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What happens when you file bankruptcy?

My brother and his wife have been struggling financially, and now they want to file bankruptcy. Has anyone been through this and know what to expect? They are scared they will lose everything or be poor forever. I tried to do some research on the internet for him, but he says that what I've told him does not sound right.

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lovingmy4babies

Asked by lovingmy4babies at 2:21 PM on Mar. 21, 2011 in Money & Work

Level 30 (44,667 Credits)
Answers (10)
  • you are not poor forever...for some people it's the only option. You start out fresh but it stays on your credit for 7 years. some employers do not like seeing it either. just depends what type you file also...with I think Chapter 13, you can lose your home and your vehicles as collateral. They need to get a free consult from a bankruptcy attorney.
    calliesmommie

    Answer by calliesmommie at 2:22 PM on Mar. 21, 2011

  • Depends on what they file and what they have. We had nothing of value except our truck and van. The van was actually worth almost nothing and we owed more on the truck than it was worth. We filed chapter 7 and got to keep our truck and van (the van was paid off in full before we even finished the bankruptcy so it was taken off the file). We did get rid of all our hospital and credit card debt and were able to have a fresh start. It was a total weight off of us. That was a couple years ago. We have no credit cards now and our only debt is the truck and some medical bills from when our last child was born last summer. So far the only issue we've had is finding a place to rent because no one would rent to us without a co-signer because of our credit but all of our family have even worse credit. Finally found someone to give us a break.
    He should just talk to a lawyer and they will explain it. We went to Legal Helpers.
    justanotherjen

    Answer by justanotherjen at 2:28 PM on Mar. 21, 2011

  • You get some much needed peace of mind. You don't have to field any more calls from all the collection agencies. You can actually have some cash on payday. Bankruptcy stays on your credit report for 7-10 years. You can and will be denied credit because of it. Unless you purposely went out and charged lots of new stuff days before you filed bankruptcy you generally do not lose 'stuff'. Any bankruptcy lawyer will have all the info you need. I would not try to file without a lawyer.
    meooma

    Answer by meooma at 2:28 PM on Mar. 21, 2011

  • No, they won't lose everything. I'm not a lawyer & I know there have been some changes in the laws that make it harder to file for bankruptcy, but, my understanding is that there are at least 2 kinds of bankruptcy & that you can list only the items that you need relief from in the 1 kind, such as credit card debt, etc. Credit card debt is unsecured debt, so they can't make you return items that were purchased with most credit cards, but secured loans, such as car loans, they can make you return a car, or anything that was purchased with collateral of any kind, that's their security. Once they file bankruptcy, some of their creditors may offer them deals to pay off their debts at a lower rate, but others may not. The bankruptcy will stay on their credit report for 7-10 yrs, & will make it harder to get credit. When they do get credit, it'll probably be at higher interest.

    Again, it would be smart to consult an attorney.
    ohwrite

    Answer by ohwrite at 2:29 PM on Mar. 21, 2011

  • I am not entirely sure, but I know they will not be able to buy a new car....they will have issues getting any kind of credit car. They may have issues moving into a new home or apartment. That usually lasts about 7-10 years. Once that patch of time is over...they can start rebuilding their lives more or less. Just like PP said.
    Wish2Be

    Answer by Wish2Be at 2:50 PM on Mar. 21, 2011

  • Thanks ladies! I'll show him these comments :)
    lovingmy4babies

    Comment by lovingmy4babies (original poster) at 3:20 PM on Mar. 21, 2011

  • Hubby and i Filed chapter 13 back in 2006. It was the BEST thing we could have ever done. We were behing on both car paymetns, and our mortgage. Not to mention had other little loans and medical bills that needed to be paid. Since we filed chapter 13 we have to pay so much to our trustee every month. But by doing this it allowed us to: breath more freely, keep our home and vehicles, not have to listen to colelction calls, and we have some "extra" money at the end of hte month . yes, it stays on your credit for years aftewards but in our case it was worh it. We won't need our credit for anything. We already have the mortgage on our home. Have two dependible vehicles that we now own free and clear. We pay cash for EVERYTHING. If we don't have cash, we don't need it. They can call a bankruptcy lawyer in their area and they will talk to them for free for about an hour. They will answer ALL their questions.
    LorisChar

    Answer by LorisChar at 3:26 PM on Mar. 21, 2011

  • They need to talk to a bankruptcy attorney.
    tasches

    Answer by tasches at 7:11 PM on Mar. 21, 2011

  • They will be okay! It's a reset button for them but they have to learn from it or they will be in the same financial mess.
    Izsarejman

    Answer by Izsarejman at 7:32 PM on Mar. 21, 2011

  • They can talk to an attorney fr free.
    jonellg

    Answer by jonellg at 11:53 PM on Mar. 21, 2011

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