When you file for bankruptcy, the last thing you want to have in uncertainty about what’s going to happen. That’s why it’s so important to be informed and find the answers you need to answer your most pressing questions about bankruptcy. That way, you’re not faced with so much fear of the unknown that often comes with filing.
With that in mind, we’ve answered the most common questions people ask about bankruptcy that people ask. Learn what you need to know about the filing process and what happens before, during and after you file. If you still have more questions or need help with filing, call us at 1‐855-417-7188 to connect with the right services for your needs.
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When you face severe financial distress, a primary concern is often how to save your home. Foreclosure not only risks your biggest asset, but it can also throw your entire life off if you’re forced to move. The good news is that filing for bankruptcy can give you a temporary respite from foreclosure actions. Once you file for bankruptcy, you receive an automatic stay, which stops all collection actions, including foreclosure. A bank cannot foreclose on your home until after your bankruptcy filing is complete.
This means you can use bankruptcy to buy more time to avoid foreclosure. In addition, your filing may cover your home. For example, if you file for Chapter 7 and your home is below a certain value, then it’s exempt from liquidation. Once you receive your final discharge, you can work with your lender to save your home.
Learn more about using bankruptcy to stop foreclosure »
Technically, yes, but that certainly doesn’t mean that you should. This is referred to as filing “pro se” which means “for oneself” or “on one’s own behalf.” As long as you are filing individually, you can file for bankruptcy yourself without a lawyer. You don’t even need a law degree to do it. This means you can file for Chapter 7 and Chapter 13 on your own, as well as Chapter 11 and Chapter 12 for your business as long as you are the sole owner.
However, filing for bankruptcy on your own is almost never advisable. Filing for Chapter 7 requires a means test that you need to know how to navigate successfully. Even for Chapter 13, you must submit a repayment plan proposal to qualify. If you don’t submit it correctly, the court may reject your discharge request. And then even if you decide to use an attorney to file, the denial from your first filing may cause issues. In some cases, the court may not approve a proposal on a debt that’s already been denied once.
Get more information on filing pro se »
People often think that filing for bankruptcy means the end of your financial life. But even right after you’ve achieved full and final discharge, you can start rebuilding your financial outlook with new loans and credit cards that are designed for people working to recover.
Secured credit cards are available to anyone in exchange for a small cash deposit. You can qualify for secured credit cards, regardless of your credit score or even if you finished a bankruptcy yesterday. There are also unsecured loans designed for people with bad credit. For example, credit building loans are designed for people with bad credit. You can get a small personal loan
Learn more about types of credit that can help you rebuild after bankruptcy »
Yes. In most cases, you can discharge at least a portion of your IRS or state tax debt by filing for bankruptcy. How much you end up paying depends on how much you owe, your financial situation and which filing you use.
Chapter 13 filings tend to be the easiest way to discharge tax debt through bankruptcy. Your IRS and state back taxes are simply rolled into your court-ordered repayment plan. You pay off a certain amount and the rest is discharged.
Chapter 7 filings are a little more complicated when it comes to tax debt. You must meet at least five of six criteria in order to qualify for any discharge of your back taxes.
It’s also important to note that bankruptcy discharge will not automatically eliminate a federal property tax lien. Even if you pay off the debt that originated the lien in full during your bankruptcy filing, you must still take steps after your filing to clear the lien
Understand the six criteria required for a Chapter 7 filing to clear tax debt »
When you cosign on a loan or a credit card, you assume liability for repaying the debt. That means you’re responsible for the debt is the primary borrower doesn’t pay. And even discharge of the debt through bankruptcy doesn’t eliminate your liability. Once the primary borrower completes their filing and receives the final discharge, the lender can still come after you for the remaining balance.
If you are a cosigner of someone thinking about filing for bankruptcy, then Chapter 13 is usually the better option. The borrower can stipulate to the court trustee that they wish to repay the cosigned debt in full during their repayment plan. This will eliminate the debt, so you won’t be on the hook.
Get tips on how to talk to the primary borrower about their filing »
This depends on which type of filing that you use. Chapter 7 tends to be the fastest type of filing. In most cases, you should complete your filing and receive your final discharge within six months. However, in some cases, it can take up to one year.
Chapter 13 filings take longer because you must complete your court-ordered repayment plan. These plans generally take three to five years. Once you make the last required monthly payment, you will receive the final discharge.
Read more about the timing you can expect once you file »
According to the Get Out of Debt Guy Steve Rhode, creditors generally can’t touch your 401(k) when you file for bankruptcy. However, every situation is different. He suggests that you get a definitive answer from a licensed attorney in your state.
“To do some homework on this before you talk to a local bankruptcy attorney,” Rhode says, “ask your employer if the 401(k) you are contributing to is an account qualified under the Employee Retirement Income Security Act (ERISA). These type of 401(k) accounts are excluded from your bankruptcy estate.”
Keep in mind, if you have taken money out of your 401(k), that money or asset is no longer protected. So, if you withdraw money from your 401(k) and then file for bankruptcy, those funds are not protected under ERISA.
Talk to a bankruptcy attorney for free »
If you’ve filed for bankruptcy in the past, you may not be able to file a second time if it’s soon after. You must wait a few years before you will qualify for another round of discharge on your debts. The amount of time you need to wait depends on which filing you used the first time and which filing you want to use now. This table gives you an idea of the time you need to wait, depending on the types of filings you use for your first and second filing.
There is an exception on the last filing set listed above that may allow you to reduce the time before your Chapter 7 filing.
Understand the time it takes between bankruptcy filings »
| First filing | Second filing | The time required between filings |
|---|---|---|
| Chapter 7 | Chapter 7 | 8 years from the first filing date |
| Chapter 7 | Chapter 13 | 4 years from the first filing date |
| Chapter 13 | Chapter 13 | 2 years from the first filing date |
| Chapter 13 | Chapter 7 | 6 years from the first filing date |
