Filing Consequences

Is it true that filing for bankruptcy can wipe out all of my bills?

The underlying policy of bankruptcy law is that the honest debtor who is in debt beyond his/her ability to repay the debt should be given a fresh start through the discharge of debts in a bankruptcy proceeding. Not all debts are dischargeable. For example, the following debts are generally not dischargeable: most taxes; spousal and child support; student loans; criminal fines and penalties; debts arising out of willful or malicious misconduct; liability for injury or death from driving while intoxicated; nondischargeable debts from a prior bankruptcy. Those debts, which are secured, may be discharged; however, the creditor may take legal steps to take back the property.

Can I keep my home after bankruptcy?

Under a Chapter 7 proceeding, you may be able to keep your home through a reaffirmation agreement so long as you are current in your mortgage payments. Before filing a Chapter 7 bankruptcy, it is important to verify that your house can be protected through bankruptcy exemptions if you intend to keep your home. However, even if you do owe back payments, you may still be able to keep your home through a proposed Chapter 13 monthly plan wherein you would pay all back payments over a period of time (normally three to five years).

What types of personal property may I keep?

You are permitted exemptions for personal property, including personal property such as household furnishings and personal effects, clothes, jewelry, personal injury award and other miscellaneous property. Equity in your automobile may be exempted to a certain extent. In addition, there is no limit as to the amount you may keep in your retirement plans, pension plans, annuities and unmatured life insurance.

Can I keep my credit cards after bankruptcy?

All debts are required to be included in the bankruptcy. You may not show preference towards certain creditors in the bankruptcy by choosing to list some and paying on others.

What happens to my personal property, real property and other assets?

Once the bankruptcy is filed, all of the property of the debtor at the time of filing and certain other property to be received in the future, become the property of the bankruptcy estate. This means that the bankruptcy trustee will take control of this property for purposes of satisfying the creditors. HOWEVER, there is certain property which is either excluded or exempt and the debtor will be able to keep it. Property or asset exemption is determined based upon a statutory scheme. As discussed above, you are allowed exemptions for a limited amount of equity in your home, car, personal property and certain pension and retirement plans, annuities and unmatured life insurance.

Will my employer find out about my bankruptcy?

Unless your employer is a creditor, generally your employer will not be notified of your filing.

Will I lose my job?

No. Bankruptcy laws prohibit discrimination based upon a debtor filing for bankruptcy protection.

Can I go to jail if I file bankruptcy?

No. There is no debtor's prison in the United States.