Frequently Asked Questions about Personal Bankruptcy

Here are the answers to some of the most commonly asked questions about personal bankruptcy.

What is personal bankruptcy?

Personal bankruptcy is a federal court proceeding that allows you to discharge or repay your debts under the protection of a bankruptcy court.  There are two types of personal bankruptcy: Chapter 7 and Chapter 13. 

Which type of personal bankruptcy is right for me, Chapter 7 or Chapter 13?

Often, most debtors do not have a choice in which bankruptcy they must file.  Chapter 7 is the more attractive of the two options for most debtors because it is fast, effective, and does not require repayments over time.  However, not everyone qualifies for a Chapter 7 bankruptcy.  For people with higher income levels, you may be forced to declare Chapter 13 bankruptcy, which means you will have to repay at least some of your debts over a period of 3-5 years.  For people who have already filed for Chapter 7 in the last eight years, you will have to file for Chapter 13.

What does personal bankruptcy do to my credit?

If you are already so behind on your bills that you are considering personal bankruptcy, your credit is probably already suffering.  Declaring bankruptcy likely will not make it much worse.  Sometimes, personal bankruptcy can even put you in a better financial position because you will be more able to pay your current bills when your debts are discharged.  Bankruptcy remains on your credit for 10 years, but you can rebuild your credit by obtaining new credit and using it responsibly. 

How do I file for personal bankruptcy?

With our services, we make filing for personal bankruptcy easy and hassle-free.  In fact, our application is free and will only take a few minutes.  You can complete virtually the entire personal bankruptcy process online, and we will take care of the rest. 

What does it cost to file for personal bankruptcy?

Fees will vary according to who handles your bankruptcy, but Chapter 7 bankruptcy averages around $300 in fees.  Chapter 13 bankruptcy tends to be slightly cheaper than Chapter 7 in terms of fees. 

Will I be able to keep my property if I file for personal bankruptcy?

With Chapter 7 bankruptcy, most debtors start out with so few assets, that they do not lose any property in the proceeding.  Chapter 7 bankruptcy allows for certain necessities that are exempt from liquidation.  However, if you have valuable property or assets, you do risk it being liquidated by the court in a Chapter 7 bankruptcy.  If you declare a Chapter 13 bankruptcy, you will not lose any of your property, but you will have to repay your debts over time. 

What debts will not be discharged with personal bankruptcy?

There are certain debts that not even personal bankruptcy can erase.  These include:

• Student loans owed to the government or a school (unless the court declares that their repayment would cause undue hardship)
• Some tax debt
• Money owed in child support, alimony, or fines
• Loans obtained by providing false information to a creditor
• Any debts not included in your bankruptcy petition
• Debts obtained from “willful and malicious” harm
• Mortgages and liens that are not paid in the bankruptcy