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James B. Rooney

Attorney at Law

Bankruptcy FAQs
Divorce FAQs
Criminal and OWI FAQs

What are the different types of bankruptcies?

For individuals, there are basically two types: Chapter 7 and Chapter 13. Chapter 7 is a process whereby most of your debts can be discharged (eliminated). Chapter 7 is also known as liquidation because any non-exempt assets will be sold by the trustee for the benefit of creditors. However, many debtors have no non-exempt assets, and therefore are able to keep all of their property. As your attorney I will go over with you the exemptions you are entitled to, and you will know before you file whether any of your property is non-exempt.

Chapter 13 is a repayment plan. Secured creditors are repaid in full, and non-secured creditors are repaid in full or in part. We submit a plan to the court, and if approved a certain amount of your income will be paid monthly to the trustee, who will in turn pay your creditors. The repayment period is from 3-5 years. If all payments have been made according to the plan, any remaining unsecured debt may be discharged.

Which chapter is right for me?

Most debtors prefer to file Chapter 7 if they are eligible. The two most common factors that cause debtors to be ineligible are too much equity in their home, or too much income. It will be necessary to review your assets and your income to determine which chapter is right for you.

How will filing bankruptcy effect my credit?

When individuals reach the point of considering bankruptcy, their credit is often poor already, and filing bankruptcy may not make things any worse. In fact, many clients are surprised to see how many credit offers they receive after filing bankruptcy. One reason for this is that a Chapter 7 discharge may only be received once every 8 years. So once you file creditors know they cannot be filed against during the next 8 years. The down side is that you will typically have to pay a much higher interest rate.

As to obtaining a new mortgage, most mortgage companies will not consider granting you a new mortgage until at least 2 years have passed from your discharge.

Will filing bankruptcy stop creditor harassment?

Yes! As soon as you file, there is what is called an Automatic Stay, which prohibits a creditor from taking any steps whatsoever to collect the debt. If you are contacted by a creditor, you would give them my name and number, and let me deal with them. Also, once you receive your discharge, creditors are permanently enjoined from attempting to collect a discharged debt. If they attempt to do so, we can ask the bankruptcy court to hold them in contempt of court.

DISCLAIMER: The above is offered for information purposes only, and is not legal advice. Please consult an attorney before making any legal decision.

NOTICE: I am a debt relief agent and I help people file for bankruptcy under the Bankruptcy Code.