Bankruptcy - Frequently Asked Questions

Who can file for bankruptcy?

Almost anyone can file for bankruptcy protection. There are certain requirements such as having a
permanent address, ownership of property or a business in the United States. Each state also has
their own residency requirements. Analysis of your circumstances would be required in order to
determine what chapter you should file and what debts would be eligible for discharge.

Do I have to have a minimum amount of debt to file for bankruptcy?

No. You don't even have to be insolvent. Many times, people are able to continue to pay their financial obligations but the amount that they pay has placed a severe burden on them. They have barely enough money left over at the end of each month for necessities. The choice to file is a personal one that should be made after you have considered certain things such as if you earn enough to pay your debt; how much you owe; if bankruptcy will get rid of the type of debt you owe; if you are you facing any type of collection activity such as a lawsuit or wage garnishment and how long it would take you to pay off your debt.

What type of debt is not dischargeable?

Most debt is dischargeable however, there are some that are not. In a Chapter 7, income taxes, property taxes, child support, alimony or maintenance, fraudulent debt, most types of student loans and debt that is incurred in relationship to a DWI, or restitution for a criminal offense are not dischargeable.

Can I keep my house and car?

Yes, provided you are current on your payments and the equity that you have in your home and/or car does not exceed the allowable exemptions.

Do both spouses have to file?

No. In some cases, there is no joint debt and debt is held by only one spouse or the other. In that case, only the indebted spouse may want to file. The other spouse's income has to be listed on the bankruptcy Petition but they will not be listed as a debtor. If, however, one spouse is a co-signer, if they do not file, the creditor has the right to pursue a judgment against them.

Do I have to pay any of my debts after bankruptcy?

Provided that the debt is listed on the petition and is discharged, you do not have to pay. The debt has essentially been erased. You cannot be sued for the discharged debt and all collection activity must cease immediately upon filing.

Will filing for bankruptcy stop a lawsuit?

Yes. Once bankruptcy is filed, there is an automatic stay that stops all collection activity. The Bankruptcy Court will notify your creditors that you are a debtor in bankruptcy and provide them with you case filing number. All collection activity must cease at that time. A creditor who continues to pursue an action is in violation of federal law and subject to sanctions. Once the debt is discharged, the you are no longer obligated for payment of the underlying debt.