Should I file Bankruptcy?

This is a personal decision. What will help you decide whether you should file bankruptcy is how much debt you have, versus the income you have. Look at the amount of money you pay each month just to make ends meet versus how much of a dent you are making into that debt that you are trying to pay off. Are you having trouble paying all your bills every month? Then it is probably a good idea to file.

What about my credit rating?

While a bankruptcy will obviously affect your credit as it will be on your credit report for about 10 years, you have to look at the big picture. Is your credit rating doing all that well now? If you cannot pay all your bills, your credit will undoubtedly suffer whether or not you file bankruptcy. In any event, while you may not have excellent credit immediately after filing a bankruptcy, you will free up your income and will be able to build your credit back up. It will not be easy to get financing, but it is not impossible, but do not be surprised if the interest rates you are offered are higher than you would expect. As long as you have good spending habits (regardless of whether they were good or bad prior to the bankruptcy) your credit will improve with time after your bankruptcy.

How can I keep my house if I file bankruptcy?

In a chapter 7, it depends on a variety of factors. First of all, you need to take the amount of your homestead exemption into account. Once you take this into account, you must consider how much equity you have left in the house. If you have a large mortgage and very little equity, you will be able to keep your house in a bankruptcy, so long as you continue to make timely payments on your mortgage. However, you will want to seek the advice of your attorney before signing any reaffirmation agreements. If you have too much equity in your house, you should not file a chapter 7 if you want to keep the house. You should file a chapter 13.

A chapter 13 allows you to keep your house, because instead of liquidating your property that is not exempt from bankruptcy, you pay into a plan that gets disbursed to all the creditors that file claims with the bankruptcy. As a result, the amount of equity in your house is irrelevant, so long as you pay your mortgage payments and pay into your plan.

What if I want to pay someone even though I am going to receive a discharge?

You can always choose to pay someone despite receiving a discharge. However, you are not obligated to do so, and it is illegal for any creditors to pursue collection of a debt that has been discharged in a bankruptcy. Also, keep in mind that you have to report any payments in excess of $600 you made to creditors within 90 days prior to your filing of bankruptcy, so if you decide to pay a particular creditor prior to filing, you will need to report this to the Trustee as it may be considered a preferential transfer and the trustee might want it refunded to the bankruptcy estate.

What information needs to be included in my Bankruptcy Petition?

Make sure to keep a list or copies of all your bills. You will need to list every creditor you money to, including collecting agencies, and attorneys working on behalf of any of your creditors. Also, you are involved in any court cases (any type, including divorce, personal injury, worker's comp, wage garnishment, traffic), you will need to list these. You also must list all your property and the approximate values (if you know the value). You must also may have to list any gifts you've made (depending on the amount) and any property you have transferred within the past 5 years (if you do not list it and the trustee finds out, the trustee may be able to avoid the transfer due to the possibility of fraud).