Bankruptcy Questions For First-Time Filers
Posted on: 29 August 2018
Do you have debts and bills that are unsustainable? If so, the solution to your problems could be filing for bankruptcy. While there are many negative connotations about using bankruptcy, it is possible to give you financial protection from debts you cannot recover from. Here are some questions that many first-time bankruptcy filers have about the process.
Are All Debts Discharged When Using Bankruptcy?
Bankruptcy is designed to protect people that have taken on more debt than they're able to repay, but be aware that some debts are not covered with bankruptcy. If you have existing back taxes that you owe, student loans that have not been repaid, or debts that are secured with collateral, these debts will still remain after using bankruptcy. While it is possible to put these debts into a payment plan to make them easier to handle, you will still be financially responsible for them.
When Will Creditors Stop Bothering You For Payment?
Being harassed by creditors might be the main reason why you decided to use bankruptcy, with frequent phone calls or letters making life stressful for you. Be aware that once you file for bankruptcy, you'll receive protection from being contacted from these creditors until the bankruptcy is resolved. If creditors continue to contact you, make them aware that you have a bankruptcy filing that is pending, and it's illegal for them to continue to contact you.
In order to get protection from the court, you'll need to list debts in your bankruptcy filing, and those creditors will be formally contacted about your pending bankruptcy. There are consequences of violating the court order, which can include voiding any existing debt that you owe them.
What Type Of Bankruptcy Should Be Used?
You may not be aware that there are multiple ways to file for bankruptcy, with each method having its own advantages and disadvantages. Two popular methods that people tend to use are Chapter 11 and Chapter 13 bankruptcy.
What sets these two apart is that Chapter 11 bankruptcy requires that you liquidate all of your assets to pay off as much of the debt as possible, but will result in debts being discharged after you have paid back all that you can. Chapter 13 bankruptcy is quite different since it involves discharging some debts, restructuring the payment process to pay back others, and having an impact on your credit that is not as bad.
Your bankruptcy attorney can help guide you towards which bankruptcy method will be best for you.
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