Bankruptcy Blog - chapter 7 faq's

Did you receive a Form 1099-C from a former creditor?There is a bankruptcy exception to the general IRS rule that says if a debt is canceled or forgiven by a creditor, the amount of the canceled or forgiven debt must be included in your gross income on your tax return.

Can they take my car?In most cases, the answer is no.  

A trustee is not permitted to take your car unless it is worth more than the law allows you to protect in bankruptcy, and the law gives you more than one way to protect it.

Sometimes.  It depends on how much the house is worth, and whether there is a mortgage on it.   It also makes a difference which chapter you file under, that is, chapter 7 or chapter 13.

Yes.   There is no requirement that a married couple file bankruptcy jointly when one spouse needs or wants to file and the other does not.   It is very common for one spouse to file for bankruptcy while the other spouse does not.

In most cases, filing for bankruptcy would not hurt your spouse. Only your creditors will be informed of the bankruptcy, although that would include creditors whose debts are owed jointly by you and your spouse.

If your credit score right now is high, then yes, your score will drop when you file bankruptcy.  But not permanently.

Individuals may file for Chapter 7 or Chapter 13 bankruptcyAfter struggling with debt, you have reached the conclusion that filing for personal bankruptcy is your only solution (short of winning the lottery).

Does bankruptcy work the same way for a mortgage or car loan as it does for credit card debt?No.   Secured debts are treated differently than unsecured debts in bankruptcy.

Filing for bankruptcy is not a crime Credit card companies wish it was, but it’s not.   You cannot be arrested for filing for bankruptcy.   You will not be frisked, cuffed, and thrown into debtor’s prison.   Likewise, your home will not be searched.

Tell your attorney the truth.   The more your attorney knows about your situation, the better the attorney’s advice will be.   That includes everything from disclosing all of your assets and income to answering your attorney’s questions completely and accurately.

If you have been considering filing for bankruptcy protection, you may have noticed that there are quite a few attorneys who offer representation for filing bankruptcy.

Overspending is one of the most common causes of chapter 7 bankruptcy filingsChapter 7 trustees ask what caused the debtor to file for bankruptcy, and when the answer is “overspending,” that typically satisfies the trustee.   Other common reasons are loss of income, medical expenses, and divorce.

The law does not have a minimum amount of debt to file chapter 7 bankruptcy. The answer is determined on a case-by-case basis.   What may be a manageable amount of debt for one person may be overwhelming to someone else.

There is no limit on how much you can owe and still qualify for Chapter 7 bankruptcy.   In fact, the more you owe, the more likely it is that you need bankruptcy relief.