# 6 Common questions about bankruptcy Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-02-16 Category: FINANCE Category URL: https://financedigest.com/category/finance Meta Title: Common Bankruptcy Questions Answered Meta Description: Discover everything you need to know about bankruptcy, from what it is to how it can help you get a fresh financial start. Find answers to FAQs here. URL: https://financedigest.com/6-common-questions-about-bankruptcyhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/istock-1300340919-1736816221503-compressed.jpg) Bankruptcy could be the solution you need to get rid of your debts and regain control of your financial life. However, you should know that bankruptcy is not a simple process. Far from it, it can be highly complicated and confusing if you are unfamiliar with it. So, if you are thinking about using bankruptcy to solve your debt issues, you probably have many questions about the process. You may want to know exactly what [bankruptcy can do for you, how long it will take, which bankruptcy chapter you should choose, or whether you should work with an experienced bankruptcy lawyer during your filing](https://www.financedigest.com/movie-chain-operator-cineworld-files-for-u-s-bankruptcy.html "Movie chain operator Cineworld files for U.S. bankruptcy"). Here you will find answers to those and many other common bankruptcy questions. Once you have a better grasp of the process, you’ll be ready to take advantage of this legal alternative to get the [fresh financial](https://www.financedigest.com/how-to-make-a-fresh-financial-start.html "How to Make a Fresh Financial Start") start you deserve. **What is bankruptcy?** Bankruptcy is a legal proceeding intended to help [people who cannot pay their debts](https://www.financedigest.com/5-common-ways-people-end-up-in-debt-without-realising.html "5 Common Ways People End Up In Debt Without Realising") get a fresh financial start by temporarily or permanently preventing certain creditors from collecting debts from them. Essentially, it gives struggling [debtors the opportunity to rebuild their finances from scratch without the pressure of fulfilling the obligations of most of their pre-existing debts](https://www.financedigest.com/sovereign-debtors-creditors-agree-on-steps-to-jumpstart-debt-restructurings.html "Sovereign debtors, creditors agree on steps to jumpstart debt restructurings"). Although bankruptcy has a historically bad reputation (mainly due to misinformation about the process), it is often the ideal [solution for those drowning in debt and looking for a way](https://www.financedigest.com/5-ways-data-integration-solutions-are-helping-financial-organizations-deliver-improved-outcomes.html "5 Ways Data Integration Solutions Are Helping Financial Organizations Deliver Improved Outcomes") out of it. **What can bankruptcy do for you?** As mentioned above, the main benefit of filing for bankruptcy is discharging most of your debts, helping you regain your peace of mind, and giving you a clean [financial slate on which to build](https://www.financedigest.com/best-guide-to-build-a-personal-financial-plan.html "Best Guide to Build a Personal Financial Plan") your economy from the ground up. However, that’s not the only advantage of the process. Another perk of bankruptcy is the automatic stay. The automatic stay is a [court order that will prevent your creditors from pursuing any debt collection efforts during your bankruptcy](https://www.financedigest.com/blockfi-tells-u-s-bankruptcy-court-it-is-the-antithesis-of-ftx.html "BlockFi tells U.S. bankruptcy court it is ‘the antithesis of FTX’"), allowing you to restructure your finances. Moreover, filing for bankruptcy may also help you stop foreclosure on your home, catch up on missed payments, and even halt wage garnishments. **Does bankruptcy eliminate all my debts?** Bankruptcy can help you get rid of most, but not all, of your debts. For example, bankruptcy may discharge unsecured debts such as [credit card](https://www.financedigest.com/uk-credit-card-borrowing-rises-by-most-since-2005-boe.html "UK credit card borrowing rises by most since 2005 – BoE") debt, personal loans, medical bills, and other consumer liabilities. On the other hand, secured debts, like auto loans, would only be discharged if you [return the asset](https://www.financedigest.com/asset-management-firms-are-using-ai-to-deliver-higher-returns-for-investors.html "Asset management firms are using AI to deliver higher returns for investors") to the creditor. Furthermore, some debts are deemed non-dischargeable, which means that bankruptcy cannot erase them. Non-dischargeable obligations include child support, alimony, numerous tax debts, [student loans](https://www.financedigest.com/student-loans-hurting-workers-ability-to-save-for-retirement.html "STUDENT LOANS HURTING WORKERS’ ABILITY TO SAVE FOR RETIREMENT"), among others. However, secured and non-dischargeable debts may be included in the Chapter 13 repayment plan (more on that later). **Can anyone file for bankruptcy?** Most people who want to get rid of their debts can file for bankruptcy. Even if you filed for bankruptcy before, you might be able to file again after a few years. However, your income will dictate which bankruptcy chapter you will be allowed to file. For example, if your earnings are [below the state median, or if your residual income is low enough to qualify](https://www.financedigest.com/qualifying-for-low-interest-credit-card-consolidation.html "Qualifying For Low Interest Credit Card Consolidation") for the means test, you may be able to file for Chapter 7 bankruptcy. On the other hand, if you generate too much money to [pass the means test](https://www.financedigest.com/ensuring-traders-pass-the-test-of-mifid-ii-and-mar.html "Ensuring traders pass the test of MiFID II and MAR"), you could go for Chapter 13 bankruptcy to discharge your debts. **What type of bankruptcy should I file?** The two most common bankruptcy types are Chapter 7 and Chapter 13. They both provide different approaches for [dealing with your debts](https://www.financedigest.com/analysis-no-china-no-deal-bid-to-break-sovereign-debt-logjams-gets-weary-thumbs-up.html "Analysis-No China, no deal: Bid to break sovereign debt logjams gets weary thumbs up") but will ultimately enable you to get rid of most of them in one way or another. Chapter 7 bankruptcy is an ideal solution for those looking for a [quick fix](https://www.financedigest.com/eu-demands-quick-fix-from-u-s-of-green-subsidy-law.html "EU demands quick fix from U.S. of green subsidy law") to their debt problems. In this Chapter, a bankruptcy trustee will handle the sale of your non-exempt [assets to pay](https://www.financedigest.com/why-it-pays-for-companies-to-hold-physical-assets-in-separate-limited-companies.html "Why it pays for companies to hold physical assets in separate limited companies") your creditors. This process will only take 3 to 5 months. After that, most of your remaining debts will be discharged. However, not everyone can file for Chapter 7. As discussed above, you will have to pass the means test to qualify for this type of bankruptcy. If you are not eligible for Chapter 7 bankruptcy or wish to keep your assets after filing, Chapter 13 bankruptcy may be the best option. During a Chapter 13 filing, you will have to devise a 3- to 5-year repayment [plan to pay](https://www.financedigest.com/uk-leadership-favourite-truss-u-turns-on-pay-plan-in-first-big-misstep.html "UK leadership favourite Truss U-turns on pay plan in first big misstep") your creditors. Once you comply with the plan, the rest of your unsecured debts will be discharged. Besides allowing you to keep your assets, Chapter 13 also offers other [key advantages](https://www.financedigest.com/ai-holds-the-key-for-both-competitive-advantage-and-risk-mitigation-in-2022.html "AI holds the key for both competitive advantage and risk mitigation in 2022"). For example, you will be able to include non-dischargeable [debts within your repayment plan](https://www.financedigest.com/sri-lanka-to-unveil-debt-restructuring-plan-to-creditors.html "Sri Lanka to unveil debt restructuring plan to creditors"). Although this means you’ll still have to pay them in full, bankruptcy will [buy you some additional time](https://www.financedigest.com/buying-a-house-for-the-first-time.html "Buying a house for the first time") to catch up on these payments. If you are unsure which bankruptcy chapter best [fits your financial](https://www.financedigest.com/5-tips-for-financial-fitness-in-2021.html "5 tips for financial fitness in 2021") situation, you should consider consulting with a bankruptcy attorney near you for further guidance. **Should I work with a bankruptcy lawyer?** If you want to increase the odds of your bankruptcy being a success, then the answer is a thunderous yes. Working with a Los Angeles bankruptcy attorney, such as KT Bankruptcy Lawyer, can be the [key to achieving the fresh financial](https://www.financedigest.com/why-financial-planning-should-be-a-key-subject-at-school.html "Why financial planning should be a key subject at school") start you are looking for. The attorney will help you every step of the way. Initially, he or she will help you gather the required paperwork for your filing. Additionally, the lawyer will help you determine the type of bankruptcy you should file for [according to your specific financial](https://www.financedigest.com/what-to-expect-in-2022-financial-services-trends-according-to-salesforce.html "What to expect in 2022? Financial Services Trends, according to Salesforce") situation. Still have questions about the bankruptcy process? Click here to contact bankruptcy attorney for a free consultation; you have nothing to lose. **How to find reputable attorneys near you.** Finding experienced bankruptcy attorneys has never been easier. Today, all you have to do is grab your [phone and run a quick Google search](https://www.financedigest.com/your-phone-number-on-google-search-giant-now-takes-removal-demands.html "Your phone number on Google? Search giant now takes removal demands"). In a matter of seconds, you will have access to many bankruptcy [law firms](https://www.financedigest.com/international-law-firm-calls-in-viato-connect-uk-and-us-offices.html "INTERNATIONAL LAW FIRM CALLS IN VIATO CONNECT UK AND US OFFICES") prepared to help you through every step of your filing. Most of these law [firms work with SEO companies for lawyers to develop](https://www.financedigest.com/crypto-firms-will-develop-offshore-without-clear-us-rules-coinbase-chief-says.html "Crypto firms will develop ‘offshore’ without clear US rules, Coinbase chief says") effective search engine optimization strategies and stay at the top of Google rankings. If you want to [grow your law firm](https://www.financedigest.com/determination-and-innovation-the-key-for-fast-growing-uc-firm.html "Determination and Innovation the Key for Fast Growing UC Firm"), you should work with a lawyer marketing agency that can help you use digital marketing to boost your brand like never before. [Read more](https://legalfacts.org/law-firm-marketing/attorney-seo-service/) about attorney SEO companies and the benefits they can bring to your law firm. [Business name:](https://www.financedigest.com/why-do-the-famous-names-in-business-rely-on-mentors.html "Why do the famous names in business rely on mentors?") KT – Tang & Associates Attorney AT LAW Address: 9741 Bolsa Ave Suite 208, Westminster, CA 92683 Phone number: (855) 485-1991 **This is a Sponsored Feature.** --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---