If I File Bankruptcy, Will I Lose Everything I Own?
No, you will not lose any property unless you choose to surrender it voluntarily. In affording a debtor a fresh start, there are specific statutes in place to help you protect your property from the claims of creditors and the trustee. Generally, a Chapter 7 Trustee will not take any property that has no value over and above the amount owed on the property to a third party plus the amount you can claim exempt. Under state and federal law, you are allowed to keep your house, car, household furnishings, tools of your trade, and other property up to certain amounts. Your experienced bankruptcy attorney can help you maximize the amount of property you can protect.
Will My Credit Be Ruined Because of Filing Bankruptcy?
Not necessarily. Your credit record will certainly not be improved by having a bankruptcy filing on it. Under federal law, a bankruptcy can remain on your credit history for up to 10 years. However, if you already have problems with your credit history such as repossessions, judgments, missed payments, etc., filing bankruptcy will not make your situation worse. Depending on the type of bankruptcy petition you file, you may find it easier to obtain short-term credit because after you complete your bankruptcy case, many of your debts are eliminated. Creditors know that you cannot receive another discharge in bankruptcy for 4 to 8 years. You will be able to find sophisticated creditors who place more weight on whether the customer has the ability to make a payment rather than whether they filed bankruptcy. It seems reasonable that if you have consistently made your payments under a Chapter 13 plan for five years, a potential lender might consider that consistency in his/her decision to extend credit to you.
Can I Choose Which Debts I Want to Get Rid of And Keep Other Debts?
No. Under the bankruptcy code, you are required to list all of your debts, all of your property, all of your expenses, and all of your income. You will be asked several questions that will help disclose property you may have transferred or that has otherwise left your possession within the past three years. Even though you have to make a full disclosure of your financial situation, each debt will have a specific treatment in your case. For example, even though your mortgage must be reported in your bankruptcy case, if it is current, you will likely be able to make your house payment, as usual, each month.