Frequently Asked Bankruptcy Questions

What is bankruptcy?

Bankruptcy is a legal process designed to help individuals and businesses overwhelmed by debt. It provides a fresh financial start by either discharging debts (Chapter 7) or creating a manageable repayment plan (Chapter 13).

How long does the bankruptcy process take?

The duration of the bankruptcy process varies depending on the type of bankruptcy filed and individual circumstances. Chapter 7 bankruptcy typically lasts around four to six months from the time of filing. Chapter 13 bankruptcy involves a three to five-year repayment plan.

Will I lose all my possessions if I file for bankruptcy?

Not necessarily. Bankruptcy laws provide exemptions that allow you to protect property/assets, such as your home, car, and personal belongings, up to a certain value. A bankruptcy attorney can help you understand which assets are protected.

Do I need an attorney to file for bankruptcy?

While it's possible to file for bankruptcy without an attorney (pro se), hiring a knowledgeable bankruptcy attorney can greatly increase your chances of a successful outcome. An attorney can guide you through the process, protect your rights, and help maximize the benefits of bankruptcy.

How does Bankruptcy stop home foreclosures?

Bankruptcy can halt foreclosure proceedings through an automatic stay, which is a legal provision that goes into effect immediately upon filing for bankruptcy. Here's how it works:

• Automatic Stay: When you file for bankruptcy, an automatic stay is put into place. This stay halts most collection activities, including foreclosure proceedings. This means that creditors, including mortgage lenders, must stop any efforts to collect debts, including foreclosure sales or evictions.

• Chapter 7 Bankruptcy: In Chapter 7 bankruptcy, the automatic stay can temporarily stop foreclosure proceedings. However, it's important to note that Chapter 7 doesn't typically allow you to keep your home unless you can bring the mortgage current quickly or negotiate a new payment plan with the lender.

• Chapter 13 Bankruptcy: Chapter 13 bankruptcy is often used to stop foreclosure and allow you to keep your home. It involves creating a repayment plan to catch up on missed mortgage payments over a period of three to five years. As long as you make your payments according to the plan, you can keep your home.

How does Bankruptcy stop wage garnishments?

Bankruptcy can be a powerful tool to stop wage garnishments, providing relief to individuals facing financial hardship. Here's how it works:

• Automatic Stay: When you file for bankruptcy, an "automatic stay" immediately goes into effect. This legal provision halts most collection actions, including wage garnishments. The automatic stay prevents creditors from continuing or initiating wage garnishments. However, it is important to note that while bankruptcy can stop wage garnishments, certain types of debts, such as child support, alimony, and certain tax debts, may not be dischargeable in bankruptcy and may continue to be garnished even after filing. Consulting with a bankruptcy attorney can help you understand your options and navigate the bankruptcy process to achieve the best possible outcome for your financial situation.