If I file bankruptcy without my spouse, will my spouse be affected?

January 22, 2012

If there is joint debt between you and your spouse, and your spouse doesn’t file for bankruptcy, your spouse will be responsible for those debts.  If there is no joint debt, filing bankruptcy will not impact your spouse’s credit in any way.

It is important to remember that the budget filed with the court will be based upon household income, which includes the income of any non-filing spouse.  In other words, the court will look at your spouse’s income (along with yours), in determining whether or not you are in a position to repay a meaningful portion of your debt.

Will my friends or relatives find out if I file for bankruptcy?

January 17, 2012

Bankruptcy filings are public information. If someone knows that you have filed for bankruptcy, they can go to the court and look at what has been filed in your case. If you owe money to a friend or relative, they will receive notice of your bankruptcy filing. Aside from your creditors, it is highly unlikely that anyone would go to the effort of going to the clerk’s office to review your case.

Since the court schedules multiple hearings at the same time, it is possible that you might see someone you know at court. However, they are probably there for the same reason you are!

What is a Chapter 7 bankruptcy?

January 9, 2012

A chapter 7 bankruptcy is often referred to as a “straight bankruptcy” or a “liquidation bankruptcy”. In a chapter 7 bankruptcy someone is  usually able to discharge credit card debt, medical bills, old utility bills, etc. A common myth about Chapter 7 bankruptcy is that a bankruptcy trustee will sell all of your property. That is not true. Consumers are able to keep property which is classified as exempt. It is important to consult a lawyer to ensure that your property is exempt, and your alternatives to dealing with unexempt property.

A Chapter 7 banruptcy generally lasts 3 – 4 months. Most people emerge debt-free and retain most or all of their assets.

One important thing to remember about a Chapter 7 bankruptcy is that once it is filed, there is no right to dismiss it. So if a trustee discovers unexempt property after the case is filed, that property may be sold and the proceeds used to repay some or all of your debt. This is why it is critical to obtain proper legal representation BEFORE filing a Chapter 7 case.