GENERAL BANKRUPTCY QUESTIONS

  1. What is bankruptcy? Bankruptcy is a legal process that provides relief to individuals or businesses overwhelmed with debt by either eliminating or reorganizing their financial obligations.
  2. How does bankruptcy work? Once filed, the bankruptcy court assesses your assets, liabilities, and financial status to determine how your debts can be handled—either by liquidation (Chapter 7) or repayment (Chapter 13/11).
  3. What are the different types of bankruptcy? The most common types are Chapter 7 (liquidation), Chapter 13 (repayment plan), and Chapter 11 (business reorganization).
  4. What’s the difference between Chapter 7 and Chapter 13? Chapter 7 discharges most debts after asset liquidation, while Chapter 13 involves a 3-5 year repayment plan based on your income.
  5. What is Chapter 11 bankruptcy? Chapter 11 is primarily for businesses, allowing them to restructure debts and remain operational during the repayment process.
  6. Who can file for bankruptcy? Individuals, married couples, businesses, and self-employed individuals can all file under various bankruptcy chapters.
  7. Can both individuals and businesses file for bankruptcy? Yes. Individuals typically file Chapter 7 or 13, while businesses often file under Chapter 7 or 11.
  8. Is bankruptcy a good idea for me? It depends on your financial situation. Bankruptcy can help eliminate debt, but it also impacts your credit. A consultation with a bankruptcy attorney can help clarify your options.
  9. What are the benefits of filing for bankruptcy? Bankruptcy can stop creditor harassment, foreclosure, repossessions, wage garnishments, and help you get a financial fresh start.
  10. What are the downsides of bankruptcy? It affects your credit score, remains on your report for 7-10 years, and may require you to surrender certain assets.

ELIGIBILITY & QUALIFICATION

  1. How do I know if I qualify for bankruptcy? You must meet income and debt guidelines. A means test determines eligibility for Chapter 7.
  2. What is the means test? A formula used to assess your income, expenses, and ability to repay debt. It determines whether you qualify for Chapter 7.
  3. Can I file if I’ve filed bankruptcy before? Yes, but there are time limits. For example, you must wait 8 years between Chapter 7 filings.
  4. How often can I file for bankruptcy? Chapter 7: every 8 years. Chapter 13: every 2 years (depending on prior filing type).
  5. Can I file bankruptcy if I’m unemployed? Yes. In fact, unemployment often strengthens your case for bankruptcy.
  6. Can I file if I’m self-employed? Yes, self-employed individuals can file just like any individual, with some additional documentation.
  7. Can a married person file without their spouse? Yes. However, it may affect your spouse’s assets and credit depending on shared debts.
  8. Do I need to have a certain amount of debt to qualify? No minimum debt amount is required, but the court will evaluate your financial situation.
  9. Can non-citizens file for bankruptcy? Yes, as long as you have a Social Security Number or ITIN and meet other eligibility requirements.
  10. Will my income affect which chapter I can file under? Yes. Higher-income earners may be required to file under Chapter 13 rather than Chapter 7.