The Top Five Questions About Chapter 7 Bankruptcy

If you’re thinking about filing for bankruptcy, or if you already know that you need to do so, it’s essential to know the basic facts before getting started. If you’re like most people though, you probably aren’t too familiar with what really happens.

So, just to get you started, here are the top five questions that people often ask when they’re trying to figure out if filing for Chapter 7 bankruptcy is a good solution:

  1. Will bankruptcy stop creditors from calling me? Yes — which is one of the main reasons why there were an estimated 1,071,932 bankruptcies filed in the U.S. during 2013. Once you have documentation to prove that you’re filing for Chapter 7 bankruptcy, creditors are not allowed to contact you in any way.
  2. How much does filing bankruptcy cost me? For individuals filing for bankruptcy, it currently costs a little over $300 for the basic filing fee — but remember that there are plenty of other fees to consider as well, such as paying for a Chapter 7 bankruptcy attorney, and any other court fees.
  3. How long does chapter 7 bankruptcy last? It typically takes around six months for the filing to take place, making it seem like a fairly simple process. Unlike Chapter 13, Chapter 7 bankruptcy often seems more appealing because it offers a “get out of debt quick” type of solution.
  4. Can my car be taken away during bankruptcy? Yes and no — it all depends on what your financial situation looks like, and whether or not you can reach an agreement with the court to make repayments to credit lenders. If you need to have a car for daily activities (like getting to work), then you’ll most likely be able to keep your car; if you’ve got a few vintage cars that are worth a lot of money but aren’t necessary for normal activities, the court may take those cars — and any other valuable items — and use them to help repay creditors.
  5. How long does it take your credit to recover after filing for bankruptcy? This is definitely one of the biggest issues with filing for bankruptcy, especially Chapter 7 bankruptcy; it only takes about six months for the process to happen, but the consequences of bankruptcy can affect your credit score for up to 10 years, making it difficult to take out any new lines of credit.

So now it’s your turn — what other questions do you have about filing for bankruptcy? Be sure to leave your thoughts down in the comments section!