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Common questions about personal bankruptcies

There are a lot of questions that some people ask if they considering filing for bankruptcy. It is understandable since it is imperative that you have all the information possible when you are trying to make your decision.

If you are drowning in bills and don't see a way out, personal bankruptcy might be a viable option. Here are some common questions and their answers for you to peruse to determine if this is the right choice for you:

Who can file for bankruptcy?

Individuals and couples can file for personal bankruptcies. These cases usually fall under Chapter 7 or Chapter 13. In order to file the joint petition, both parties filing must be married to each other on the date of the filing. Most personal bankruptcy filings happen with one of the debtors filing. However, there are times when creditors might file a petition against the person who owes them money. The person would then have a specific amount of time to contest the petition.

Does it stop collection attempts?

When you file for bankruptcy, the court issues an automatic stay. This prevents creditors from being able to contact you in any manner to try to collect the debt. There are some exceptions to the automatic stay's protections so be sure you find out exactly how the order might impact your case.

What happens to my assets?

What happens to your assets depends on what chapter of bankruptcy you file and the classification of the asset. Typically, you can keep more assets in a Chapter 13 filing since you are making payments on the amount owed. In a Chapter 7, you don't make payments so more assets are liquidated in an effort to pay creditors what they are owed. You should find out what assets are considered exempt, meaning they can't be touched by the bankruptcy court, and which are non-exempt, which means they can be taken by the court.

What kinds of debts can be discharged?

Many debts, including medical and credit card debts, can be forgiven in a bankruptcy. Student loans, child support arrears and tax debts are a few that can't be wiped out. Any debt that isn't included in your petition and those that are due to illegal activities like embezzlement can't be discharged.

The decision to file for bankruptcy must take all personal factors into account. You need to explore what factors might impact your case before you make a decision. Once you are ready, get your case filed quickly so you can have the relief as soon as possible.

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