Many debtors want to know, “What exactly is bankruptcy?” Bankruptcy is the legal process which allows debtors to discharge certain debts and potentially get a fresh financial start. Bankruptcy is regulated by federal law, and all bankruptcy cases are settled in federal bankruptcy courts.
There are two common types of bankruptcy: Chapter 7 Bankruptcy and Chapter 13 Bankruptcy. Chapter 7 Bankruptcy is the most common type of bankruptcy filed and allows debtors to immediately discharge their debts, although many debtors will not qualify for Chapter 7 Bankruptcy. Many debtors will, instead, be required to create a debt repayment plan to repay a portion of their debts by filing Chapter 13 Bankruptcy.
One of the benefits of bankruptcy is bankruptcy protection. What is bankruptcy protection? It is protection afforded the debtor when their bankruptcy petition is filed in court. Bankruptcy protection can potentially stop foreclosure on your home, although liens and mortgage payments are not discharged, and may prevent repossession of other assets. Bankruptcy protection can also stop creditor harassment and wage garnishments.
So what exactly is bankruptcy? It is a legal tool that you may be able to use to discharge all or a portion of your unsecured debts and stop creditors from harassing you.
Unfortunately, whether you file Chapter 7 or Chapter 13 Bankruptcy there will be some types of debts that will not be discharged. For instance, common unsecured debts that are not discharged include spousal and child support obligations, student loans and back taxes owed to the state or federal government.
Whether or not you can keep your home after filing bankruptcy is a top bankruptcy question but the answer can be complicated and this common question is a question to ask your bankruptcy lawyer. Whether the bankruptcy court can seize your home in the bankruptcy is limited by your states bankruptcy homestead exemptions, the type of bankruptcy you file, the state where you live, how much land your home is built on and the amount of equity you have in your home.
One of the most common questions asked is, “How much will it cost to file bankruptcy?” If you are financially strapped this could be your top filing question. If you choose to file bankruptcy without legal assistance you will need approximately $400. Hiring a bankruptcy lawyer for a simple Chapter 7 case can cost as little as $750; hiring a bankruptcy attorney for a complicated Chapter 13 case could cost as much as $4,000.
Yes, you can file for bankruptcy protection without legal assistance.
Another top bankruptcy question debtors want to know is if they buy a home after they file for bankruptcy. Although it may be tough to get a mortgage immediately following bankruptcy, debtors can begin to increase their credit scores right away and may be able to buy a home after their score is raised and they have saved money for a down payment.