Given everything that has taken place throughout our country over the last few months, the prospect of filing for bankruptcy can be confusing and scary for many who are considering doing so. While almost everyone understands the basics of what bankruptcy is and generally how it works, very few individuals totally understand the full scope of bankruptcy and what impacts it can have on their lives. Below are some of the most common questions and answers we receive from clients who are considering filing for bankruptcy. For more information about any topic presented herein, please contact an Alpharetta bankruptcy attorney.
How Do I Know if I Should File for Bankruptcy?
Typically, job loss and medical bills are common triggers for bankruptcy filings, and bankruptcy filings usually increase during economic downturns. But it is difficult to know when to file for bankruptcy since everyone’s financial situation is different. You may also want to consider filing for bankruptcy if:
- You are getting a divorce
- You are in danger of foreclosure or eviction
- Creditors are suing you or otherwise engaging in debt collection efforts
- You can only pay for essential goods using credit cards
- You are paying off one credit card balance with another credit card
- You are withdrawing money from retirement accounts to pay bills
If you are experiencing any of the above situations, you may want to consider speaking to an Alpharetta bankruptcy attorney to evaluate your options.
What Does the Bankruptcy Filing Process Look Like?
The process of filing for bankruptcy will vary based upon whether you are filing for Chapter 7 or Chapter 13, what kinds of debts you have, and the behavior of your creditors, among several other variables. Generally, however, a typical bankruptcy filing proceeds as follows:
- Gather relevant financial documents, including your current income sources, tax returns, receipts for major purchases, monthly living expenses, debts, and deeds to real estate and vehicles. Your attorney will be able to help you determine what documents you need.
- Assemble and file a bankruptcy petition (usually with the assistance of your attorney) with the bankruptcy court. This petition should document your income and debts, as well as a description of the property that you believe should be exempt from seizure. Chapter 13 filings should also include a proposed repayment plan.
- Once you have filed your petition with the bankruptcy court, the automatic stay goes into effect, prohibiting your creditors from taking any further collections enforcement actions.
- The court will then appoint a bankruptcy trustee to your case, who will review your petition and see that your creditors are paid as much as possible
- At this point, a meeting of your creditors occurs, which you must attend. At this meeting, your bankruptcy trustee will ask you a series of questions about your assets and debts to ensure that you were truthful with your financial disclosures.
- If you filed for Chapter 13 bankruptcy, you must also attend a confirmation hearing, where a bankruptcy judge will either confirm or deny your repayment plan
- After the meeting of the creditors, your creditors and trustee have 60 days in which to object to proposed discharges. If no objections are filed during that period, the bankruptcy court will issue an order discharging your debts.
What Does a Bankruptcy Filing Do to My Credit Score?
Bankruptcy filings — both Chapter 7 and Chapter 133 — can damage your credit score, but the extent of the damage depends on what your credit looked like before you file. If you had a good credit score before filing (generally considered to be above 700), your credit score will drop precipitously after filing for bankruptcy. If you had a bad credit score before you filed (generally considered to be below 500), a bankruptcy filing will have less of an impact on your credit score. While both types of bankruptcy filings have negative impacts on your credit score, potential creditors may view one type of filing more favorably than the other. For example, it is not uncommon for creditors to view individuals with Chapter 13 filings as a better credit risk than those with Chapter 7 filings.
Can I Be Discriminated Against Because of a Bankruptcy Filing?
Federal law prohibits discrimination on the basis of bankruptcy filings, both in the public and private sectors. The following forms of discrimination against bankruptcy filers are illegal:
- Terminating an employee
- Discriminating with respect to hiring
- Denying, revoking, suspending, or declining to renew a license, franchise, etc.
These protections do not extend to the housing market, however. Private landlords may deny rental applications of individuals who have filed for bankruptcy in the past. They may also demand higher rent payments or require that you pay several months in advance.
How Many Times Can I File for Bankruptcy?
There is no limit on how many times you may file for bankruptcy, but your ability to obtain a discharge of your debts is limited. For successive filings under the same chapter (e.g., Chapter 7 to Chapter 7), you must wait eight years between filings for Chapter 7 bankruptcies and two years between filings for Chapter 13 bankruptcies. For successive filings under different chapters (e.g., Chapter 13 to Chapter 7), the limits are as follows:
- Chapter 13 to Chapter 7: If the court granted a discharge under Chapter 13, you must wait six years before filing for Chapter 7.
- Chapter 7 to Chapter 13: If the court granted a discharge under Chapter 7, you must wait four years before filing for Chapter 13.
Will My Name Go Public if I File for Bankruptcy?
Everything that occurs during a bankruptcy case is a matter of public record, meaning that your name will go public if you file for bankruptcy. However, when you file for bankruptcy, all information will be uploaded into the PACER system used by federal courts to store documents. Because very few people outside of the legal profession actively use PACER, it is unlikely that you will gain any publicity for a bankruptcy filing among your regular acquaintances.
More Questions? Contact an Alpharetta Bankruptcy Attorney
We understand that if you are considering filing for bankruptcy you likely have many more questions than those presented here. For more information, please contact an Alpharetta bankruptcy attorney at Hait & Kuhn by using our online form or calling us at either of our metro Atlanta locations: Alpharetta (770-517-0045) or Woodstock (678-888-0198).