What is bankruptcy?
Bankruptcy is a legal proceeding filed in the United States Bankruptcy Court that permits you to obtain a discharge of your responsibility to pay certain debts. The bankruptcy laws are intended to allow an honest person to get a “fresh start.” But bankruptcy is not a free ride. Depending on your personal finances, you may have to sell some of your property and assets. A bankruptcy filing will appear on your credit report for 10 years and will make it more difficult and more expensive to obtain new credit. Bankruptcy is a matter of pubic record so relatives, friends and neighbors could find out. It may be more difficult to rent an apartment, buy or rent a car, or even buy insurance, because you will be considered a higher risk. There is a chance that your credit cards may be cancelled if you file for bankruptcy, which may make it difficult for future transactions.
Do I need an attorney to file for bankruptcy?
You are not required to be represented by an attorney, but the advice of an attorney is generally helpful in understanding your rights and the consequences of your bankruptcy case, particularly in light of the recent changes to bankruptcy law. If you decide to file a Chapter 7 or Chapter 13 bankruptcy case, the advice and assistance of an experienced bankruptcy attorney is generally a worthwhile expense.
Are there less expensive alternatives to hiring an attorney?
So-called “bankruptcy petition preparers” offer services in some areas of the country or over the Internet. Although their fees are usually lower than those of attorneys, bankruptcy petition preparers are generally not attorneys and are, therefore, not permitted to give you legal advice or represent you in court should there be problems with your case. If you are a person with very limited means, in some states or cities you may be able to obtain the services of an attorney who will represent you without charge on a pro bono basis through a legal aid bureau or local bar association.
Can I keep my credit cards after filing?
Whether you will continue to have and use any given credit card account is up to the issuer of the card. Some issuers may permit you to keep your account if you “reaffirm” payment of your debt to the issuer. There may be other alternatives available, such as secured or guaranteed payment cards that function more like debit than credit cards.
Can I be fired for declaring bankruptcy?
The Bankruptcy Code generally prohibits termination of employment or discrimination with respect to employment solely because an individual (1) has filed a bankruptcy case, (2) has been insolvent before the case was filed, or (3) has not paid a discharged debt.