Frequently asked questions

Will I lose everything if I file for bankruptcy?

Although some of your personal assets and belongings could be sold by your trustee to partially satisfy your debts, usually personal items and household goods are not affected. Also, things owned entirely by your spouse are exempt. However, if you and your spouse own things jointly, you may have to sell the portion that you own. It is a good idea to discuss these issues with your trustee before you file for bankruptcy.

How long does it take to file for personal bankruptcy?

Filing for personal bankruptcy is a five- to 10-step legal process, depending on the specific circumstances. The whole procedure from the day you file for bankruptcy, to the day you are discharged from bankruptcy and your debts are cleared, is about nine months.

Will bankruptcy remove all debts?

Secured debts are not significantly affected by bankruptcy. A secured debt is one where the creditor secured one or more of your assets as collateral as a requirement of the loan made to you. For example, you may promise to give a creditor, such as a bank, your car or your home if you do not repay a loan. A secured creditor may seize these assets, but, once they are sold, any outstanding balance will be discharged. Child and spousal support payments, as well as court fines and penalties are not cleared by bankruptcy. Student loans are also not cleared by bankruptcy unless you ceased being a student at least seven years before the date that you filed for bankruptcy.

What will happen to my credit rating?

Your credit rating tells banks and other lenders how good you are at handling credit, and is usually checked by lenders before they decide whether to give you a credit card or a loan. Bankruptcy gives you the lowest possible credit rating, and the fact that you went bankrupt stays on your credit record for six or seven years (depending on the policy of the credit reporting agency) after you are discharged from bankruptcy. As a result, lenders may be reluctant to give you loans or credit cards for quite some time.

What is garnishment?

Garnishment allows the creditor to collect money directly from someone who owes the debtor money such as an employer who owes the debtor wages. This person or business is called the garnishee. If you won a lawsuit and you have a judgment that says you are owed money, and the debtor refuses to pay, a common way to collect is by garnishment. Garnishment orders are issued by the court.


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