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What is a Debtor?
In its most basic form, a debtor is a person who owes someone else money. A
creditor is the person who is owed money. For example, If John loans Mary
fifty dollars, then John is the creditor of Mary, and Mary is the debtor or
John.
What is Bankruptcy?
Bankruptcy is the legal method for a debtor to "discharge" or
relieve personal liability on debts that you owe. While no debtor is guaranteed a
total discharge of his debt, most debtors who file for bankruptcy are given
such relief. One of the primary purposes of the bankruptcy laws is to relieve
the honest debtor from the weight of oppressive indebtedness and to provide
the debtor with a fresh start.
Who can file for bankruptcy?
Any person can file for bankruptcy protection from creditors. In
addition, most businesses and charitable organizations may also qualify for
bankruptcy protection. You may only discharge your debt in a Chapter 7
case once every 6 years, but you may file a Chapter 13 case even if you have
been granted a Chapter 7 discharge in the last 6 years.
What happens to my bills after I file for bankruptcy?
As soon as your case is officially filed with the court, creditors are
legally prevented from attempting to collect on any debt owed to them by
you. This means that creditors must stop all collection activity, including:
telephone calls, harassing letters, repossessions, foreclosures, lawsuits,
and wage garnishments. Once the case is concluded, the court may enter a
"discharge". A discharge is a total release of a debtor from any
further personal liability for most if not all of his or her pre-bankruptcy debts.
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What is the difference between Chapter 7, 11, and 13 bankruptcy?
In a typical Chapter 7 bankruptcy (also
known as liquidation), a trustee collects the nonexempt property of the
debtor, converts the property to cash, and distributes the cash to the
creditors. In contrast, Chapters 11, 12, and 13 of the Bankruptcy Code
contemplate debtor rehabilitation. In a rehabilitation case, creditors look
to future earnings of the debtor, not to the current property of the debtor.
Under rehabilitation, a debtor will generally retain his assets and
property, while making payments to creditors pursuant to a court approved
plan.
Will filing bankruptcy effect my credit
rating?
Unfortunately it will. However, most
individuals are able to rebuild their credit within a few years. If you are
currently contemplating bankruptcy, then it is likely that your current
credit rating has already been effected. A discharge of your current debt
may provide the opportunity to rebuild your credit with steady, regular
payments on a new account.
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How long will a bankruptcy show on my credit
reports?
The Fair Credit Reporting Act prohibits
the reporting of outdated information about consumers. With a few
exceptions, credit-reporting agencies can only disclose a bankruptcy during
the first ten years following a filing.
Will I lose my house, car, and other personal
property?
Not necessarily, Florida has laws that
determine which items or property are exempt from being taken away.
Homesteads of certain sizes are exempt in Florida. Personal items such as furniture and clothing are exempt up to
$1,000.00. There are also many other categories of property that are exempt
in Florida. We will review your property and discuss how bankruptcy
would affect keeping your property at your FREE INITIAL CONSULTATION.
Should I file for bankruptcy?
There is never a quick answer to this
question. Generally, if you can pay off your debts within three to five
years then filing for bankruptcy is not a good idea. If this is not
possible, then filing may be a viable solution to eliminate your financial
obligations.
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Last update: 8/2/2007 |
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DISCLAIMER
The information at this site has been prepared
by, or on behalf of, Karin A. Garvin, ESQ., for general
informational purposes only. It does not constitute legal advice
and is presented without any representation or warranty
whatsoever, including as to the accuracy and/or completeness of the
information. No one should, or is entitled to, rely in any manner
on any of the information at this site. Parties seeking advice
should consult with legal counsel. |
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