me if I file for bankruptcy?

A. No, an employer is not allowed to fire you simply because you file for bankruptcy. In fact, if you’re filing a Chapter 7 case, your employer will probably not even know unless you choose to share that information. If you’re filing for Chapter 13, the repayment plan may call for your employer to withhold the amount from your check, but the employer cannot take adverse action just because you are working through a bankruptcy plan.

Q. Can all of my debts be discharged through bankruptcy?

A. No. There are some debts that are usually not dischargeable. These generally include: student loans, recent taxes, and domestic support obligations.

Q. Should my spouse and I file for bankruptcy together, or should just one of us file?

A. It depends. If most or all debts are only in one name, it may be more advantageous for that person to file individually to protect the spouse’s credit score. If, however, debts are in both names, it is usually necessary for both spouses to file. Otherwise, the creditor may still be able to go after the other spouse for payment.

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