Technically what is Bankruptcy?

Bankruptcy is your legal right to relieve all or a portion of your debts under federal law.

In the constitution of the United States, Article I, Section 8, Clause 4, it provides Congress with the power to establish uniform laws on the subject of Bankruptcies throughout the United States.
There are different types of bankruptcy proceedings under the law. Chapter 7 and Chapter 11 are very common. Chapters 9 and 12 are seldom used in consumer law and involve municipalities and farmers. A Chapter 13 is a reorganization of debt. Chapter 15 involves foreign proceedings and is usually practiced by a niche lawyer.

Do I need to hire an attorney to file for Bankruptcy?
There is no legal necessity that someone have an attorney in order to file bankruptcy. But, bankruptcy can be very complex and there is a great deal of paperwork involved. Because courts and paralegals are not able to provide legal guidance it can be almost impossible to do this on your own. It is in your best interest to have an attorney help you with the process so as to ensure it is done properly.

 

Will the phone call stop if I file for Bankruptcy?
Filing bankruptcy instantly invokes United States Code Title 11362 the Automatic Stay. The automatic stay stops most debt collectors straight away. If creditors continue to call you should refer them to your attorney and give them no further information. It is not necessary for you to tell them that you have filed bankruptcy, just simply give them your attorney's name and number.

Will my home still be foreclosed on if I file for Bankruptcy?
Foreclosures are initially stopped by filing bankruptcy. The law doesn't allow you to prevent a foreclosure by repeatedly filing bankruptcies.

If this is your first bankruptcy, filing won't stop certain time periods associated with foreclosure procedures from "running." In certain cases, once a homeowner receives advance notice of foreclosure, the home may not be sold until the notice period has ended. However filing for bankruptcy won't stop the notice period from elapsing. Additionally, the sale of your real property can't happen while you are in bankruptcy unless the foreclosing party gets permission from the bankruptcy judge by filing a motion to lift the stay.

Remember, under no circumstances may an individual file a bad faith bankruptcy proceeding just to stop a foreclosure proceeding.

 

 

How long will Bankruptcy stay on my credit?
Bankruptcy does stay on your credit for 10 years. However, most people experience an improvement of their credit within 12 to 18 months of the filing of their bankruptcy. After filing for a Chapter 7 bankruptcy the debtor cannot file again for bankruptcy for another 8 years. Creditors realize this and thus a lot of times, future creditors see less risk in extending you credit in the near future.

 

Is there a minimum amount of debt I must have & can I just run up my debt right before I file for Bankruptcy?
There is actually no minimum amount of debt that a person must have in order to file for bankruptcy! However, there are a variety of facts which can make filing for bankruptcy worthwhile or not.

Any aggregate debt which exceeds $550.00 for any single creditor for non-essential luxury goods, or cash advances totaling over $825.00 on a credit card incurred or taken within 90 days of filing bankruptcy are presumed to be non-dischargeable.


What happens to my 401k or my IRA if I file for Bankruptcy?
Under 11 USC 522(b)(3)(C) tax-exempt retirement accounts (401(k) and SEP and SIMPLE IRAs and defined-benefit plans that are exempt (protected) from being part of the bankruptcy estate.

In fact, 11 USC 522(b)(3)(C)(n) provides " retirement funds to the extent that those funds are in a fund or account that is exempt from taxation under section 401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code of 1986" are exempt from bankruptcy proceedings up to $1,000,000.

To determine exactly how much of your 401K is exempt, your attorney should know the local state exemptions.

Debt against a 401K is not considered a "debt" because you are borrowing from yourself.

As of 2009, the Ninth Circuit Court of Appeals ruled that 401K loans are not considered a debt in the bankruptcy code and so loan repayment can not be considered in calculating a debtor's budget for the means test.

Can I be fired from my job for filing Bankruptcy?
Absolutely not. No. It is illegal under U.S. Bankruptcy Law to specifically discriminate against a person based upon their need to file for protection under bankruptcy laws. If you were to be fired for this reason it is recommended to contact an employment law attorney right away.


Can I keep any of my assets if I file for Bankruptcy?
It is likely you will be able to keep some of your assets. Bankruptcy laws allow debtors to keep a certain amount of property. Depending upon which Chapter you file. A Chapter 13 usually means you keep your assets. Under a Chapter 7 bankruptcy, your non-exempt assets are liquidated.