Answers To Some Frequently Asked Bankruptcy Questions

When someone is first faced with the possibility of bankruptcy, questions arise by the loads. Although bankruptcy is a scary thing for someone unfamiliar with the consequences, knowing some of the answers will ease the fear. Below are some of the more common bankruptcy questions that people have.

What happens when you file Chapter 7 bankruptcy?

This is one of the more frequently asked bankruptcy questions. The debtor files a petition with bankruptcy court disclosing all the property owned by the filer and all current debts. After all exempt property has been disclosed, the trustee sells what he can and splits the cash among the creditors who have filed a claim. Then, all remaining debts are discharged.

What is the difference between Chapter 7 and Chapter 13 bankruptcy?

This bankruptcy question distinguishes between the most popular forms of bankruptcy. Unlike Chapter 7 bankruptcy, Chapter 13 is more of a reorganization of a debtor's debts. A new payment schedule is worked out with the creditors and the debtor normally has three to five years to pay off the remaining debt.

Can I be fired for filing bankruptcy?

This bankruptcy question concerns many people. The answer is no. Your employer cannot discriminate against you because you have filed bankruptcy. The law offers penalties to those that do.

Can I be sent to prison because of my unpaid debts?

The answer to this bankruptcy question is no, provided there is no fraud involved in the matter. The United States does not allow for debtors' prisons.

Will I still be able to keep my credit cards?

In some cases, the answer to this bankruptcy question is yes. If you sign a reaffirmation agreement with the creditor sometimes they will keep your cards active, along with any remaining credit available. Also, sometimes credit card companies won't cancel your credit cards immediately after your case is discharged. Sometimes, they won't find out you have filed bankruptcy for several months.