How To File Bankruptcy For Free: A 10
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In a Nutshell
Chapter 7 bankruptcy is a powerful debt relief tool for American consumers and businesses alike. If your case is simple, you may not need a lawyer to file. Here’s a 10-Step Guide on how to prepare for and get a fresh start in the form of a bankruptcy discharge.
Written byAttorney Andrea Wimmer.
Filing any type of bankruptcy provides immediate debt relief through the automatic stay. Thatâs the law that prohibits creditors from contacting you as soon as your bankruptcy case has been filed. It also stops a wage garnishment right away.
Heres Why You Need A Bankruptcy Attorney:
Hiring a Bankruptcy Petition Preparer is NOT a Solution
Pro se filers often hire a BPP as a cheap alternative to a lawyer in an attempt to save money. The BPP may tell you all you need to do is pay them just $75.00 and it will be easy to waive the Bankruptcy Courts $335.00 filing fee. This is often not the case and can eventually result in a dismissal of your case. A BPP cant provide legal advice when a waiver is denied or when other problems arise.
Let there be no doubta bankruptcy petition preparer is nothing more than a typist who, by law, isnt even allowed to give you legal advice. It isnt worth your time or money. Learn more about the risks and responsibilities of filing bankruptcy in Wisconsin without a lawyer, or book your free consultation with our Milwaukee area bankruptcy attorney today.
Is Chapter 7 Bankruptcy Right For You
If youre drowning in debt and dont know where to turn, bankruptcy might be your best option. Most debtors have no nonexempt property, which means that they pay nothing to unsecured creditors and their debts are discharged. If youre considering filing for bankruptcy or just looking for options to deal with your debt, check out our other blog posts or reach out to an experienced National Bankruptcy Forum member attorney.
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You Will Not Lose Everything: Exempt Assets Are Protected From Creditors
Exempt assets are protected from your creditors which, in turn, means you get to keep them. In contrast, nonexempt assets can be sold by your bankruptcy trustee to pay your creditors.
The type of exemptions you qualify for are determined by state law. There are some unusual and very specific rules to determine which state law you must use to determine exemptions. However, I am not going to bore you with such a minuscule and technical area of the law today.
Bottom line: If you have moved from one state to another in the last two years, you need to speak to an experienced bankruptcy attorney where you live. They will help you identify which states law you need to look at when determining your exemptions.
Since chapter 7 bankruptcy exemptions vary from state to state, some states have very generous exemptions. Others are stricter about which of your assets are protected from creditors.
Your Home And The Chapter 7 Bankruptcy Trustee
Chapters 7 and 13 work very differently, so it’s important to understand what to expectespecially if you want to keep valuable property in Chapter 7. Here’s how it works.
After filing for Chapter 7, your property will go into a bankruptcy estate held by the Chapter 7 bankruptcy trustee appointed to your case. However, you don’t lose everything because you can remove property reasonably necessary to maintain a home and employment. The trustee will sell any remaining assets and distribute the sales proceeds to your creditors.
Here’s the tricky partif you make a mistake, it’s unlikely that the bankruptcy judge will allow you to dismiss the case, and you could lose the house. So you must follow the rules carefully.
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What Happens To My Credit If I Declare Bankruptcy
When you declare bankruptcy, it’s a sign that you are no longer paying your debts as originally agreed, and it can seriously damage your credit history. That said, the two types of bankruptcy aren’t treated the same way. Because chapter 7 bankruptcy completely eliminates the debts you include when you file, it can stay on your credit report for up to 10 years.
While chapter 13 bankruptcy is also not ideal from a credit standpoint, its setup is viewed more favorably because you are still paying off at least some of your debt, and it will remain on your credit report for up to seven years.
Shortly after your bankruptcy is discharged by the courtmeaning you no longer owe the debts you’ve included in your filingit may be difficult to get approved for credit, especially with favorable terms. There are some lenders, however, who specifically work with people who have gone through bankruptcy or other difficult credit events, so your options aren’t completely gone.
Also, the credit scoring models favor new information over old information. So with positive credit habits post-bankruptcy, your credit score can recover over time, even while the bankruptcy is still on your credit report.
Can You File Bankruptcy And Keep Your House
5 minute read â¢Upsolve is a nonprofit tool that helps you file bankruptcy for free.Think TurboTax for bankruptcy. Get free education, customer support, and community. Featured in Forbes 4x and funded by institutions like Harvard University so we’ll never ask you for a credit card.Explore our free tool
In a Nutshell
Filing bankruptcy and keeping your house is possible. Whether you can file bankruptcy and keep your house depends on your unique circumstances. Hereâs what you need to know.
Written byAttorney Andrea Wimmer.
Homeownership has long been part of the âAmerican Dream.â If youâre overwhelmed with debt, donât let your fear about losing your home stop you from getting bankruptcy relief. Especially if paying your creditors is putting your ability to pay your home mortgage at risk.
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What To Avoid Before Filing Bankruptcy
Here. Some things to avoid before filing for bankruptcy include: Failure to file your tax return – Your tax return is important and will be necessary as part of your filing. and schedules . They are essential for satisfaction. Collect income tax. If your tax return is no longer up to date, yours. the case may be over.
Establish A Budget And A Savings Account
One way to hopefully prevent more financial trouble in the future is to establish a monthly budget. Decide how much money you need to be sure that all bills are paid and that all essential items are met for your household.
That amount of money should be set aside each month. The remainder of your income should be placed in a savings account that you build over time. When the opportunity comes to purchase a home or a car, a solid savings account says a lot to a lender regarding your financial stability.
Furthermore, the savings account will help you refrain from using credit for non-essential purchases in the future.
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Is Bankruptcy Always The Right Answer
No. Honestly, bankruptcy is not always the right fit for everyone. If bankruptcy is not the right fit for you, we can assist you with other options, including negotiating a debt settlement plan, debt consolidation or loan modification. Restructuring debt or negotiating a reduced fee can work wonders to get you on the right track again.
Kentucky Exemptions Vs Federal Exemptions
Under Kentucky law, you are granted only a $5,000 exemption for your homestead, which is significantly lower than most states. This means that if you must sell your home under chapter 7, you will receive $5,000 to go towards purchasing a new residence. Meanwhile, under federal law, you will be given a $23,675 exemption.
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Will Bankruptcy Affect My Job Or Future Employment
Twenty-nine percent of employers run a credit check on new job applicants, according to a survey by CareerBuilder. As a result, declaring bankruptcy could affect your ability to get a new job, especially if that job is in the financial services industry or with a government entity.
They do this primarily to make sure you’re a good fit for the jobssuch as handling moneyand that you’re not financially stressed, which could increase the likelihood of theft or fraud.
If an employer simply runs a routine criminal background check, however, your bankruptcy won’t show up.
It’s less likely that employers would conduct background checks on current employees. So if you’re not planning to switch jobs, you likely don’t need to worry much about a bankruptcy affecting your employment.
Can I Keep My Home After Filing Bankruptcy
The answer, like so many others in law, is that “it depends.” Most people that declare bankruptcy can keep their houses throughout the process, but some are not.
Keeping your home is often the biggest worry about filing for bankruptcy â and which Chapter to file for. This article will give you some useful information so you can know what to expect.
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If I File Bankruptcy How Will It Affect My Future Credit And My Job
Different people have different experiences obtaining credit after they file for bankruptcy. As a general rule, most people find it more difficult to obtain long-term credit, such as a home mortgage, shortly after a bankruptcy has been filed. For other types of credit, however, experiences vary depending on other factors. The Bankruptcy Code prohibits your employer from discharging you or discriminating against you solely because you have filed a bankruptcy case. A bankruptcy can remain on your credit report for up to 10 years, but many people are able to raise their credit score to a relatively good level within a few years after bankruptcy.
Common Questions People Ask When Deciding Whether To File
Anybody can fall into a rut. We have seen it again and again. Clients come to us at one of the lowest points in their lives. We believe that clients choose us because of what we offer. We provide more than legal services. We help clients see the light again. We offer them hope. We start at our first consultation. The following are some of the most common questions people have when deciding whether to file bankruptcy.
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What Happens When Declaring Bankruptcy
If you’re struggling financially, bankruptcy gives you the opportunity to pay down a portion of your debts over time or have some of them eliminated entirely.
Either way, declaring bankruptcy grants what’s called an automatic stay, which is essentially a block on your debt to keep creditors from trying to collect. They can’t deduct money from your bank account, garnish your wages or go after any of your other assets.
You’ll then have time to work with the court and your creditors to determine the next steps.
What Happens To Nonexempt Property
The fate of your nonexempt property depends on the type of bankruptcy you file.
- Chapter 7 bankruptcy. If you file for Chapter 7 bankruptcy, the trustee will sell your nonexempt property and distribute the proceeds to your creditors. However, the trustee might let you buy back your motorcycle, boat, or any other nonexempt item if you can afford to do so. You can learn more about exempting property in a Chapter 7 Bankruptcy Exemptions: What Can I Keep? Youll find answers to specific exemption questions in Chapter 7 exemption FAQ.
- Chapter 13 bankruptcy. By contrast, you keep all of your propertyboth exempt and nonexemptif you file for Chapter 13 bankruptcy. Of course, nothing in life is free. Heres the catch: Youll have to pay your unsecured creditors an amount equal to your nonexempt property over your three- to five-year repayment plan or your disposable income, whichever is more. So you can expect, at a minimum, that each dollar of nonexempt property you keep will increase the amount you pay into your repayment plan by a dollar.
Because your case is unique, its strongly suggested that you meet with a bankruptcy lawyer. A bankruptcy attorney can tell you which chapter will be best for you and what will happen to your property, as well as the cost of filing a Chapter 7 case versus the cost of filing a Chapter 13 matter.
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Is There An Income Limit For Chapter 7 Bankruptcy
To automatically qualify for Chapter 7, your disposable income must be below the Chapter 7 income limit – specifically it needs to be below the median level for your state. That number varies from state-to-state. If your disposable income exceeds the median in your state, you still may be able to qualify through a means test that includes looking at your income and reasonable expenses to see if you can get that number under the median income for your state.
Pay Your Bills When They Are Due
Make sure that none of your bills are paid late, as that can reflect negatively against you on your credit report. You must have a complete understanding of every bills due date and how much is due well before it needs to be paid. It is also a good idea to consider having your bills automatically drafted from your account. However, be sure the money is there, as overdraft fees can impede your overall credit profile.
While some may feel as though it is impossible to repair your credit after bankruptcy, the good news is it is very achievable. With some determination and consistent behavior, you can build your credit to what it once was prior to your bankruptcy.
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Are Debts Affecting Your Ability To Keep Up With Your Mortgage
Ask yourself this question: If I could deal with all of my other debts, would paying my mortgage be easier? We help people answer that question every day.
Its your home, so you always pay your mortgage, but you are falling behind on your credit cards and other bills, and you worry that you may soon also fall behind on your mortgage payments. You worry that you may lose your home.
You can file bankruptcy even if there is equity in your home. If you owe more money to your creditors than the value of what you own you are considered insolvent. If you are insolvent you are eligible to file for bankruptcy or proposal in Canada.
With up-to-date mortgage payments filing for bankruptcy does not mean you will automatically lose your house. In fact, by eliminating other debts that are making it difficult to keep up with your mortgage payments.
Does Bankruptcy Ruin Your Credit
While there are many benefits that come with filing bankruptcy, there are also some sacrifices that must be made. One of these is that a bankruptcy claim can leave a negative impact on your credit score. The amount of damage it does, though, depends on what your credit score looked like before you filed.
If your credit score was relatively good before filing, bankruptcy can certainly leave a big dent in your score. Those with good credit post-filing should expect a sizable drop in their score. However, if your score was already low before filing, the damage wont amount to nearly as much. A person with many delinquent accounts and a high debt-to-asset ratio already has a pretty low credit score. As such, filing for bankruptcy will only cause a modest drop in credit score.
While a bankruptcy claim can certainly tank your credit score to begin with, it can also be the quickest way to improve it. For example, someone who doesnt file for bankruptcy might continuously be behind in payments and have an ever-increasing amount of debt without the ability to catch up. In this case, their credit score will continue to take hit after hit with seemingly no means for improvement.
On the other hand, someone who does file for bankruptcy will have a reduced debt load and will eventually be able to get their finances back on track. They will be able to start making loan and credit payments on time all while reducing their debt-to-income ratio and rebuilding their credit.
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Discuss Your Bankruptcy Alternatives To Keeping Your Home
Worrying about your home and your family is natural. For most people its not the mortgage thats the problem its the credit cards, lines of credit, payday loans and other bills.
At Hoyes Michalos, we can help. In many cases you can file bankruptcy and keep your home and keep your car if you claim bankruptcy.
For over half of the people we meet with a bankruptcy is NOT necessary a consumer proposal is a better solution and even if you do file bankruptcy, we still offer alternatives.
The longer you wait, the greater the risk that you fall behind on your mortgage payments, and that will put your hard-earned assets at risk.
There are other factors to consider before deciding if a proposal is the correct option, so if you or someone you know is in a similar situation, we recommend you discuss your individual situation with a bankruptcy trustee. With offices across Ontario, we can help you review your options.