Anyone filing for bankruptcy undoubtedly has plenty of questions like what is bankruptcy? How does it work? What can bankruptcy do to anyone’ credit? Who should file for bankruptcy? What happens to debt and property after filing for bankruptcy? We have compiled a list of most frequently asked questions about bankruptcy. Get answers of these most common questions about bankruptcy from one of the popular bankruptcy attorneys of California, Mr. Brian Linnekens.
What is Bankruptcy?
This is the most common question frequently asked to Brian Linnekens in his 10 years of bankruptcy law career. Brian Linnekens defined bankruptcy as a proceeding in which an individual legally declares that he is not able to pay all of the money that he owes. Bankruptcy grants that individual a fresh financial start while providing him an opportunity to potentially repay creditors in an orderly fashion.
What are the advantages of filing for bankruptcy in a court?
Bankruptcy makes is possible for debt collectors to stop foreclosure on bankrupt’s (a person who is declared insolvent) home and property. It provides an opportunity to debt collectors to catch up on payments that have been missed by an individual or bankrupt. Filing for bankruptcy helps a bankrupt prevent his home vehicle or other property from being repossessed. In addition, bankruptcy can prevent a bankrupt from wage garnishment and harassment by debt collectors. It can also provide a bankrupt a discharge of some of his debts.
What is the difference between bankruptcy chapter 7 and Chapter 13?
In bankruptcy Chapter 7, the debtor nonexempt property (if any exists) is liquidated to pay as much as possible to pay the debtor’s debt. On the other hand in Chapter 13 a proportion of the bankrupt’s future income is used to pay as much of the debtor’s debts as is possible under the bankrupt’s financial circumstances. This is a basic difference between Bankruptcy Chapter 7 and a Chapter 13. In the case of bankruptcy chapter 7 individual loses his nonexempt assets and receives a discharge from his debts. While in chapter 13, the individual retains his nonexempt possessions, but must pay back as much as feasible for the individual to pay over 3-5 years. Chapter 7 cases are less expensive and take less time than chapter 13. However, Chapter 13 allows an individual who is above the median income or who has a lot of nonexempt assets to keep their assets and receive the protection of bankruptcy.
What is an Automatic Stay?
An automatic stay is a restraint provided by a court after filing for a bankruptcy chapter 7 or chapter 13 to a bankrupt. An automatic stay prevents a bankrupt from his debt collectors to take any subsequent action to collect debts. The automatic stay is filed immediately after the bankruptcy petition is filed.
Will My Employer Know I Filed for Bankruptcy?
Bankruptcy petitions are public records. Normally; however, your employer will not know you have filed an appeal for bankruptcy unless you owe him money and your employer is your creditor.
What filing for bankruptcy won’t do for a bankrupt?
This is the most frequently asked and most important question that every bankrupt should keep in his mind before filing for a bankruptcy in a court. Remember, bankruptcy will not cure all of your financial problems. It should be understood that bankruptcy will not eliminate your secured debts such as mortgages and car loans. Bankruptcy also will not discharge your special treatment debts such as certain student loans, alimony, child support, certain taxes and criminal fines.