The Hightower Team offers answers to these frequently asked Bankruptcy questions. Please consult a qualified attorney for specific answers to your situation.

What Debts Are Removed by a Bankruptcy?

Most unsecured debt is erased in a Chapter 7 bankruptcy, excluding the following categories.

• Child support and alimony
• Debts for personal injury or death caused by drunk driving
• Income tax debt and all other tax debts
• Student loans from government organizations
• Fines and penalties imposed for violating the law

Will Bankruptcy Save My House?

Filing for bankruptcy will trigger an automatic stay that stops creditors from collecting their debt. This included debts owned on a home secured by a mortgage.

For those who file Chapter 7 bankruptcy, the automatic stay lasts only as long as the property is not abandoned by the trustee or until the bankruptcy case is closed. This only provides temporary relief from the foreclosure, but not a lasting solution.

During a Chapter 13 bankruptcy, the bank can request the stay to be lifted if the debtors are not making their payments. If you recall, a Chapter 13 bankruptcy is reorganization, so by design it allows debtors to cure their default on their home mortgage by paying the arrearage over a period of time. Chapter 13 bankruptcy may be a viable solution to save your home.

Will Bankruptcy Stop Creditors from Contacting Me?

By law, all actions against a debtor must cease once the bankruptcy documents are filed. Bankruptcy protection means creditors cannot initiate or continue any lawsuits and must stop making phone calls demanding payments. However, creditors secured by a lien (car, house, etc.) will get the stay lifted if ongoing payments cannot be made.

What Does Bankruptcy Cost?

Court fees and attorney fees vary, but should fall within the range of $1000 to $2500. All creditable bankruptcy attorneys will provide a free initial consultation to answer questions and will create a plan for you. Being well organized and prepared for the initial consultation is a good way to keep attorney fees down. Prior to any consultation, request a financial worksheet from the bankruptcy attorney you intend to meet. Be sure to provide them with a full and complete financial worksheet. At the initial consultation you can only get the best help and advice if your bankruptcy attorney has all the facts!

Who Will Know?

All bankruptcy filings are public record and the three major credit bureaus will record the event. Chapter 7 bankruptcy will remain on your credit report for ten years, and Chapter 13 will remain on your credit report for six years. Under normal circumstances no one will know about a bankruptcy unless the firm or individual pulls your credit history. However, a debtor may be required to disclose this information when asked. Take all of this information into consideration when deciding if bankruptcy is right for you.

Can I Be Fired from My Job for Filing Bankruptcy?

No, the law prohibits any employer from discriminating against you because of bankruptcy. However, most employers will pull the credit history of those applying for work and take that into consideration prior to offering a compensation plan for the potential employee.

What Does It Mean to Reaffirm Debt?

Reaffirmation agreements are not required by the bankruptcy code. With a reaffirmation agreement, the debtor is required to continue to pay as if no bankruptcy has been filed. Reaffirming debt is a serious decision and should only be done in certain situations. Most debt that is reaffirmed occurs when that debt is secured by collateral, and it is more advantageous to make payments versus forfeiting the asset. There is no formal reaffirmation agreement in Chapter 13 bankruptcy.

Will I Ever Have Credit Again?

Yes, but how quickly is up to you! Most debtors who file bankruptcy build credit by using secured credit cards. This means a debtor puts a certain amount of money into an account to guarantee payment. In most cases the credit limit is equal to the security provided and is increased over time as the debtor proves their ability to pay. For more information about secured credit cards, visit section 20 of this booklet. Since a bankruptcy remains on credit reports for six or ten years, it becomes less significant the further in the past it is, especially as good credit history is established.