The 5 most common questions about bankruptcy
Will my creditors stop harassing me?
Yes, they will! By law, all actions against a debtor must cease once bankruptcy documents are filed. Creditors cannot initiate or continue any lawsuits, wage garnishees, or even telephone calls demanding payments. Secured creditors such as banks holding, for example, a lien on a car, will get the stay lifted if you cannot make payments.
Will my spouse be affected?
Your wife or husband will not be affected by your bankruptcy if they are not responsible (did not sign an agreement or contract) for any of your debt. If they have a supplemental credit card they are probably responsible for that debt.
However, in community property states, either spouse can contract for a debt without the other spouse's signature on anything, and still obligate the marital community. There are a few exceptions to that rule, such as the purchase or sale of real estate; those few exceptions do require both spouse's signatures on contracts. But the day to day debts, such as credit cards, do NOT require both spouses to have signed.
Your bankruptcy lawyer will be able to guide you in this regard.
Who will know?
Chapter 7 filings are public records. However, under normal circumstances, no one will know you filed for Chapter 7. The Credit Bureaus will record your filing and it will remain on your credit record for 10 years.
Will I ever get credit again?
Yes! A number of banks now offer "secured" credit cards where a debtor puts up a certain amount of money (as little as $200) in an account at the bank to guarantee payment. Usually the credit limit is equal to the security given and is increased as the debtor proves his or her ability to pay the debt.
Two years after a discharge, debtors are eligible for mortgage loans on terms as good as those of others, with the same financial profile, who have not filed Chapter 7. The size of your down payment and the stability of your income will be much more important than the fact you filed chapter 7 in the past.
The fact you filed Chapter 7 or 13 stays on your credit report for 10 years. It becomes less significant the further in the past the filing is. The truth is, that you are probably a better credit risk after bankruptcy than before.
What does it cost?
Costs for filing your bankruptcy will vary depending on the type of bankruptcy you are seeking. The rule of thumb is that a consumer bankruptcy will cost approximately $200. This does not include attorney fees that can run between $700 and $1500 depending on the nature and complexity of your case. Many bankruptcy lawyers will give you a free initial consultation. You can keep the fees down by being well organized and well prepared. You may also be able to keep the fees down by not requiring the lawyer to attend the meeting of creditors with you. Check this with your lawyer. In some states such as Massachusetts, attorneys must attend the Section 341 meeting with the debtors otherwise attorneys are deemed to have NOT represented the debtors.
These fee quotes are mere estimates based on nationally reported averages and subject to variation and change. Please consult with your local bankruptcy court and with legal counsel on fees before commencing any action.
About the Author
Nathan Dawson writes for http://www.mybankruptcycounseling.com