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What are the top five questions asked when deciding to declare bankruptcy? Bankruptcy is a viable option for many Americans, but many people are still afraid. They hesitate since they don’t know what the bankruptcy process entails. Others worry they’ll lose their home or car if they declare bankruptcy, but that’s not necessarily the case. Bankruptcy has come a long way since the days of “bankrupting America.” Today, bankruptcy is an effective tool to help individuals overcome debt. Below is a list of the top 5 bankruptcy questions many people ask.
Will my creditors stop bothering me?
By law, they have to. Once bankruptcy has been filed any actions against the debtor must stop. Creditors cannot start or continue with any actions against you, including phone calls, garnishments, or lawsuits. Payment demands must also be stopped. Any secured creditors like a bank that holds your car note or mortgage can, however, can get any holds removed if you fail to make payments.
How will my spouse be affected?
Your spouse is not affected by your bankruptcy unless they have signed an agreement or contract for any of your debt.
In a community property state such as California, any assets acquired by either spouse are considered to be “community property”. Both spouses will be on the hook for the debt regardless of who has signed for the debt initially. Other than real estate, which requires the signature of both parties on the contract, there are a few exceptions. Any other debts such as credit cards or day-to-day expenses are the responsibility of both spouses.
Who will know I filed for bankruptcy?
Bankruptcy records are public records but normally no one will know unless you decide to tell them. Credit bureaus will of course know of the bankruptcy and ding your credit for 7 to 10 years depending on the type of bankruptcy filed.
Is credit possible after bankruptcy?
Of course! There are several options to restore your credit. A popular option offered by many banks these days is a secured credit card. Secured credit cards are exactly what they sound like: the debtor deposits $200 to $500 in a bank account. The bank, in turn, uses the deposit to guarantee payment on the credit card which usually has a limit equal to the amount deposited. Over time the credit limit is increased as the debtor proves their ability to pay.
Also, once your bankruptcy is discharged and disappears from your credit report(generally around two years after discharge), a debtor will for a mortgage loan. Deposit size and income will be the most important data points for a lender at this stage.
After 10 years an on, any bankruptcy becomes less significant. Some lenders may even consider you a better credit risk than before your bankruptcy was filed.
What are the costs to file for bankruptcy?
At the time of this writing, the cost of filing for consumer bankruptcy is in the range of $300 – $500. Of course, each person’s location and other specifics can change the amount needed to file. This is the filing fee and any other administrative or trustee fees. If you hire an attorney, the fees will increase depending on the complexity of your case. Many attorneys will offer a free consultation so it’s possible to save a bit just to be pointed in the right direction.
In summary, these 5 questions are some of the most asked by people starting the bankruptcy process. Filing bankruptcy can be a scary and overwhelming experience but you shouldn’t feel alone as there are loads of resources available to help you understand the process.