5 Frequently Asked Bankruptcy Questions
Q. Which debts can be included in a bankruptcy?
A. In most cases, bankruptcy can eliminate most if not all of your debt. Some debts included are credit cards, medical bills, back IRS taxes over 3 years old, deficiencies on financing contracts, and gambling debts. These can all be discharged as long as they don’t involve fraud.
Sales taxes of any kind, alimony, most property settlements or child support debts cannot be discharged in a bankruptcy. Discharging a student loan in a bankruptcy filing is extremely difficult and requires that you show an extreme hardship, usually a disability that is expected to last for an indefinite length of time.
Q. Will a bankruptcy filing affect my spouse’s credit?
A. Your spouse’s credit score will not be directly impacted by a bankruptcy filing, however it may change their credit ratios slightly. Tennessee is not a community property state. Ask your bankruptcy lawyer for more information on this issue.
Q. Will a co-signer be liable for my debt if I file bankruptcy?
A. A bankruptcy discharge will only affect the liability of the person receiving it. However, the loan company may go after your co-signer. In some cases, a Chapter 13 bankruptcy will stay collection activities against all parties until a discharge is achieved.
Q. Will I be able to get credit or loans again after the bankruptcy?
A. People do get credit again after bankruptcy. It is not a financial death sentence. You may need to wait a few years though. As a general rule, you will likely be able to get financing for say, a car within about 2 years. Tread carefully in rebuilding your credit. Often a bankruptcy actually improves your credit score, since it can wipe out much of those outstanding balances and improve your debt to income ratios.
Q. Will my friends and family find out about the bankruptcy?
A. The Daily News does publish daily bankruptcy filings. These are published in an obscure location in the newspaper and are not likely to be seen by anyone you know. In most cases, the only individuals who will know that you have filed bankruptcy are the ones you tell.