What is bankruptcy?
Bankruptcy is the legal method for a debtor to discharge or relieve debt. Bankruptcy
is a way for people or a business who owe more money than they can pay to either
work out a plan to repay the money over time or to have their debt wiped out.
While no debtor is guaranteed a total discharge, most debtors who file for bankruptcy
are given such relief. One of the primary purposes of the bankruptcy act is
to relieve the honest debtor from the weight of oppressive indebtedness and
to provide the debtor with a fresh start. Title 11 of the United States Code
regulates the filing of a bankruptcy. If the debtor initiates the bankruptcy
it is called a voluntary bankruptcy. If the creditor initiates the bankruptcy
it is called an involuntary bankruptcy. In an involuntary bankruptcy the debtor
has the opportunity to contest the petition. While the debtor is either working
out a plan or the trustee is gathering the available assets to sell, the Bankruptcy
Code provides that creditors must stop all collection efforts against the debtor.
The Bankruptcy Code regulates what chapter you must file under, what bills can
be eliminated, how long payments may be extended, what possessions you may keep,
and all other details concerning the bankruptcy.
What is the Bankruptcy Code?
The Bankruptcy Code refers to Title 11 of the United States Code. (11 U.S.C.
º 101-1330) Federal Law governs bankruptcy.
Where do I get a copy of my states local rules?
Copies can be obtained at the public service counters in the Clerk`s office
of the Bankruptcy Court. In addition, many Bankruptcy Courts now have their
rules online.
Who can file for bankruptcy?
Any person, partnership, corporation or business trust may file bankruptcy.
In addition, charitable or social organizations may also file for bankruptcy.
United States citizenship is not a requirement for filing bankruptcy.
What if I am married?
If you are married, you may file a joint petition. A joint petition is the filing
of a single petition by an individual and the individual’s spouse. Also if you
are married, one spouse may file an individual petition. In order to qualify
for a joint petition, you must be married on the date that the joint petition
is filed. Unmarried persons, corporations and partnerships must each file a
separate case. If you are an individual and have a business, you may not file
a single petition for yourself and your business; each must be a separate bankruptcy
case.
Will I lose my house, car, and other personal property?
Not necessarily, each state has laws that determine which items or property
are exempt from being taken away. For example, many states exempt personal items
such as furniture and clothing. In addition, other kinds of property are exempt
up to a limit. These exemption limits mean that any equity that you have in
the property above the limit is not exempt. The Bankruptcy Court can take the
property and sell it, pay off any creditors, give to you the exemption amount,
and keep the rest for other creditors.
Does my divorce decree protect me if my ex-spouse has filed for bankruptcy
and she has listed me as a co-signer on a Schedule D?
If you are contractually bound with your ex-spouse on a debt, the creditor can
require the entire payment of that debt from you even though the divorce decree
assigns the debt to your ex-spouse. Depending on the terms of your divorce decree,
you may be able to have certain support obligations under it determined to be
non-dischargeable by the bankruptcy court or in state court. If you find out
that your ex-spouse has filed for bankruptcy, you should seek legal advice to
find out your possible obligations.
Will filing bankruptcy affect my credit rating?
Unfortunately it will. However, most individuals are able to rebuild their credit
within a few years. If you are currently contemplating bankruptcy, then it is
likely that your current credit rating has already been affected. A discharge
of your current debt may provide the opportunity to rebuild your credit with
steady, regular payments on a new account.
How long will a bankruptcy show on my credit reports?
The Bankruptcy Court has no jurisdiction over credit reporting agencies. The
Fair Credit Reporting Act, 6 U.S.C. Section 605, is the law that controls credit
reporting agencies. The law states that credit reporting agencies may not report
a bankruptcy case on a person’s credit report after ten years from the date
the bankruptcy case is filed. Other bad credit information is removed after
seven years. The larger credit reporting agencies belong to an organization
called the Associated Credit Bureaus. The policy of the Associated Credit Bureaus
is to remove chapter 11 and chapter 13 cases from the credit report after seven
years to encourage debtors to file under these chapters.
Can I file for bankruptcy every few years?
No. Once a discharge is granted, a debtor who filed under chapter 7 or 11 is
prohibited from filing for another 6 years. However, you can file under Chapter
13 at any time even shortly after filing under Chapter 7.
What is the difference between a Chapter 7 & Chapter 13?
- A Chapter 7 is a straight bankruptcy, where you file and discharge your
debts. Certain debts are exempted from discharge. Some examples of debts are
that exempted from discharge are alimony, child support, student loans, and
tax debts; although, some income tax debts may be dischargeable depending
on the circumstances. It is possible to keep a house and a car as long as
there is not an excessive amount of equity in either one.
- A Chapter 13 is a repayment plan in which your money is sent to a Chapter
13 trustee, and the trustee pays your debts for you. This will last for a
period of three to five years. All types of debt, including taxes, can be
paid through a Chapter 13.
How long will this be on my credit record?
At the present, most credit reporting agencies report a Chapter 7 for ten years
and a Chapter 13 for seven years.
If I am married, do we both have to file?
No. A married person may file alone or jointly with their spouse.
Does Mark Young handle any other types of cases?
At this time, Mark T Young and Associates only handles bankruptcy cases
