There's no denying that each individual will need to approach the issue of personal bankruptcy in his or her own unique way. However, with that being said, most individuals express the same concerns when filing for Chapter 7 or Chapter 13 bankruptcy . They worry that they'll end up losing their homes, or they're concerned about how long a bankruptcy will remain on their credit scores.
That's why we have compiled the most popular questions about personal bankruptcy. If any of your questions aren't answered here, be sure to contact a bankruptcy attorney for more information:
1. Will I lose my home if I file for bankruptcy? While the answer to this question is an undeniably frustrating, "it depends", the truth of the matter is that the majority of personal bankruptcies won't result in a lost home. New federal exemptions have made it possible for you to keep your home and car (up to a certain value). However, if you have vacation homes or more than one car, the bankruptcy courts might liquidate these assets to pay off your creditors.
2. Can bankruptcy protect me from foreclosure? Bankruptcy can protect you from foreclosure ; in fact, federal law deems it illegal for your bank to take any foreclosure action against you during the course of the bankruptcy. This prevention of debt collection is known as an "automatic stay", and it protects you from creditors who insist on collecting your debts.
3. How will my credit be affected? While there's no denying that a personal bankruptcy will remain on your credit score for some time, the truth is that most people who file for bankruptcy already have poor credit. Additionally, if you try to continue paying your debts in an effort to keep your credit, you may end up with permanent bad credit, rather than just the few years it takes to rebuild a healthy score.
4. Which type of bankruptcy should I file for? Again, the answer to this question will depend on the individual filing for bankruptcy. For example, if you're determined to repay your debts, a Chapter 13 bankruptcy will re-arrange your debts into a new repayment plan. If you want to wipe out your personal debts altogether (with some exemptions), then filing for a Chapter 7 bankruptcy makes more sense if you qualify.
Again, if you didn't find the answer to your most commonly asked questions, contact a local bankruptcy attorney immediately!