FREQUENTLY ASKED QUESTIONS

Will I lose my house or vehicle if I file a bankruptcy under chapter 7 or chapter 13?

                 Most individuals who file a bankruptcy under chapter 7 or chapter 13 will not lose their house or vehicle because of the bankruptcy filing.  You will lose your house or car if there is a mortgage or vehicle lien on those items and you fail to keep the payments current or fail to properly insure those items.  You are allowed to protect from the bankruptcy process a certain amount of equity in a house or car through what are called bankruptcy exemptions.   For most of the individuals filing for bankruptcy, these exemptions are adequate to allow an individual filing for bankruptcy to keep his car or house.

Is my pension safe from the bankruptcy process?

        Depending on the value of the pension, and the legal manner in which the pension is held, your pension may or may not be exempt from the bankruptcy process, depending on what other property you own and what claims are against you and your spouse.    A consultation with a lawyer qualified in bankruptcy will be required to adequately answer that question under the facts of each case.

What debts will be eliminated by a bankruptcy?

           If everything proceeds well with your individual bankruptcy, you will receive a discharge of debts from the bankruptcy court at the end of your bankruptcy.  A discharge of debts will generally extinguish credit card debt, medical bills, unsecured loans and many other types of debt.   A discharge in bankruptcy will generally not relieve you of paying a mortgage or car loan if you keep those items.  A discharge of debts will also generally not relieve you of paying alimony, maintenance, child support, student loans, taxes, fraud claims, criminal restitution and driving accidents caused by drugs or alcohol.  In certain, limited cases, income tax may be eliminated by a discharge of debts.  

        If you receive a discharge of debts on a debt that was co-signed or guaranteed by another person, that person will remain liable to pay that debt, even though you are freed of that obligation.

If I file for bankruptcy, is my credit ruined forever?

        No.  If you otherwise keep your credit clean after the filing of bankruptcy, your credit will be largely rehabilitated in about three years after you receive the discharge of debts in bankruptcy.  If you have kept your credit clean since the bankruptcy filing, your credit will probably be better in two years after the issuance of the discharge than it would have been had you not filed for bankruptcy, but retained your unpaid bills.

If I file for bankruptcy does my husband or wife have to file bankruptcy, too?

        No.  Nonetheless, it is often wise for both husband and wife to file a bankruptcy together if both have significant joint debt, other than on mortgages and car loans.  If they both owe on a credit card debt, and only one spouse files for bankruptcy, the credit card company will demand payment from the spouse not filing for bankruptcy.

NEXT PAGE.

BACK TO THE HOME PAGE.

Copyright 2000 - 2010  by The Bankruptcy Lawyer, John Francis Murphy, Esq.