Q: What is a bankruptcy?
There are multiple categories, or chapters, of bankruptcy, but consumer Bankruptcy typically falls under Chapter 7, or Chapter 13. Both categories have their own benefits, but both are aimed to eliminate the debts of unfortunate debtors who have lost control of their debts. Bankruptcy provides an essential fresh start for the debtor who has lost control of the debts they have achieved.
Q: Will bankruptcy wipe out all of my debts?
The debts that are wiped out will depend on the of bankruptcy that you file, and the type of debts that you have. Some debts are not wiped out by Bankruptcy, these debts are Child support, Alimony and past due taxes.
Q: Can bankruptcy wipe out student loans?
A: Student Loan debt can only be discharged in very rare situation where the debtor can prove that repayment will cause an undue hardship on them. This does not happen often. But by discharging debts that are dismissible under Bankruptcy, you will have the capital to better pay off student debts.
Q: What is an “automatic Stay”
A: An Automatic stay is a temporary protective order issued by the court upon filing for Bankruptcy. It stops creditors from contacting you and trying to make any collection efforts against the debtors.
Q: What happens if a Creditor tries to collect a debt from me during the Automatic Stay?
A: First you should verify that this creditor was included in the Bankruptcy filing. Second, and only if they were included in the bankruptcy, you should contact your attorney immediately to file an action with the Court to stop further contact as it is a violation of the Automatic Stay. If the Creditor was included in the Bankruptcy the Court may punish the Creditor for any harms suffered by the debtor from the contact of the creditor.
Q: I don’t want to lose my property, what type of Bankruptcy is right for me?
A: The answer will highly depend on the income that you have, but a Chapter 13 Bankruptcy is best for someone interested in not losing any of their property.
Q: What is the difference between Chapter 7 and Chapter 13 Bankruptcy?
A: A chapter 7 bankruptcy is what is known as a “liquidation” bankruptcy. In a Chapter 7 bankruptcy the debtor turns over nonexempt personal property over to the Trustee. The Trustee will then sell this personal property for cash, the cash will be used to pay back as much of the debt as possible. The property that is exempt from sale in a Ch. 7 Bankruptcy depends on state law, if you have questions please reach out to The Law Office of Jason A. Borg for quick assistance on the issue. A chapter 13 bankruptcy is known as a “reorganization” bankruptcy. This style of Bankruptcy allows for you to keep your personal property, but you have to be able to make monthly payments towards your debts. A Chapter 13 Bankruptcy creates a scheduled plan that calculates a monthly fee that you must pay to the trustee. A chapter 13 payment plan last from 3 to 5 years during this time you must make the scheduled payments or face dismissal.