Bankruptcy - Information

Bankruptcy must be filed in the United States Bankruptcy Court.  It has sole jurisdiction in all bankruptcy matters.  There are two main reasons bankruptcy is available to consumers:

1.  To allow consumers to make a fresh start.

2.  To allow consumers to pay off their debts according to property owned and available for payment.

 

Here are the facts surrounding bankruptcy:

  • - Chapter 7 filings are public record. 

    - Credit bureaus will keep your bankruptcy filing on your credit profile for 10 years.

    - Depending upon where you live in, (a community property state), you can obligate your spouse even if your spouse did not sign on your accounts.  

    - Your credit cards will be cancelled unless you reaffirm those debts.

    - Credit cards with zero balances will be closed.

    - Your assets will be disposed of by a trustee assigned to your case.

    - Assets in excess of your allowed personal exemption and non exempt assets such as real estate, boats and automobiles may be disposed of by the trustee in order to satisfy some of your debt.

HOW THE NEW BANKRUPTCY LAW AFFECTS YOU

  • If you are a debtor who makes more than your state's median income and you are seeking bankruptcy, the new bankruptcy law will require you to enter Chapter 13 reorganization.  This means that you will have to pay some amount to your creditors and liquidate most of your assets.  If you make less than your state's median income, you will still be able to enter Chapter 7 which wipes out debt after certain assets are forfeited. 

  • The new law will require you to enroll in credit counseling within 180 days of filing for bankruptcy.

  • Student loan debt will be much tougher to erase.

  • Homestead provisions within the law will restrict the amount of exemption for a homestead if the primary home was purchased within a number of months from the date of filing. 

  • Most provisions of the new law take effect 180 days after the President signs the bill.  The homestead provision will take place immediately upon his signature.