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Bankruptcy FAQ

At Avery Law, we have over 65 years of experience helping people find workable solutions to their financial problems through filing Chapter 7 and Chapter 13 bankruptcies. If you are currently struggling with unsustainable debt, we're here to provide you with the information and legal advice you need to move forward in the right direction. We believe that filing for bankruptcy can be very beneficial, but filing should always be an education decision.

In order to assist you with the information gathering process, we have provided a list of frequently asked questions about bankruptcy. If you are interested in obtaining more information, we encourage you to contact an Idaho bankruptcy attorney from our firm directly to schedule your free case evaluation.

  • What is bankruptcy?
    Bankruptcy is a legal action that individuals, as well as businesses, can use as a means for obtaining much needed debt relief and a financial fresh start. There are numerous reasons why someone may choose to file bankruptcy, including job loss and illness, and various Chapters under which consumers can file their bankruptcy.
  • What is a Chapter 7 bankruptcy?
    Chapter 7 bankruptcy is known as the liquidation bankruptcy. A Chapter 7 is an orderly, court-supervised procedure where a trustee takes the debtor's non-exempt assets and reduces them to cash in order to pay off creditors. However, since many Chapter 7 debtors have little to no nonexempt assets (no asset cases), many debtors get to keep everything. With a Chapter 7, qualifying unsecured debts are essentially wiped out or erased completely.
  • What is a Chapter 13 bankruptcy?
    A Chapter 13 bankruptcy is also known as the "wage earners" bankruptcy because it is designed for individuals with a regular source of income. With the Chapter 13, the debtor proposes a plan to repay creditors over a time period of 3 to 5 years.
  • Can I choose between a Chapter 7 and 13?
    The Protection Act of 2008 requires that a "means test" be used to determine whether or not an individual debtor qualifies for relief under a Chapter 7. If the debtor's income exceeds the threshold then the debtor may have no other choice but to file a Chapter 13.
  • Can bankruptcy save my home from foreclosure?
    Chapter 13 is often preferable, especially for homeowners at risk of losing their home to foreclosure. A Chapter 13 allows the debtor to keep a valuable asset such as their home. With a Chapter 13, the debtor generally remains in possession of their property and makes payments to their creditors through a trustee.
  • What is the bankruptcy discharge?
    The bankruptcy discharge releases the debtor from all personal liability for certain types of debts. Once a debt is discharged, the debtor is no longer legally liable or required to pay debts that are discharged. The discharge acts as a permanent order that prohibits creditors from taking any type of collection action on discharged debts.
  • Will all my debts be wiped out?
    No. Generally, only certain unsecured debts are allowed to be discharged. These include credit card debt, medical bills, unsecured loans and others. The types of debts that typically cannot be discharged include student loans, child support and alimony, certain taxes, restitution and debts to government agencies for fines and penalties, among others.
  • Can I file for Chapter 7 a second time?
    Yes you can, but the court will deny a discharge in a second Chapter 7 case if you received a discharge under a Chapter 7 or a Chapter 11 case that was filed within eight years before the second petition was filed. In simple terms, you need to wait eight years before you can file a second Chapter 7 petition.
  • What is the automatic stay?

    When you file a formal bankruptcy petition, the court will issue an automatic stay that halts all collection activities against you. This means that you can be protected from the following while your bankruptcy is pending:

    • Wage garnishments
    • Foreclosure proceedings
    • Repossessions
    • Utility shutoffs
    • Lawsuits
    • Debt collection phone calls

    The automatic stay will not stop criminal proceedings or actions for child support or spousal support. Our firm's attorneys can provide you with more information about the automatic stay and how it applies to your personal situation.

  • How will bankruptcy affect my credit?
    While bankruptcy will impact your credit, the effects are not permanent. Generally, a Chapter 7 bankruptcy will remain on your credit for ten years and a Chapter 13 for seven years. After your bankruptcy has been completed you can begin rebuilding your credit using responsible financial behaviors and planning. In many cases, consumers find that they can rebuild their credit significantly and maintain credit scores much higher than they had before their bankruptcy.

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