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Bankruptcy Process |
FREQUENTLY
ASKED BANKRUPTCY QUESTIONS
Do I have to Qualify for
Bankruptcy?
In general,
there is no standard requirement for filing for bankruptcy. However,
whether or not your income is more or less than the median income in
the state of Florida will determine whether you can file under
Chapter 7 or must file under Chapter 13.
What is the difference between
Chapter 7 and Chapter 13 Bankruptcy?
In order to
file under Chapter 7, your income must be less than the median
income in the state of Florida. If you qualify, your unsecured debt
- credit cards, medical bills, and certain kinds of loans - will be
wiped out. However, the court may sell some of your property in
order to pay your creditors a portion of what you owe. Typically,
non-essential or luxury items are sold. If you cannot maintain
monthly payments on your house, it may be foreclosed upon as well.
In a Chapter 13 bankruptcy, your debt is
restructured according to a payment plan agreed to by your
creditors. A trustee is appointed by the court, tasked with ensuring
you make payments on time and creditors receive what they are owed.
In general, people who file under Chapter 13 are required to pay
back 80% to 100% of what they owe over the course of 3 or 5 years.
I need to file for bankruptcy but my Spouse
doesn't. Can I file alone?
Yes, if the
debt in question is yours and yours alone. If, for example, you have
debt on credit cards that are in your name only. However, since you are married and
presumably jointly own a home or other property with your spouse,
your spouse's financial information will need to be reported on
bankruptcy documents.
Can I get a Credit Card after Bankruptcy?
It is relatively easy to
establish credit after bankruptcy. If you diligently pay your
bills, especially your mortgage, and do not fall behind on payments,
you should be able to qualify for a low-balance credit card a few
months after filing for bankruptcy. If you handle your credit card
responsibly, you can often quickly improve your credit score.
Should Cancel I Cancel My Credit Cards to
Improve My Credit Score?
Your credit score reflects a number of factors -
not just whether you are late on payments. Creditors look at how
much credit you have in proportion to your debt. So, for instance,
if you have 4 credit cards with a credit line of $10,000 on each,
your credit line equals $40,000. If you have $5,000 of debt on each
one, you owe 50% of your total credit line. If you decide to cancel
two cards and consolidate the remaining balance on the other two
cards, you would now have $20,000 in credit and $20,000 in debt.
This would hurt your credit score since your cards would now be
maxed out.
If you are trying to protect your credit score or
rebuild it, cancelling credit cards may be counterproductive.
Additionally, applying for credit cards in order to transfer
balances on existing ones could negatively impact your credit score.
When creditors check your credit report, other creditors often
assume it's because you need to borrow money or apply for additional
credit to handle existing debt. As a result, your credit score could
be reduced.
How long will my Bankruptcy take? Will My home
be Protected?
While each case is different, the typical Chapter
7 bankruptcy takes roughly 90-100 days from start to finish. During
this time, creditors have to stop contacting you and must
communicate with you through your attorney. If you are facing
foreclosure, filing for bankruptcy may delay the foreclosure
process.
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