Will I lose my home? - Unlike the image of bankruptcy from the 1920's, the current system is not designed to take everything away from you. You will not be living on the street wearing a barrel. Under current Federal law, an individual is allowed to keep at least $16,610.00 in equity in their residence. This is measured by taking the fair market value of the home and subtracting the balances of all outstanding mortgages. Under Connecticut law beginning in 1993, this amount is increased to $75,000.00 per owner. Newly proposed changes to the Federal may change this, however.
How long will filing bankruptcy affect my credit? - There is no doubt that filing bankruptcy will affect your credit rating. Most people do not realize that the record of a bankruptcy filing will remain on your credit history for 10 years. There are approaches that can minimize the effect of a bankruptcy case, but it is for this reason that it is important that your case be handled by a trained professional.
Will my friends and relatives find out? - The Bankruptcy Court is a Federal Court and therefore all of its records are public. However, in these times it is highly unusual for any publication to carry listings of consumer bankruptcies. It is likely that with the 15-fold increase in filings since 1980 that you probably know someone who has filed and just don't know it.
I don't want to file bankruptcy, is there anything I can do? - There are many alternatives to filing bankruptcy. Most depend on your income levels and lifestyle. Sometimes, financial difficulties are temporary and can be handled as such. Just as with major surgery, it is important to consider all of the alternatives. Congress is considering requiring family budgeting education and mandatory negotiation with creditors before allowing the filing of a bankruptcy case.
Are all debts dischargeable? - The simple answer is no. Student loans may no longer be discharged unless there is proof of a serious hardship. Family support obligations and DWI penalties are other examples of non-dischargeable debts. Fraud is another additional consideration. If a creditor can prove that you incurred a debt by submitting a fraudulent financial statement or incurred the debt knowing that you had no ability to repay, that debt may be declared non-dischargeable.