01. What is bankruptcy?
Bankruptcy is a legal process that allows both individuals and businesses to discharge or pay off their existing debts. Bankruptcy proceedings and agreements are monitored and enforced by the court of law. In order to be considered for bankruptcy individuals and businesses must meet certain requirements.
02. What are the different types of bankruptcy?
There are three types of bankruptcy available for both businesses and individuals. Chapter 7 bankruptcy is available to both individuals and businesses and it involves liquidation of assets in order to pay creditors. Chapter 11 and Chapter 13 bankruptcies allow individuals and businesses to repay their debts through a payment plan. Chapter 11 bankruptcy is a payment plan for businesses while the chapter 13 bankruptcy is for individuals.
03. Who is able to file for bankruptcy?
The ability to file for bankruptcy is available to any person or business that owes money to creditors.
04. How do I begin the bankruptcy process?
To begin the bankruptcy process, it is necessary that individuals and businesses compose a list of all of their existing debts. Likewise, it is necessary to form a list of all assets and liabilities. This will allow a bankruptcy attorney to assist an individual or business in making the best choice as to which type of bankruptcy to file while also preparing to initiate bankruptcy proceedings through the courts.
05. Are cosigners responsible for debts filed under bankruptcy?
It is important to note that cosigners can be held responsible for any debts that are filed under bankruptcy. This is especially true for individuals that are going through divorce proceedings. If an individual fails to pay the creditor, the creditor can pursue payment for an existing debt from the cosigner even if an individual files for bankruptcy. It may be necessary for those going through a divorce to have a stipulation within a divorce decree which states the types of actions or protections an ex-spouse has if an individual should default on existing financial obligations.
06. Do I have to have a certain amount of debt in order to file for bankruptcy?
In general, there is no certain amount of debt that an individual or business must have in order to file for bankruptcy. Those individuals that are going through a short-term financial setback should thoroughly consider whether the option of bankruptcy is right for them. Likewise, individuals that have few assets may find that filing bankruptcy is not beneficial as the creditors are not able to liquidate property in order to collect a debt.
07. Am I held responsible for debts if my ex-spouse files for bankruptcy?
Individuals must understand that they may be responsible for debts that ex-spouse claims under bankruptcy proceedings. This is especially true if an individual was a cosigner for the ex-spouse that is filing bankruptcy. The creditor may decide to collect a debt from the cosigner as a means of settling a debt despite the fact that the spouse is interested in filing for bankruptcy.
08. Is it necessary for me to file bankruptcy on all my accounts?
All debts must be included when filing for a bankruptcy petition. This is necessary so that the bankruptcy courts can determine how the existing debts will be repaid either through liquidation or a payment plan.
09. If I file for bankruptcy, is there a chance that I will lose my retirement accounts or Social Security payments?
In general, retirement accounts and Social Security payments are protected from bankruptcy proceedings. Retirement accounts that are not a part of an estate are not considered as assets so they would not be applicable to bankruptcy proceedings. Likewise, Social Security payments cannot be garnished for bankruptcy. As long as the Social Security payments can be identified as such, they are protected from any bankruptcy proceedings.
10. Is it possible for me to change the type of bankruptcy I file under?
Those interested in changing the type of bankruptcy that they’re currently under should consult with a bankruptcy lawyer. In most cases individuals can convert to another type of bankruptcy. It is important to note however, that when converting from certain types of bankruptcy it is important to review whether or not an individual fulfills certain requirements in order for the necessary actions to take place to move forward with bankruptcy proceedings. For example, those moving from a payment plan type of bankruptcy to liquidation bankruptcy must be able to have assets that can be liquidated in order to pay off existing debts.