Frequently Asked Questions About Bankruptcy
What is bankruptcy?
Bankruptcy is a form of debt relief that many businesses and successful entrepreneurs have used at one time or another. It is also common for many individuals and families after medical crises, natural disasters and other unexpected challenges. The legal processes of bankruptcy allow an individual or company to eliminate many or all of their debts. The right to file bankruptcy is provided by federal law and all bankruptcy-related matters are handled in federal court.
What does bankruptcy do for me?
The filing of Chapter 7 or Chapter 13 bankruptcy places an immediate stay to all collection activities, including collections calls and letters, wage garnishments and foreclosures. When your bankruptcy is complete, you will benefit from a fresh financial start.
What documentation do I need to file bankruptcy?
- Proof of completion of a means test that you must take before you file bankruptcy
- Paystubs or proof of income from all sources for this month and the last six months including self-employment
- Your most recent monthly statement for all credit cards, utilities and collection letters
- Driver’s license and Social Security card
- Tax returns of the last four years
- Credit counseling confirmation: Our preferred provider for this counseling is In-charge Education Foundation.
- Life insurance policy information
- Market analysis on home or any properties owned
- Proof of current auto insurance
- Completed client questionnaire (PDF)
You don’t need to assemble all these things before your initial consultation with us, but you will need them before we can help you file.
If I file bankruptcy, can I keep my house?
You are able to keep your house if you meet certain qualifications, including the ability to stay current and continue to make the regular monthly payments as they come due. If you are behind on your mortgage, a Chapter 13 may prevent foreclosure and allow you to save your home.
If I file bankruptcy, can I keep my vehicle?
You are able to keep your car or motorcycle if you meet certain qualifications, including the ability to stay current and continue to make the regular monthly payments as they come due. If you are behind on your vehicle payment, Chapter 13 may prevent the repossession.
I borrowed money from a family member; can I repay him or her before I file my bankruptcy?
Generally, you cannot pick and choose which creditors are included in the bankruptcy and which creditors you pay. If you have paid a substantial amount of money to a family member in the year prior to the filing of your case, that payment would be considered a preferential payment, and the court deny your bankruptcy or may require your family member to pay the money to your creditors.
A better strategy might be to let that personal loan be discharged in bankruptcy like all your other debts and at some later time, voluntarily (not out of any legal obligation) reimburse your family member. However, you must be truthful with the bankruptcy trustee. Ask a bankruptcy lawyer before you do anything about a personal loan within a year before filing bankruptcy.
How much does it cost to file bankruptcy?
Generally, attorney fees for bankruptcy are as little as $1,000 to as much as $3,500. You will also owe court fees. Ask a lawyer what those fees will likely be for the type of bankruptcy you expect to file. Legal costs for bankruptcy vary depending on the complexity of the matter and the number of creditors a client has.
How can I rebuild my credit after bankruptcy?
Part of the bankruptcy process is to take a debt education course. You will learn valuable information if you give it your full attention. Your bankruptcy lawyer will also give you valuable tips. Most people who file bankruptcy are able to get credit again before long.
More Questions About Bankruptcy?
The Frankfort Law Group offers a free consultation to further discuss your case and the costs. We have offices in Frankfort and Oak Lawn in Illinois. Please call 708-349-9333 or send our office an email.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.