Filing for bankruptcy appears incredibly complicated, but it really doesn’t have to be, says bankruptcy attorney Benjamin J. Ginter, who runs the Law Offices of Benjamin J. Ginter in Cranford, New Jersey. Here, he explains what the basics of bankruptcy are, from whether filing is immoral (no) to whether you need a lawyer (yes).
What is bankruptcy?
A: Consumer bankruptcy allows people to either eliminate or ‘wipe out’ most of their debt; or, in some circumstances, to repay their creditors under a court supervised repayment plan. The eventual goal of any type of bankruptcy filing is almost always to obtain a “discharge” from the court, which means that all the consumers’ debts (with some exceptions) which existed before the filing of the bankruptcy petition with the court are eliminated.
Q: Do I need a lawyer to file bankruptcy?
A: Some people do have a very simple case that they could possibly do on their own. But it’s a good idea to have an attorney guide you through the process and make sure you do things correctly. A lawyer can guide you through the intricacies of the process and help you avoid the pitfalls. Although you may think your case is easy, if you file incorrectly, it can significantly delay your discharge and in some cases, your case could be dismissed. Moreover, if you file for the wrong bankruptcy chapter, you could put yourself in jeopardy of losing assets, including your home.
Q: Can I change from one chapter of bankruptcy to another?
A: Usually, yes. Generally, you can convert a case once to any other chapter for which you are eligible. There are issues to watch for when going from one Chapter to another which I can guide you through.
Q: Who can file bankruptcy?
A: With few exceptions, any person or business owing money to a creditor can file a bankruptcy petition.
Q: Is filing bankruptcy immoral or bad?
A: No, the bankruptcy law is in place because our system of law recognizes that your life and future should not be ruined because of some financial mistakes you’ve made or events that might possibly have happened outside of your control. You should never feel ashamed or feel like a failure if you decide to file for bankruptcy. The truth is, millions of people have filed, especially during this weak economic period. Even major billion dollar corporations file for bankruptcy. Hold your head up high and remember that bankruptcy can give you a fresh start.
Q: Can I get credit cards after I file bankruptcy?
A: Yes. You might even start receiving offers in the mail right after you file your case. However, these credit cards usually carry with them high interest rates and fees. They put money in your bank’s pocket, not in yours. If you want the convenience of a credit card, have one with a small limit, or better yet, a debit card that doesn’t allow you spend more than you have on deposit.
Q: Do you have to have a certain amount of debt to file?
A: Strictly speaking, no. But, of course, if you only have only a very small amount of debt, filing a bankruptcy case may not make much sense. Some people probably should not file because they have very little debt while others should not file because they have nothing the creditors can take
Q: What can I keep, if anything, if I file bankruptcy?
A: Exemptions allow an individual to “exempt,” or keep, certain kinds of property. Most people that wish to file bankruptcy are unlikely to have a great deal of money or property stashed away. Oherwise, they probably would have paid their bills. It is likely that unless you own a valuable car that’s paid off, a house with a lot of equity, a valuable inheritance, or some other kind of unusually valuable property, you will be able to keep everything you own as “exempt.”
Q: How long does a bankruptcy stay on my record?
A: Bankruptcies remain on credit reports anywhere from seven up to 10 year. But you can improve your credit along the way.
Q: Can I do anything to remove a bankruptcy from my credit report?
A: No. Although at your option, you can file an explanation with the credit reporting agencies briefly describing the events resulting in your bankruptcy. If an account is reported inaccurately, you can request the record be updated to reflect the actual situation.
Q: When can I apply for credit again?
A: The decision whether to grant you credit in the future is strictly up to the creditor and varies from creditor to creditor. No law prevents anyone from extending credit to you immediately after the filing of a bankruptcy, but creditors aren’t required to extend you credit.
