When many people think of bankruptcy, they imagine financial ruin. While it’s true that bankruptcy can be stressful, has long-term implications for your financial health, and should always be a last resort, many people don’t realize that it can also be an effective path to a fresh start.
The best way to make sure your bankruptcy journey leads to that fresh start instead of financial ruin is to work with experienced bankruptcy attorneys who can guide you through the process. Knowing your options and how to protect your interests is key to a good outcome, and that’s where we come in. This bankruptcy FAQ can help you understand the process with answers to common bankruptcy questions from the Integrity Law Group team.
Table of Contents
1. What Happens When You File for Bankruptcy?
You’ll need to complete a credit counseling course before filing. Then, once you file for bankruptcy, the first thing that happens is the issuance of an automatic stay. This stay immediately halts creditor actions, such as collection calls, wage garnishments, and foreclosure.
The next steps depend on which type of bankruptcy you file: Chapter 7 or Chapter 13.
- Chapter 7 Bankruptcy: A trustee will be assigned to your case. There is a meeting of creditors, and debts are typically discharged a few months thereafter. However, some debts, like student loans and child support, are not dischargeable.
- Chapter 13 Bankruptcy: Instead of liquidating assets, you’ll work with the court to establish a repayment plan. The repayment period usually spans three to five years, after which any remaining eligible debts are discharged. This option is often chosen by individuals who have high incomes or want to protect non-exempt assets.
2. What Can You Not Do After Filing for Bankruptcy?
After filing for bankruptcy, there are a few things you cannot or should not do. These include:
- Taking on New Debt: Refrain from opening new credit cards or taking out loans during the bankruptcy process without consulting your lawyer. This can raise red flags for the bankruptcy trustee and may result in your case being questioned.
- Hiding Assets: Transparency is vital in the bankruptcy process. Failing to disclose assets can result in severe consequences, including criminal charges.
- Large Financial Transactions: Avoid large transactions, such as selling valuable property or making big purchases, without informing the court.
- Skipping Required Education: Bankruptcy filers often need to complete financial counseling or debtor education courses. Failing to complete these can delay or even dismiss your case.
3. How Much Does it Cost to File for Bankruptcy?
The cost of filing for bankruptcy consists of several fees and costs, both immediate and long-term:
- Filing Fees: Currently for Chapter 7, the filing fee is $338, while Chapter 13 costs $313. These fees are fixed by the federal government and are required to initiate the bankruptcy process.
- Credit Counseling Fees: Before filing, you’ll need to complete a mandatory credit counseling session, which typically costs between $10 and $50, depending on the provider.
- Attorney Fees: While filing fees are fixed, attorney fees can vary widely depending on the complexity of your case and your location. Bankruptcy attorneys typically charge between a few hundred to several thousand dollars for their services. Hiring an experienced bankruptcy attorney is crucial, as even small mistakes can complicate the process.
In the long term, another cost of bankruptcy is its impact on your credit score. However, there are steps you can take to rebuild credit, and a knowledgeable attorney can make the process smoother and help you regain control of your financial future.
4. What Disqualifies You from Filing for Bankruptcy?
There are several possible disqualifications that could prevent you from filing for bankruptcy or could cause your existing case to be dismissed. Your bankruptcy lawyer at Integrity Law Group can help you with every step and detail to ensure no simple mistakes lead to disqualification.
- Fraud: If you’ve been caught fraudulently hiding assets, falsifying information, or attempting to avoid creditors, your bankruptcy case could be denied, and you may face criminal charges.
- Dismissed Bankruptcy Cases: If your previous bankruptcy was dismissed due to non-compliance or failure to follow court orders, you may be prohibited from refiling for 180 days.
- Recent Bankruptcy Discharges: The U.S. Bankruptcy Code sets limits on how often you can receive a discharge. For Chapter 7, you must wait at least eight years if you’ve had a previous Chapter 7 discharge. For Chapter 13, you typically have to wait two years if you’re filing another Chapter 13 case, or four years if you’re moving from Chapter 7 to Chapter 13.
- Certain Debts: Some debts, such as child support, alimony, and most tax debts, may not be discharged through bankruptcy.
- Non-Cooperation: Failing to attend mandatory meetings or complete required courses can delay or even dismiss your case.
5. How Long Does Bankruptcy Stay on Your Credit Report?
This depends on which type of bankruptcy you file. Chapter 7 bankruptcies remain on your credit report for up to 10 years, while Chapter 13 remains for up to seven years.
While you can’t control how long a bankruptcy stays on your report, you can take steps to rebuild your credit over time. Many people begin seeing an improvement in their score within just a few years after filing. By practicing responsible credit management, such as making timely payments and reducing debt, you can regain your financial footing.
6. How Many Times Can You File for Bankruptcy?
You are not limited to filing for bankruptcy just once, but there are waiting periods between filings.
- Chapter 7: You must wait eight years after receiving a Chapter 7 discharge before you can file again for Chapter 7. However, there is no limit on how many times you can file if your previous case was dismissed without a discharge (unless it was dismissed because of your non-cooperation).
- Chapter 13: If you previously filed for Chapter 7 and received a discharge, you usually must wait four years before filing for Chapter 13. If you’ve already filed a Chapter 13, the waiting period is typically two years.
Get the Guidance You Need with Integrity Law Group Bankruptcy Attorneys
At Integrity Law Group, we understand how overwhelming the process is and how detrimental it can be to your financial well-being, but it doesn’t have to be. Our team of experienced bankruptcy attorneys is here to provide guidance and support every step of the way. This bankruptcy FAQ provides some simplified answers to common questions, but there’s no denying how complex bankruptcy is. That’s why you need dedicated, personalized, and ongoing support.
If you’re considering bankruptcy, don’t wait—contact us today for a consultation. We’ll review your situation and help you make the best decisions for your financial future. With Integrity Law Group by your side, you can regain control of your finances.