Frequently Asked Questions:

• WHAT CAN YOU KEEP IN BANKRUPTCY?
• CAN TAXES BE DISCHARGED?
• CAN STUDENT LOANS BE DISCHARGED?
• CAN CHILD AND SPOUSAL SUPPORT BE DISCHARGED?
• CAN PROPERTY SETTLEMENT AGREEMENTS BE DISCHARGED?
• WHO SHOULD CONSIDER BANKRUPTCY?
• WILL MY CREDIT BE RUINED?
• CAN I FILE BANKRUPTCY AGAIN?

WHAT CAN YOU KEEP IN BANKRUPTCY?

• Most people do not lose any of their belongings in bankruptcy. The end goal of bankruptcy is to get you back on your feet financially. Therefore, your basic necessities are protected in bankruptcy, so as to help you re-establish yourself.
• The equity in your home and most of your personal belongings will, in all likelihood, be protected in bankruptcy.
• The exemptions (the bankruptcy law which protects your assets) are very complicated and you should consult an attorney to maximize the protection that you are afforded under Bankruptcy Law.

CAN TAXES BE DISCHARGED?

Contrary to common belief, income taxes can be discharged in bankruptcy provided that:

1. The taxes are at least three years old.
2. The tax returns must have been actually filed at least two years ago.
3. Any assessment was more than 240 days ago.
4. The debtor did not engage in any type of fraud or tax evasion.

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CAN STUDENT LOANS BE DISCHARGED?

• Student loans are not dischargeable in bankruptcy, except in cases where it would create an extreme hardship on the debtor to pay back the student loan.

CAN CHILD AND SPOUSAL SUPPORT BE DISCHARGED?

• No.

CAN PROPERTY SETTLEMENT AGREEMENTS BE DISCHARGED?

• Property settlement agreements as a result of a divorce can never be discharged in bankruptcy.

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WHO SHOULD CONSIDER BANKRUPTCY?

• Anyone that is overwhelmed with financial problems should consider filing bankruptcy. Financial problems greatly affect your entire life causing some, if not all, of the following problems:
• 1. Physical ailments (ulcers, high blood pressure, insomnia).
  2. Problems within a marriage and within a family due to the stress of the financial situation.
  3. Negative affect on your job performance.
  4. # Depression and a feeling of being overwhelmed.
• Bankruptcy should be considered as medicine for those who are financially ill.
• Creditors can make you feel guilty and ashamed, but creditors are NOT on your side. They forget that it is a long-standing tradition in the United States, most other countries, and in most religions to forgive debts and let a person get a fresh start.

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WILL MY CREDIT BE RUINED?

• Your credit is not hurt by the bankruptcy itself; what hurts your credit is that the debts are not paid. The way to rebuild your credit is to buy an inexpensive item on time and pay for it; then buy something else and pay for it, etc.
• An automobile is one of the easiest items to buy after the bankruptcy is over. Check out the automotive section of the newspaper.
• You can maintain your bank accounts and all of your utilities.
• You can make arrangements to pay any creditor, if you want or feel obligated.
• Bankruptcy will stay on your credit report for up to 10 years, but if you have a decent income, you will find credit. With over a million people a year filing bankruptcy, creditors would run out of customers if they refused to extend credit to everyone who has filed bankruptcy.

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CAN I FILE BANKRUPTCY AGAIN?

• You can file bankruptcy more than once. To file another Chapter 7 bankruptcy, there must be at least six years time from discharge to discharge. You can file a Chapter 13 bankruptcy at any time, so long as you intend to pay your creditors 100%. If you are going to be paying your creditors less than 100%, then it needs to be at least six years from your last discharge.