Bankruptcy Lawyer FAQ

Frequently Asked Questions About Bankruptcy

What is bankruptcy?

Bankruptcy is a federal legal process that helps individuals and businesses eliminate or repay their debts under court protection. It's designed to give honest debtors a fresh start when they cannot pay their bills.

What's the difference between Chapter 7 and Chapter 13?

Chapter 7 is liquidation bankruptcy — most unsecured debts are eliminated in 4-6 months. Some non-exempt assets may be sold to pay creditors.

Chapter 13 is reorganization — you pay back creditors over 3-5 years through a court-approved repayment plan. You keep all your property.

Will I lose everything if I file bankruptcy?

Almost certainly not. Most bankruptcy filers keep all their property thanks to bankruptcy exemptions that protect:

• Home equity (up to a limit)
• Vehicle equity (up to a limit)
• Retirement accounts
• Personal belongings
• Tools of your trade
• Some cash and bank account funds

How much does bankruptcy cost?

Type	Total Cost
Chapter 7	$1,500-$3,500
Chapter 13	$3,500-$6,500

Includes attorney fees, court fees, and required courses. Many attorneys offer payment plans.

Can bankruptcy stop foreclosure?

Yes, immediately. When you file bankruptcy, an "automatic stay" goes into effect that stops foreclosure proceedings. This gives you time to negotiate alternatives or save your home through Chapter 13.

Will bankruptcy ruin my credit?

Bankruptcy affects your credit, but the impact may be less than you think:

• Stays on credit report 7-10 years
• If your credit is already poor, it may actually improve
• Most people can get credit cards within 1-2 years
• Mortgages are typically possible 2-4 years after discharge
• Many people find their credit recovers faster than expected

Will my employer find out?

Probably not. Bankruptcy filings are public record, but most employers don't actively search for them. If wage garnishment was already involved, your employer would know about that. Federal law prohibits employment discrimination based on bankruptcy.

Can I keep my car?

Usually yes:

• Chapter 7: Vehicle equity exemption may protect your car
• Chapter 13: You can catch up on missed payments and keep your car

If your car loan is current and equity is within exemption limits, you keep your car.

Can I keep my house?

Usually yes:

• Chapter 7: Homestead exemption may protect your equity
• Chapter 13: Catch up on missed mortgage payments through the plan

Keeping your house often depends on your home equity and your state's exemptions.

Can I file bankruptcy on student loans?

Generally no, but exceptions exist:

• Student loans are typically not dischargeable
• "Undue hardship" exception is rare and difficult
• Some bankruptcy courts have become more lenient
• Worth discussing with an experienced attorney

What about tax debts?

Some tax debts can be discharged if they meet specific criteria:

• Tax debt is at least 3 years old
• You filed the return at least 2 years ago
• Tax was assessed at least 240 days ago
• You didn't commit fraud
• Income tax (not payroll or fraud taxes)

Will my spouse have to file too?

Not necessarily. Married couples can file:

• Jointly (one case for both)
• Individually (only one spouse files)

Your attorney can help determine the best approach.

Can I file bankruptcy more than once?

Yes, but with restrictions:

• Chapter 7 to Chapter 7: 8 years between discharges
• Chapter 13 to Chapter 13: 2 years between discharges
• Chapter 7 to Chapter 13: 4 years
• Chapter 13 to Chapter 7: 6 years

How long does the process take?

• Chapter 7: 4-6 months from filing to discharge
• Chapter 13: 3-5 years for the full plan

Will creditors stop calling immediately?

Yes. The automatic stay takes effect the moment you file. Creditors who continue to call can be sanctioned by the court.

What debts are discharged in bankruptcy?

Discharged: Credit cards, medical bills, personal loans, older tax debts, business debts, utility bills, lawsuits, judgments

NOT discharged: Recent tax debts, student loans (usually), child support, alimony, criminal fines, debts from fraud

Can I get credit cards after bankruptcy?

Yes, fairly quickly:

• Secured credit cards: Available immediately
• Unsecured credit cards: Usually within 12-18 months
• Some lenders specialize in post-bankruptcy customers

Will my landlord evict me?

Filing bankruptcy alone doesn't allow eviction. However:

• If you're behind on rent, the eviction process may continue
• Future rent must still be paid
• Some landlords may not rent to those with recent bankruptcies

What if I get a tax refund or inheritance?

• Chapter 7: May be subject to seizure (depends on timing and exemptions)
• Chapter 13: May affect your repayment plan amount

Discuss with your attorney before receiving large sums.

Can I file bankruptcy without a lawyer?

You can, but it's risky:

• Bankruptcy is complex
• Mistakes can be costly
• You may lose property unnecessarily
• Discharge can be denied for errors
• An attorney's fee is often saved many times over by their expertise

How do I choose a bankruptcy lawyer?

Look for:

• Specialization in bankruptcy (not a general practitioner)
• Experience (years and number of cases)
• Free consultations
• Reasonable fees
• Good reviews
• Clear communication
• Local court experience

Is bankruptcy the right choice for me?

Bankruptcy may be right if:

• You can't pay your bills
• You're facing foreclosure or repossession
• Creditors are suing you
• Your debt would take more than 5 years to pay off
• Other options haven't worked

A free consultation with a bankruptcy attorney is the best way to find out.