Frequently Asked Questions About Bankruptcy
If you are considering bankruptcy, you probably have many questions regarding how the process works and whether it will be the right solution to your financial problems. At the Law Office of Curtis M. Garner & Associates, LLC, we hear from clients all the time who are trying to make life-changing decisions regarding their financial situation. Here are some examples of common questions we receive:
Can I stay in my home?
You may be able to stay in your home during bankruptcy. In fact, many people choose to file bankruptcy to stall foreclosure proceedings against their house. You must agree to keep paying your mortgage payments during and after your bankruptcy proceedings, however. You also must have a certain amount of exempt equity in your home.
What debt can be discharged?
You can discharge most unsecured debts in bankruptcy. Unsecured debt is debt that is not backed by collateral. For example, if you bought your car using a loan, your car is the collateral for the loan. If you don’t pay the loan, the bank can take your car. Medical bills, on the other hand, do not have collateral and are, therefore, unsecured.
You cannot discharge every debt, however. The law states that you cannot discharge the following debts:
- Child support or alimony obligations
- Student loan debt, in most circumstances
- Income tax debt from the past three years
- The debt you owe from a lawsuit, such as personal injury
- Fines and penalties for a legal violation
- Various other debts
You should always review your debts with an experienced bankruptcy attorney to understand what types of debt you can and cannot discharge.
What happens to my student loans?
Student loans are not dischargeable debt under the bankruptcy code unless you can prove that repayment would be an undue hardship. The federal bankruptcy court located in Missouri looks at your ability to pay, both in the past and future, as well as your living expenses and other obligations, to determine whether your student loan payments would constitute an undue hardship.
How long does a bankruptcy stay on my record?
A bankruptcy may stay on your credit report for 10 years from the filing date. You may start taking on new credit as soon as your discharge is complete.
How long does a bankruptcy case take?
Most bankruptcy cases take between three and six months, depending on the type of bankruptcy you are filing and the types of debt involved. If you file Chapter 13, however, your repayment process may take three to five years.