Frequently Asked Questions – Bankruptcy

Bankruptcy

How long will a bankruptcy stay on my credit report? 

A bankruptcy filing can legally stay on your credit report for ten years for a Chapter 7 bankruptcy. For a Chapter 13 bankruptcy, credit bureaus will generally remove the bankruptcy from your credit report after seven years.

The good news is that having a bankruptcy filing on your credit report does not mean that you will have bad credit for seven to ten years. In fact, most people who file for bankruptcy are able to improve their credit score to a good level after two to three years, and many have been able to obtain credit within a few months of completing their Chapter 7 bankruptcy.

Many credit card and loan companies may see you as less of a credit risk than you were prior to filing. When you file for bankruptcy, you eliminate a lot of debt that previously made you a greater liability for companies lending you money or offering you a credit card.

Do I have to list all of my credit cards in the bankruptcy, or can I keep some of my credit cards? 

You must list all of your debts. You cannot pick and choose which credit cards will be listed in the bankruptcy. Whether the creditor keeps you as a client after you file for bankruptcy is their decision.

Can I eliminate student loans in bankruptcy? 

Student loans generally fall under the category of non-dischargeable debts, regardless of whether they are government or private student loans. Unless your can show that repaying your student loans would result in undue hardship, bankruptcy will not eliminate your student loans. This might change as there is talk in Washington about relieving some of the trillion dollar plus student debt load.

If I am married, do I have to file jointly with my spouse? 

No. You are not required to file jointly with your spouse if you are married, and then you spouse will not receive a bankruptcy filing on their credit report.

Who will find out that I filed for bankruptcy? 

Generally, other than your creditors, no one will know.

What can happen if I don’t pay my debts and I don’t file for bankruptcy? 

Every situation is different, but generally if you fail to make payments on your debts then the creditor may seek several options to obtain the money. A creditor can file a lawsuit in court to obtain payment of the debt. Once the creditor obtains a judgment from the court, then they can seek to collect the debt through wage garnishment, freezing your bank account and taking the money out of that account. The time frame in which the creditor will take action varies. Some creditors are more aggressive and take legal action faster while other creditors do not take legal action.

Will my creditors stop harassing me when I file for bankruptcy? 

When you file for bankruptcy the automatic stay prevents creditors from contacting you or taking action to collect on the debt you owe. The automatic stay also stops creditors from continuing with wage garnishments, lawsuits in court, or harassing telephone calls.

Will I be fired from my job because I filed for bankruptcy?

The bankruptcy code prevents employers from firing you solely on the basis that you have filed for bankruptcy. In the majority of cases most employers will not even be aware that you have filed for bankruptcy. It is more likely that an employer finds out that you have debt problems because you are receiving harassing creditor calls at work or because of a wage garnishment.