What is bankruptcy?
How can bankruptcy help me?
What debts can be discharged?
What debts cannot be discharged?
What property can I keep?
Can I keep my car?
How will bankruptcy affect my credit rating?
Will it cost me anything to file?
Do I have to go to any hearings?
Does it matter if I have been sued?
What will happen to people who co-signed loans with me?
Questions and More Information...
Bankruptcy is a legal process that may help you if you have more debts than you can pay. To begin the bankruptcy process, you file legal papers (called a petition) with the Bankruptcy Court. You must list all your debts and property on the petition. After you file for bankruptcy, your creditors cannot try to collect from you directly, but they must take any claims they have against you to the Bankruptcy Court.
NOTE: YOU CAN STILL FILE FOR BANKRUPTCY. In October of 2005, new bankruptcy rules were added, including: Almost everyone must complete credit and debt counseling both before and after filing for bankruptcy. There are fees for both this counseling, but people with low income may get them waived. The counseling can take place over the phone. Do not sign up for any counseling until you have talked to an attorney about whether bankruptcy is the best choice for you.
Bankruptcy may make it possible to:
Note: Alimony and child support debts have different rules. For more information, call Statewide Legal Services at 1-800-453-3320.
What debts CAN be "discharged"?
Bankruptcy can discharge most debts that are "unsecured". Debts are either "secured" or "unsecured". Unsecured debts have no property for the creditor to repossess (take back). Examples of unsecured debts include most credit card debt and medical bills. Secured debts usually are tied to a piece of property. (For example, your car loan or home mortgage.) If you stop making payments, the lender can repossess the property.
What debts CANNOT be "discharged"?
Bankruptcy cannot fix all financial problems. Some debts cannot be discharged, including:
You are allowed to keep enough property for you to make a fresh start after bankruptcy. You can keep most of your household furnishings (furniture, dishes, etc.), some jewelry, your clothing, and tools you use for work. Currently, you may keep up to $20,200 in equity in your house ($40,400 if the house is jointly owned by husband and wife), or up to $10,775 in property (including cash) if you do not own a house.
Most people who file for bankruptcy can keep their car. It depends on how much the car is worth and whether you still owe money on it.
How will bankruptcy affect my credit rating?
Most people who file for bankruptcy are already in trouble with a number of creditors, and therefore usually have a poor credit rating. Bankruptcy will not make those credit problems any worse, but will not make them go away. Bankruptcy will be listed on your credit history for 10 years. You can be granted credit after filing a bankruptcy, but the decision to give you credit is up to the individual lender.
Will it cost me money to file?
Yes. The fee is around $300. Some people with low income can now get this fee waived; that is, not charge you to file for bankruptcy. If you cannot get the fee waived, you may be able to pay it in installments.
Do I have to go to any hearings?
Yes, there is one very short hearing that you must attend which takes place soon after
you have filed your petition. It is called the "meeting of creditors", although
creditors do not always go. And, in some cases you may have to go to another hearing.
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Does it matter if I have been sued?
No. In most cases, even if you have been sued and the other side has won, that debt ("judgment") can be discharged (cancelled). This is true even if a wage garnishment/attachment has started.
What will happen to people who co-signed loans with me?
Co-signers are as responsible as you are for the payment of those loans. If you discharge your debt through bankruptcy, the creditor has the legal right to demand that your co-signer pay the bill.
Do I need a lawyer to help me? Filing for bankruptcy is very complicated to do by yourself. See below for help.
Where can I go for more information?This pamphlet was produced by the Legal Assistance Resource Center of CT in cooperation with Connecticut Legal Services, Greater Hartford Legal Aid, New Haven Legal Assistance Association, and Statewide Legal Services.
The information in this pamphlet is based on
laws in CT as of September 2007. We hope that the information is helpful. It is not
intended as legal advice for an individual situation. If you need further help and have
not done so already, please call Statewide Legal Services (see above) or contact an
attorney.
Copyright: 9/2007