Common Questions Asked About Bankruptcy

Bankruptcy is a court proceeding in which a judge decides whether or not your debts will be erased (referred to as a discharge) or reduced. Many people suffering with debt problems may find themselves in need of the benefits bankruptcy can offer; but, not without much to consider. Here are a few common questions and answers about the bankruptcy process:

Who Declares Bankruptcy?
What Is the Difference Between Chapter 7 and Chapter 13?
How Long Does a Bankruptcy Case Take?
Are There Alternatives to Bankruptcy?
How Does a Bankruptcy Lawyer Help?

Who Declares Bankruptcy?

A consumer bankruptcy petition is filed by the debtor (the person who is filing bankruptcy). Usually, the debtor is the head of the household and has a monthly income of less than the median income in the state. A business bankruptcy petition is filed by the owner of a business. The owner of the business is the debtor in a business bankruptcy.

What Is the Difference Between Chapter 7 and Chapter 13?

There are two common types of bankruptcy: Chapter 7 and Chapter 13. A Chapter 7 bankruptcy is known as a liquidation bankruptcy because it is used to eliminate debts by forcing repayment through the liquidation of non-exempt assets. Chapter 13 is known as a repayment bankruptcy because it is used to repay debts through a court-approved repayment plan based on your disposable income.

How Long Does a Bankruptcy Case Take?

The time it takes to finish a bankruptcy case varies depending upon the type of bankruptcy. A Chapter 7 bankruptcy case normally takes between three and five months. A Chapter 13 bankruptcy case takes between three and five years.

Are There Alternatives to Bankruptcy?

There are alternatives to bankruptcy. However, these alternatives are often a less impactful option for the debtor who is overwhelmed with unsecured debt. One alternative is to consider a debt consolidation; but these can be difficult to obtain if you are already behind on your payments with creditors. Generally, options like debt settlement and title loans are risky for resolving large amounts of debt. These alternatives also have disadvantages because creditors will attempt to collect debts from the debtor and may take legal actions against the debtor.

How Does a Bankruptcy Lawyer Help?

A bankruptcy lawyer will help a debtor understand the benefits and disadvantages of filing for bankruptcy. Once the decision is made to file for bankruptcy, the attorney will help draft the bankruptcy petition. The attorney will also provide counseling to the debtor to ensure that the debtor understands the bankruptcy process and the debtor’s rights and responsibilities.

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