Frequently Asked Questions
Please note that these are general answers to common questions people have and your situation could be different.
Q: What is bankruptcy?
A: Bankruptcy is a legal process where debtors (people who owe money) are able to get most, if not all, bills discharged (wiped out), keep most if not all of their property and get extra time to pay debts if they receive income. Once the bankruptcy begins, creditors cannot try to collect from the debtor or sue the debtor to obtain a judgement.
Q: Does it ruin my credit?
A: While bankruptcy does have an immediate impact on credit score, it’s not what you’d expect. For many people, their credit score is actually improved because it removes many of the “derogatory” marks—the things that lower your score—from your credit report.
Q: Will I lose everything?
A: Generally, no. That’s part of why there are lawyers – to make sure you don’t do it wrong and lose everything! In fact, filing for bankruptcy does not mean you have to sell everything and, often, it can even improve your payments on the stuff you do keep or let you pay them off faster. Many bankruptcies aren’t even designed around canceling the debt. Instead, they focus on reducing interest rates and restructuring payments so you can afford to pay your debts and get back on your feet. Diment & Associates can help you plot a course to get out from under your ever-growing mountain of bills and on to a healthier financial future. Often, it’s a matter of restructuring debts and changing some spending habits.
Q: Will I be able to purchase a house or car?
A: While bankruptcy does have an immediate impact on credit score, it’s not what you’d expect. For many people, their credit score is actually improved at the conclusion of a bankruptcy because it removes many of the “derogatory” marks—the things that lower your score—from your credit report. Even more interesting is that for many, their access to credit is improved. Most people don’t realize that mistakes from their past like evictions, repossessions, or accounts in collections are highly impactful on credit decisions. Having a bankruptcy, for many lenders, is a factor that impacts interest rates – not approvals. This is especially true after two years since your bankruptcy. Many people are further from realizing their dream of buying a house or a car than they thought – because of derogatory marks. Once they file for bankruptcy, they end up closer to that goal than they were before.
Q: How does the bankruptcy process work?
A: Discuss your concerns with one of our attorney’s. Based on your situation, they will advise you on the best action plan. When you are ready to move forward, an agreement to retain counsel is completed. Once counsel is retained, you collect and submit statements of accounts and assets to our online portal and complete a credit counseling course. When you receive the certificate for completing the course, we can file a petition to the court. Then there is a meeting of creditors held by a court trustee to review and discuss the case. All parties are required to attend. Please note, our service is all inclusive, meaning there are no additional fees or charges you will incur for filing.
Q: How will it affect my spouse?
A: This is usually a complex question that requires a lawyer’s consult on a case-by-case basis.
Q: Can employers discriminate against someone who has filed for bankruptcy?
A: No. It is illegal for either private or governmental employers to discriminate against a person as to employment solely because that person has filed for bankruptcy. It is also illegal for local, state, or federal governmental units to discriminate against a person as to the granting of licenses (including a drivers license), permits, student loans, and similar grants because that person has filed for bankruptcy. If you feel you are being discriminated against for bankruptcy, please notify your lawyer.
Q: Are there alternatives to bankruptcy?
A: There are a few things you can do instead of bankruptcy, however most of these do tend to have a high failure rate vs filing bankruptcy with a lawyer having a high success rate. Some other things you can look into are out of court settlement, reduction of payment, help from consumer credit counseling services, or payment of debts by selling or borrowing on property. All of these alternative options, however, require cooperation from creditors and are more likely to succeed if tried right after financial difficulties begin.
