Bankruptcy FAQ

At Reed Law Firm, P.A., we help our clients understand how bankruptcy works and how attorney Eric Reed can help them put their overwhelming debt behind them. Here are answers to some of the most common questions our clients ask during their free initial consultation.

For more specific answers to your bankruptcy questions, call our Columbia-based firm at 803-726-4888 or our Florence law office at 843-679-0077 today. We represent clients throughout central and eastern South Carolina.

Is Bankruptcy My Best Option?

This depends on many factors, but in general, if your debts are much larger than your income, bankruptcy is probably the best way for you to get out of debt. In other cases, debt consolidation and/or negotiation with creditors may be better choices. If you schedule an appointment with us, we will not try to steer you into a bankruptcy if that is not your best option. We will explain how bankruptcy and other debt relief options work, so that you can make your own informed decision.

What Kinds of Debts Can Bankruptcy Help With?

Through bankruptcy, you can generally discharge unsecured debt such as loans, credit card and hospital bills. However, unpaid spousal support, child support and some tax bills cannot be discharged. Student loans are also not dischargeable in most cases. However, even if a debt is not dischargeable, we may still be able to use bankruptcy to gain protection for you and work out a repayment arrangement. No matter what the debt is, if it is causing you trouble, give us a call so we can explain your options.

What is the Bankruptcy Process?

Both Chapter 7 and Chapter 13 bankruptcy begin with a filing with the bankruptcy court. This filing shows your assets, debts, income, tax returns, creditors and other relevant information, along with a plan for either repaying the debt or liquidating it.

The court then assigns a trustee to your case and schedules a meeting of creditors within about 40 to 50 days of the filing. At this hearing, the trustee puts you under oath. The trustee, and possibly some of your creditors, ask you questions about your financial standing and the terms of the bankruptcy plan. Your lawyer will prepare you for this hearing and be present during the proceeding. Do not let this meeting scare you. It normally takes no more than about five minutes and most creditors do not even attend. Your lawyer will be there with you to get you through the process.

In Chapter 13, once the parties agree to a bankruptcy plan, the judge will schedule a hearing to review the plan. It is not always necessary for you to attend the hearing to confirm the plan.

What are the main reasons why people file for bankruptcy?

Many challenging circumstances in life can lead to financial troubles, including significant credit card debt and an inability to make their mortgage payments. Many people choose bankruptcy because:

• It gives them a way out from many types of debt.
• One type of bankruptcy, Chapter 13, gives them an opportunity to catch up on mortgage payments, restructure their loans and avoid foreclosure.
• It offers a clean financial slate and a way to rebuild their credit after hitting rock bottom.
• It's a way to stop creditor harassment, wage garnishment and repossession.

Put simply, bankruptcy is a financial lifeline for many people in a difficult financial bind.

What are the eligibility requirements for filing bankruptcy?

The requirements differ depending on the type of bankruptcy. The quickest and simplest form of bankruptcy, Chapter 7, is only available to those with income below certain limits. Chapter 13 is available to individuals with debt below a certain threshold.

If you've previously filed bankruptcy, then you will need to wait a certain period of time - two to eight years, depending on your situation - to file again.

Can I include all types of debt in a bankruptcy filing?

You will need to include all your debts on the bankruptcy petition. However, not all debts are eligible to be discharged (wiped out) in bankruptcy. Nondischargeable debts include:

• Student loans
• Tax debts
• Alimony
• Child support

What are the long-term effects of bankruptcy on my financial life?

By clearing away unpayable debts, bankruptcy can set the stage for a more stable financial future. Contrary to popular belief, bankruptcy will not permanently ruin your credit. You can start to rebuild your credit after your debts have been discharged. You can obtain certain types of credit cards and may eventually qualify for owning a home (if you don't already).

Your bankruptcy will no longer appear on your credit report after seven to 10 years, depending on the type of bankruptcy.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.