Find Out the 10 Common Questions About Bankruptcy with Colorado Bankruptcy Lawyers.
The decision to file for bankruptcy is a significant one, and we are here to assist you in determining whether bankruptcy is the best course of action for your circumstances. We recognize that you have many questions and that you want them all answered. You can use these FAQs to discover answers to the most typical queries.
Learning about bankruptcy and how it works is the first step to take before filing for bankruptcy. Of course, the process is best understood when you seek legal assistance from a bankruptcy attorney. Contact the Law Office of Clark Daniel Dray (debtfreecolorado) if you are thinking about filing for bankruptcy to find a solution and receive thorough responses to all your inquiries that are pertinent to your case.
Below are the 10 frequently asked queries with regard to bankruptcy that will later be answered through this article:
- What is Bankruptcy?
- Do bankruptcies come in different types?
- What Benefits Can I Get from Filing for Bankruptcy?
- What Can’t Bankruptcy Do?
- What Should I Consider Before Filing for Bankruptcy?
- Are there Available Alternatives If You Have a Lot of Debt and don’t Want to File for Bankruptcy?
- Are My Creditors capable of appealing My Bankruptcy?
- What Debts are Discharged in Bankruptcy?
- After Filing for Bankruptcy, am I Still Able to Own Property?
- Lastly, Do I require Legal Counsel to File for Bankruptcy?
Every case is unique, and every case merits the careful consideration of a law firm dedicated to providing specialized bankruptcy solutions. When it comes to the power of bankruptcy and how it can provide you with a new financial start, we are delighted to answer your inquiries and assist you in making an informed choice. For a free consultation, reach out to us right away.
What are the 10 Commonly Asked Questions Regarding Bankruptcy?
Find out the answers to ten of the most frequently asked questions about bankruptcy in Littleton, Colorado. To begin, however, let’s define the term “bankruptcy.”.
What is Bankruptcy?
Through a legal process called bankruptcy, some people who are unable to pay their debts can start over financially, either temporarily or permanently. Since the effects are severe and long-lasting, bankruptcy is typically seen as the last option for managing debt. For ten years after filing for bankruptcy, lenders will be more reluctant to extend credit, and it may even be challenging to get employment.
Those who are no longer able to pay their debts can, however, start over through a legal process. A court judgment that states that a person is not required to pay back some debts is given to those who abide by the bankruptcy laws and are granted a discharge.
Do Bankruptcies Come in Different Types?
There are officially six separate categories of bankruptcy, each designated after a specific section of federal bankruptcy law. However, Chapter 7 and Chapter 13 bankruptcy are the two types of bankruptcy that are most frequently filed.
Chapter 7 bankruptcy
Given its straightforward and simple nature, Chapter 7 is sometimes referred to as straight bankruptcy since it involves selling the debtor’s assets, and splitting the money among creditors. Chapter 7 is known as liquidation in bankruptcy legislation. Ironically, most Chapter 7 registrants have no genuine assets to liquidate—at least none that aren’t shielded by exemptions.
The main disadvantage of Chapter 7 bankruptcy is that anything subject to a security interest is not exempt (home, automobile) and can be seized to satisfy the debt connected to the specific item. This type of bankruptcy does not stop secured creditors from seizing your property, so if you have money to pay the debt, this isn’t the best option to take.
Chapter 13 bankruptcy
Individuals who get a regular wage but are unable to pay off the bills are eligible for Chapter 13 bankruptcy. This type of bankruptcy enables the debtor to combine their debts, reach an agreement on a lower overall number and submit to a three-to-five-year plan for debt repayment. A case may be changed from a Chapter 13 filing to a Chapter 7 liquidation if the debtor doesn’t make payments on time.
Chapter 13’s main advantage is that it stops creditors from bothering you and allows you to keep property subject to a security interest, provided you continue to make payments in the repayment plan.
What Benefits Can I Get from Filing for Bankruptcy?
In addition to helping you stop foreclosure on your home or mobile home and giving you a chance to catch up on missed payments, filing for bankruptcy may also help you stop garnishment, stop debt collection letters, stop other creditor actions to collect a debt, restore or prevent termination of utility services, prevent repossession of your car or other property, and stop foreclosure on your home or other property.
What Can’t Bankruptcy Do?
Not all financial issues can be resolved through bankruptcy. For instance, it may permit the restructuring of debts due to “secured” creditors, or creditors who have an interest in assets like a mortgage or a car loan, but it typically won’t abolish those debts. However, it won’t erase debts that fall under the following categories:
- some obligations incurred within 180 days of filing bankruptcy;
- child support; alimony;
- court fines and penalties;
- some taxes, particularly those accumulated over the previous three years;
- debts not specified on your bankruptcy petition;
- loans obtained by fraud; and
- student loans payable to a school or government body that became due fewer than 7 years before the bankruptcy was filed, unless repayment would be an unaffordable burden; bills that come up after bankruptcy has been filed; or
- safeguard co-signers on your debts.
When the lead debtor on a co-signed loan is discharged in bankruptcy, the co-signers may still be required to pay back all or part of the loan.
What Should I Consider Before Filing for Bankruptcy?
Only the most severe financial situations should necessitate bankruptcy. Spending money on short-term financial problems will harm your credit too much. However, how can you tell if your debt issue calls for such a drastic measure?
The following are some indications that you might be a good bankruptcy applicant:
- Are debt collectors following you around?
- Do you make purchases for your needs with credit cards?
- Do you struggle to meet the credit card minimum payments each month?
- Are you at risk of falling into foreclosure, being evicted, or having your utilities cut off?
- Are you experiencing emotional distress because of your debt situation?
Meeting with a credit counselor should be your initial move if you indicated “yes” to a number of the aforementioned inquiries. Do not use credit consolidation businesses that are marketed on television or online. The unfortunate fact is that some of these services are frauds. Instead, take advantage of the U.S. Department of Justice’s list of accredited credit counselors.
If bankruptcy is the only option to help you get rid of your debts, a credit counselor will be able to evaluate how serious your situation is. There are frequent bankruptcy alternatives, though that will be discussed on the next page.
Are there Available Alternatives If You Have a Lot of Debt and don’t Want to File for Bankruptcy?
In lieu of filing for bankruptcy, a debtor may attempt to arbitrate with creditors or bargain workout agreements to change the terms, postpone payments, or cut interest rates. Assignment of property for the benefit of creditors (ABC), in which the debtor places assets in the trust of an impartial third party to pay creditors.
A company in debt may sell the company while negotiating debt satisfaction as a condition of the sale. Insolvency can be avoided in more inventive ways. But many debtors discover that their creditors are unwilling to bargain or even accept terms that are reasonable.
Are My Creditors capable of appealing My Bankruptcy?
As we previously stated, creditors should avoid bankruptcy. In both Chapter 7 and Chapter 13 bankruptcy filings, the creditor is frequently given significantly less than the whole amount owed, if nothing at all. So, finding flaws in a debtor’s bankruptcy case is in the creditors’ best interest.
The debtor must appear before a meeting of creditors presided over by the court-appointed trustee following the filing of a petition for Chapter 7 or Chapter 13 bankruptcy. To ask the debtor questions about their finances, all creditors are invited to the conference. Within approximately two months of the conference of creditors, a creditor may submit an adversary process to oppose if they think the debtor misrepresented on credit applications or is trying to conceal assets from the court.
What Debts are Discharged in Bankruptcy?
Unsecured debts, including credit card and medical bills, as well as some judgments or past taxes, may be discharged. Generally, secured debt (loans backed by collateral), student loans, child support or alimony, recent taxes, criminal fines, or personal injury judgments cannot be discharged.
After Filing for Bankruptcy, am I Still Able to Own Property?
Yes. All of the exempt property is yours to keep. Almost always, anything you acquire after filing for bankruptcy can also be kept. The key exception is that, unless it falls within an exemption, any inheritance, property settlement, or life insurance payment you get within approximately three months of declaring bankruptcy may need to be given to your creditors.
Lastly, Do I require legal counsel to file for bankruptcy?
Technically, no, but bankruptcy law is quite complicated. An attorney for bankruptcy can help you get the most debt relief possible, keep the most of your assets, and foresee any issues that can cause your petition to be delayed or rejected. Prose petitioners, or individuals who file on their own, frequently run into difficulties and have their cases dismissed.
Contact Our Experienced Littleton Bankruptcy Attorney Now!
Nobody likes to be in a situation where they must sell their house or automobile due to a lack of money. The Law Office of Clark Daniel Dray (debtfreecolorado) not just in Littleton but also in Broomfield, Boulder, Denver, and Louisville, offers legal guidance at every stage of the procedure so that you can make decisions about your financial future knowing exactly what you’re getting into. To start the bankruptcy filing process and learn how we may help you regain financial control, get in touch with our office right away.
Although bankruptcy is not something to be handled lightly, with the correct direction and counsel, it may be the best option in some circumstances. Before deciding whether to file for bankruptcy or not, you can make sure that you are informed about all of your options by dealing with a lawyer from the Law Office of Clark Daniel Dray. To begin, get in touch with us and schedule a free consultation immediately.