Frequently Asked Questions About Bankruptcy

For people in deep debt, the saying “when in a hole, stop digging” and “you cannot borrow your way out of debt” are very apt maxims. A time does come when the only option is personal bankruptcy. People tend to be wary of bankruptcy simply because many of their bankruptcy questions are unanswered. Online bankruptcy services are available to guide people through the intricacies of the process.

For the majority of people bankruptcy is something they think will not affect them, but in this day of ever increasing consumer spending, easy availability of credit cards and increases in interest rates and the price of gas, the concept of personal bankruptcy is beginning to loom large on the horizon. The number of online bankruptcy services are increasing to satisfy this rising demand. These services deal with a number of bankruptcy questions like:

What form of bankruptcy should you pursue?

Most individuals will choose between filing a Chapter 7 bankruptcy and a Chapter 13 bankruptcy with Chapter 7 being the preferred option, although the court has the final decision on which type you are eligible for.

Will bankruptcy wipe out all bills?

Not all debts are dischargeable. Generally speaking, the following debts will not be discharged: taxes; spousal and child support; debts arising out of willful misconduct and or malicious misconduct by the debtor; liability for injury or death from driving while intoxicated; non-dischargeable debts from a prior bankruptcy; student loans; criminal fines and penalties and forfeitures.

Will creditors be forced to stop harassing?

Yes, they will! By law, all actions against a debtor must cease once bankruptcy documents are filed. Creditors cannot initiate or continue any lawsuits, or even telephone calls demanding payments. Secured creditors such as banks, holding, for example, a lien on a car or a mortgage, will get the stay lifted if you cannot make payments.

Will it affect credit history?

Yes. A bankruptcy judgment is recorded in your credit history and remains for 7 to 10 years depending on the type of bankruptcy you obtain. You can still obtain credit as a number of banks now offer "secured" credit cards where a debtor puts up a certain amount of money (as little as $200) in an account at the bank to guarantee payment. Usually the credit limit is equal to the security given and is increased as the debtor proves his or her ability to pay the debt.

Is obtaining a mortgage possible after bankruptcy?

Yes, two years after a discharge, debtors are eligible for mortgage loans on terms as good as those of others, with the same financial profile, who have not filed for bankruptcy. The size of your down payment and the stability of your income will be much more important than the fact of your personal bankruptcy.

Use the online bankruptcy services for more bankruptcy questions you may have.