Here a some common questions to Bankruptcy

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1. Will I lose anything if I file for bankruptcy?
Generally, you may file a bankruptcy and retain all of your personal belongings, including your house, your car and all household goods. If you owe more on your car than the car is worth, the bankruptcy court will not sell your car, because after sale there would be no money left over to make a distribution to your creditors. The same goes for your home and personal property. Even if your property is worth more than what is owed on it, usually we can use the state exemptions to protect these items.

You may be more at risk of losing property if you don't file bankruptcy, as creditors can sue you, garnish your wages and attach and seize your property. As a result, you may miss rent, mortgage or car payments, making it difficult to provide even your most basic necessities.

2. Will filing for bankruptcy stop harassing phone calls from collectors?
When you file bankruptcy, something called an "automatic stay" goes into effect. After you file, the court notifies all creditors listed in your schedules. This stops virtually all creditors from taking action to collect the debts you owe them unless the bankruptcy court lifts the stay and lets the creditor proceed with collections.

3. Does my spouse have to file jointly with me?
If all or most of the debts are in your name only, your spouse may not have to file. Creditors usually cannot pursue a non-filing spouse, unless he or she is legally a co-debtor on the debt. Additionally, the bankruptcy should not be reflected on the non-filing spouse's credit report. The law does vary, however, from state to state so make sure you speak with an attorney about whether or not your spouse has to file.

4. Who knows about my bankruptcy case?
The only parties that receive notice of the bankruptcy are your creditors, the bankruptcy court and the IRS. Generally, the bankruptcy will have no effect whatsoever on your taxes. Your employer will not be notified of the bankruptcy unless your employer is also a creditor. The bankruptcy is public record, so anyone who wants to find out could determine that you had filed. Generally, however, only you, your creditors and the IRS will know about the bankruptcy.

5. Will I lose my house or apartment?
While bankruptcy is not designed to take away your home, there are a few situations where you can lose your home. If you are behind on your mortgage payments, you will almost certainly lose your house if you file a Chapter 7. In a Chapter 13 bankruptcy, you will not lose your house if you immediately resume making the regular payments called for under your agreement and repay your missed mortgage payments through your plan.

In Chapter 7 bankruptcy, whether or not you will lose your house depends on the amount of equity you have in the property and the amount of any homestead exemption (which varies state-to-state). If the total amount of debt against your house is less than the market value, you may lose your house unless a homestead exemption protects you. If you are current on your rent payments and file for bankruptcy, it's unlikely your landlord will know. But if you are behind on your rent, it's likely your landlord will attempt to evict you.

6. What generally happens in consumer bankruptcy cases?
In a Chapter 7 filing, you file several forms with the bankruptcy court that list income, expenses, assets, debts and property transactions for the past two years. The cost to file is $200, which may be waived for people who receive public assistance or live below the poverty level.

A court-appointed trustee is assigned to oversee the case. A month after filing, you must attend a meeting of creditors where the trustee reviews your forms and asks questions. If you have any non-exempt property, you must give it (or its value in cash) to the trustee. Three to six months later, you will receive a notice from the court that "all debts that qualified for discharge were discharged."

Chapter 13 differs slightly. You file the same forms along with a proposed repayment plan. Here you describe how you plan on repaying your debts over the next three to five years. The cost to file is $185 and a trustee is assigned to oversee the case. You attend the meeting of creditors. Often one or two creditors attend this meeting, especially if they don't like your plan. After the meeting, you attend a hearing and the bankruptcy judge either approves or denies your plan. If confirmed, and you make all the payments, you may receive a discharge of any balance owed at the end of the case.

7. What debts are not dischargeable?
There are many debts that are not dischargeable and that you will still be responsible for after the bankruptcy. These include: taxes, spouse and child support, debts arising from willful misconduct and or malicious misconduct by the debtor, liability from driving while intoxicated, non-dischargeable debts from a previous bankruptcy, student loans, and debts due to fraud or criminal activities. Certain luxury purchases and cash advances over $1,000 are non-dischargeable within 60 days of the bankruptcy filing.

8. Is filing bankruptcy immoral or does it make me a bad person?
Everyone is entitled to a fresh start. Many times, events occur in people's lives that cannot be expected. You may have had a sudden loss in income, a family medical catastrophe, a work injury, or any one of numerous other difficulties that would have been almost impossible for which to plan.

Most of the people that we represent are good people who have encountered unfortunate circumstances and just want to get a fresh start. We understand that for most of our clients bankruptcy is the last resort. Many of our clients have a very difficult time determining if bankruptcy is the right decision for them.

You must ask yourself, are the Credit card companies concerned about your financial difficulties? Are you paying your creditors instead of saving for your children's education or your retirement?

9. Can I get rid of student loans or tax debts?
Any bankruptcy attorney must have a sophisticated understanding of bankruptcy law to deal with student loan and tax debts. Until October 1998, student loans were discharged through Chapter 7 bankruptcy if the first payment on the loan became due more than seven years prior to the date of filing.

In October 1998, President Clinton signed a new law into effect that disqualified all student loans from discharge. UFS can still help you obtain relief from your student loan debts through the use of Chapter 13. Under Chapter 13, our attorneys can consolidate your student loan debt, along with any other outstanding bills, and arrange an interest free repayment plan, so that you do not have to suffer through the burden of garnishments, harassment and other collection efforts by student loan agencies.

You may even be able to reduce the amount paid to the student loan agency during the course of your Chapter 13 so that your consolidation payment is as low.

10.How negatively will a bankruptcy affect me?
Bankruptcy should only be considered in the most severe cases and is not typically the best solution to a typical debt problem. Why? Bankruptcy will stay on your credit report for 10 years. However, it will actually remain on your court records for 20 years. In other instances, it will follow you for the rest of your life.

For example, if you apply for a loan, job, insurance, and other items, you very well may be asked "have you ever filed for bankruptcy?" This can negatively impact your future employment situation and carries with it a negative stigma.

Credit companies also do not look favorably on people that have used bankruptcy as a means of solving their debt problem. The credit card offers you'll receive will carry with them a "higher risk" interest rate than had you not filed. While Bankruptcy may help you eliminate your debt, its negative affects on your credit, emotions, court records, and self-esteem may last much longer than 10 years.