WHAT KINDS OF BANKRUPTCY CAN I FILE?
There are four types of bankruptcies you can file. First is a Chapter 7 bankruptcy, which is a straight up, wipe everything out bankruptcy. There are certain conditions and requirements you must meet before you file for bankruptcy. A Chapter 7 bankruptcy will give you a fresh start and it generally wipes out all of your secured and unsecured debts. However, some debts that are not dischargeable, such as alimony, child support, certain taxes, student loans, criminal restitutions, and intentional torts. A Chapter 11 bankruptcy is for businesses that make over $350,000.00. It is a reorganization plan, similar to a Chapter 13, except for businesses. There is a Chapter 12 bankruptcy that is exclusively for farmers. There is a Chapter 13 bankruptcy which is a debt reorganization plan that allows creditors to restructure their debt and to pay it off over a three to five year period of time. This is a highly technical bankruptcy and you need to hire a bankruptcy attorney to perform. This bankruptcy is popular among homeowners that have fallen behind on their mortgages and now are able to make the monthly payments but need help with the past due prearranges. It is also for debtors that do not qualify for Chapter 7 bankruptcy because their incomes are too high.
HOW DOES FILING BANKRUPTCY EFFECT MY CREDIT?
Actually, filing bankruptcy will be a positive thing. It does wipe the slate clean as far as all the debt you owe will be discharged. You become a better credit risk after filing bankruptcy because you can’t file again for another seven years and your creditors know this. If you were to default on a loan or credit card, the creditor knows that they are more likely to collect the debt through the collections process than if you hadn’t filed bankruptcy.
WHAT HAPPENS TO MY CREDIT SCORE WHEN I FILE BANKRUPTCY?
Generally, most people who file bankruptcy have low credit scores. This will not effect that. What is does is put a freeze on getting credit while you are in a bankruptcy, meaning that none of the credit companies will loan you money or give you credit cards. However, once you are out of the bankruptcy and receive your discharge, those credit card companies view you as a better credit risk and will extend credit to you.
WHAT IS A CHAPTER 7 BANKRUPTCY?
Chapter 7 bankruptcy is a bankruptcy that allows you to get a fresh start by wiping out your secured and unsecured debt. By filing this, there are certain income requirements based on your family size. If you own a house but do not own a lot of equity in it, you can file a Chapter 7. This is popular among debtors who want a fresh start and need the ability to start clean. There are some limitations. You cannot discharge certain debts, such as alimony, child support, certain taxes, student loans, criminal restitutions, and intentional torts. There is a means test that has to be applied and you have to satisfy that requirement. Your debt can not be over a certain amount. It will always help to contact a Chapter 7 bankruptcy attorney.
WHAT IS A CHAPTER 13 BANKRUPTCY?
A Chapter 13 bankruptcy is a debt reorganization bankruptcy that has a plan. Generally speaking, the plan will be from anywhere to three to five years. Those who file Chapter 13 bankruptcies are generally people who own homes and have fallen behind in their mortgage and have accrued significant arrears. The arrearage is put into a payment plan and is paid back over a three to five year period of time. There is also a formula to calculate how much of your unsecured debt will be paid back. As a general rule in Maryland, there is a 10% payback for every dollar owed of unsecured debt. This can go up to 100% payment plan depending how much equity you have in the property or income you have over the means test. In order to file a Chapter 13 bankruptcy, you really need to hire an experienced bankruptcy attorney.
HOW DO I STOP CREDITOR HARASSMENT?
If you file bankruptcy, an automatic stay is issued under the federal bankruptcy code. All creditors must stop whatever activity they are doing against you to collect the debt. If they are calling you and harassing you, that has to stop. If they have filed suit against you, that suit would have to stop. If you have a lawyer, your lawyer would have to file a suggestion of bankruptcy. If you have an experienced bankruptcy attorney, they will file the suggestion of bankruptcy and that will stop the lawsuit in its tracks and lessen your anxiety.
HOW DO I STOP WAGE GARNISHMENTS?
Obviously, filing a bankruptcy will stop wage garnishments. Once you have filed bankruptcy, you need to contact your payroll department and provide them with your bankruptcy case number and proof of filing. Additionally, you need to notify the creditor of the bankruptcy filing as well as notifying your bank. An experienced bankruptcy attorney can help you with that process.