Chapter 7 Personal Bankruptcy FAQs

Filing for Chapter 7 personal bankruptcy can be a very confusing process. The following information addresses the most frequent concerns people have when they consider bankruptcy.

Am I eligible to file bankruptcy? Once every 8 years you can file a chapter 7. The rules as to when you can file a Chapter 13 and how often are more complicated. Your eligibility to file a chapter 7 does not depend simply on the amount of your debt nor the amount of your income each month. Our job is to help determine if you can file and if not now, when you would be eligible to file.

What is the difference between a chapter 7 and chapter 13? A chapter 7 bankruptcy is often referred to as a liquidation bankruptcy. You file, eliminate what debt you can, keep what assets you are allowed to keep, and are done in about 90 days. Chapter 13 is where you agree to pay back to your creditors some percentage of what they are owed over a period not to exceed 5 years. In exchange you get to keep your asset.

When do the creditor calls stop? Once you file, the bankruptcy law imposes a barrier against any creditor continuing to contact you by phone or letter, continuing any law suit or levying against your wages, as a general rule, all creditor activity to collect on a debt must stop.

Will I be able to get credit after filing? Yes, but it might take a few years. The more time that passes since your filing, increases the likihood that you will get credit in the future.

How long is the difference on my credit report? Your credit report will usually carry the filing for 10 year. Initially your rating will take a deep drop. You might find it will drop down to the 400But we often find your rating, after about 3 to 4 years and no new debt, will bounce back to the 700s.

What can I keep if I file bankruptcy? There are rules as to what you can keep under Federal law and under Minnesota law. Generally you can keep your household goods and furnishings. You can protect a certain amount of equity in one vehicle per debtor. Your house is also protected upon to a certain amount of equity. Retirement accounts (IRAs and 401(k) are almost always protected. Beyond that, the equity in your other assets will determine what you can keep and what you have to buy back from the bankruptcy court.