1. What is Bankruptcy?
Bankruptcy, or insolvency as it is otherwise known, is a legal declaration of an inability or an impairment to pay for the debts owed to creditors. To put it simply, it is an option that debtors and creditors have whenever an individual cannot pay his debts when they fall due.

There is admittedly a bad stigma around bankruptcy. However, when it comes to dealing with individual insolvency cases, it should always be considered. Note that bankruptcy is not permanent. It is a temporary case, thus, allowing you, the debtor, to gain a fresh start.

2. What is Chapter 7?
Chapter 7 bankruptcy is named such because it is chapter 7 under the bankruptcy law. Chapter 7 is synonymous with liquidation or straight bankruptcy. It is also named liquidation bankruptcy because your assets can be repossessed and sold off to fulfill the debt obligation to the creditors.

3. What is the process for filing?
First, any qualified bankruptcy attorney will probably require you to fill out a questionnaire for them to review to determine whether or not bankruptcy is right for you. If it is determined to be your best option, the attorney will have to decide under which Chapter you will file. You will likely meet with the attorney on more than one occasion to answer questions, provide documents and for the attorney to answer any questions you might have. After the bankruptcy petition (legal papers filed with the bankruptcy court that commences your bankruptcy proceeding) is filed, you will be required to appear in court on at least one occasion, the Meeting of Creditors, for a Chapter 7 filing

4. How will filing affect my credit?
Under the Fair Credit Reporting Act, a Chapter 7 may remain on your credit report for 10 years. A Chapter 13 filing is legally permitted to be reported for 7 years. The filing of any bankruptcy petition will seriously impact your credit score in the near future. By beginning to slowly build up your credit after your bankruptcy is discharged, you tell future lenders that your problems with credit are now behind you. One way is to obtain a “secured” credit card from a bank as soon as you are able. With a secured card, a debtor puts up a certain amount of money, as little as $200.00, in an account at the bank to guarantee payment. This limit is usually increased as the debtor proves his or her ability to pay the debt.

Two years after your bankruptcy is discharged, you will be eligible for a mortgage loan on similar terms to individuals with similar financial profiles that have not filed bankruptcy. It is then that the amount of your down payment and your employment and income stability become more important to a bank than your past bankruptcy filing.

5. What is a Meeting of Creditors?
Section 341 of the United States Bankruptcy Code affords creditors the right to meet with the debtor to determine if a discharge or a reorganization of debt is appropriate based upon the facts and circumstances presented by a debtor in their bankruptcy petition. While creditors do technically have the right to attend these proceedings and to question the debtor, creditors rarely appear at these proceedings.

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