Frequently Asked Questions

A. Chapter 7 eliminates unsecured debt such as credit card bills, medical bills, and other types of non-collateral debt through the process of liquidation of assets that are subject to bankruptcy. The proceeds of the liquidation are used to pay off creditors. Many assets are exempt from this process, whether under state or federal exemption rules. This means that most people who undertake Chapter 7 can keep much of their assets and belongings. At the end of the process, most unsecured debt is discharged, giving the debtor a clean slate and a fresh start.

A. The Chapter 7 process is the simplest and fastest, which takes about four months. Since the Chapter 13 process involves making payments over a long term to pay off creditors, it can take three to five years.

A. A bankruptcy filing can cause your credit score to decrease and can remain on credit reports for up to 10 years. This makes future borrowing difficult, although you can immediately begin to work on improving your score through certain strategies in the wake of bankruptcy. It is important to remember that most people who are heavily in debt, subject to wage garnishment, repossession, and lawsuits, already have damaged credit scores.

A. The answer to this question depends on the type of bankruptcy that is filed. Under the Bankruptcy Code, Chapter 13 allows a more encompassing type of discharge to encourage individuals to use that chapter to repay a portion of their debts. Generally, most unsecured debt can be discharged. This means debt like credit cards and medical bills. Most debt that is secured, like your mortgage and vehicle loan, survives bankruptcy as a charge against those attached items unless a court order modifies the lien. If you wish to save your home or car, we recommend that you speak with our attorney about the best way to do this.

A. If you want to do debt consolidation or credit counseling, we recommend that you do it under Chapter 13. This allows you to set the plan approved by the court and make payments through the bankruptcy court to stop interest, late fees, and creditor harassment.