Frequently Asked Questions

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1. “Will I lose all my property if I file for bankruptcy?"

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Short answer: No — most people keep everything they own.

Detailed Explanation:

Bankruptcy laws include exemptions that protect certain types of property, such as:

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• Your home (up to a certain equity amount)

• Your car

• Household furniture

• Clothing

• Retirement accounts (fully protected)

• Some cash and personal items​

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In Chapter 7, exemptions protect property from being taken by the trustee.

In Chapter 13, exemptions help determine your payment plan — but still, you typically keep ALL property.

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Most bankruptcy filers lose nothing because their assets are protected.

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2. “Will filing bankruptcy stop creditors from calling or suing me?”

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Yes. The moment the case is filed, the automatic stay goes into effect.
This is a federal court order that immediately stops:

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• Collection calls

• Lawsuits

• Wage garnishments

• Bank levies

• Foreclosure (temporarily)

• Repossession

• Tax collection activity (most)​

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Creditors must stop all contact or they risk being sanctioned by the court.

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3. “What is the difference between Chapter 7 and Chapter 13?”

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Chapter 7 (Liquidation):

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• Wipes out most debts in 4–6 months

• No payment plan

• Best for low income or few assets

• Protects property through exemptions​

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Chapter 13 (Repayment Plan):

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• A 3–5 year payment plan

• Helps catch up on mortgage, car payments, taxes, or support

• Useful if your income is too high for Chapter 7

• Stops foreclosure and allows you to keep property you might otherwise lose

 

4. “Will bankruptcy wipe out all my debts?”

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Bankruptcy eliminates most unsecured debts, including:

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• Credit cards

• Medical bills

• Personal loans

• Utility bills

• Old apartment balances

• Payday loans

• Some tax obligations​

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Debts that usually cannot be wiped out:

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• Child support

• Alimony

• Most student loans (unless you win an undue hardship action)

• Recent income taxes

• Debts from fraud or intentional harm​

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5. “Will filing bankruptcy ruin my credit forever?”

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No. Bankruptcy appears on your credit report for:

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• Chapter 7: 10 years

• Chapter 13: 7 years

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But many people see their credit scores increase within 6–12 months because their debt-to-income ratio improves.

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You can rebuild quickly by:

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• Making on-time payments

• Keeping credit balances low

• Using secured credit cards

• Monitoring credit reports

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Many people qualify for car loans within months and mortgages within a few years.

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6. “Can I keep my car if I file bankruptcy?”

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Yes, in most cases.

You can keep your car if:

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• It is protected by exemptions (most are)

• You stay current on your loan or reaffirm it in Chapter 7

• You include the loan in the Chapter 13 repayment plan

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If the car is behind on payments, Chapter 13 can stop repossession and let you catch up.

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7. “Do I have to go to court?”

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Not usually.

You only attend a brief Meeting of Creditors (341 meeting), which is:

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• Not in a courtroom

• Typically 5–10 minutes

• Conducted by the trustee, not a judge

• Usually done by phone or video in many districts

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You rarely need to appear in front of a judge unless there is a dispute (which is uncommon).

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8. “How much does bankruptcy cost?”

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Costs vary by location, chapter, and attorney, but typical ranges are:

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• Chapter 7 attorney fees: $1,000–$2,500

• Chapter 13 attorney fees: $3,000–$5,000 (often paid inside the repayment plan)

• Court filing fees:

• Chapter 7: $338

• Chapter 13: $313

Many attorneys offer:

• Payment plans

• “File now, pay later” options

• Zero-down Chapter 13 filings

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9. “Will everyone know I filed bankruptcy?”

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Bankruptcy is public record, but practically, no — almost nobody will ever look it up.

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Your employer will not be notified unless:

• You have a wage garnishment (the garnishment stops)

• You file Chapter 13 and payments are deducted through payroll

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Your friends, neighbors, and family will not be notified unless you tell them.

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10. “Can bankruptcy stop foreclosure or repossession?”

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Yes.

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Foreclosure:

• Bankruptcy immediately stops foreclosure through the automatic stay.

• Chapter 13 allows you to catch up on missed payments over 3–5 years.

• Sometimes you can remove second mortgages or liens.

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Repossession:

• Bankruptcy stops repossession before it happens.

• If the car is already repossessed, you may get it back if you file quickly.

• Chapter 13 can lower interest rates and sometimes the car loan balance (“cramdown”).

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