Let's talk bankruptcy! Despite the common notion that bankruptcy is a negative, the truth of the matter is that bankruptcy can be a great place to begin a fresh start. Before you do decide to file though, you'll want to learn as much information about it that you can. In this slide you'll find 8 common questions people who are considering bankruptcy usually ask, and need to know. Having this knowledge helps get you started in understanding the common terms and procedures related to filing. Feel free to share this slide on your website and also to leave your comments below.

1. Action Advocacy, PC 1
Frequently Asked Questions in Bankruptcy
When it comes to bankruptcy, people have a lot of questions;
questions that need to be answered in a way that will bring
clarity and understanding about the subject of bankruptcy.
The following 8 slides will answer some common questions you
may have about bankruptcy. You can leave any other questions
you have in the comments below.
Feel free to use or embed this slide on your website.

2. Action Advocacy, PC 2
Frequently Asked Questions in Bankruptcy
1. What is a Chapter 7 Bankruptcy?
A Chapter 7 bankruptcy allows the debtor to get rid of his/her unsecured debts. Credit cards,
medical bills and debts where the debtor didn't give collateral for the loan are considered
unsecured debts.
In Chapter 7, the debtor does have to surrender his/her secured property with some exceptions.
The debtor may be able to save some property through applicable state or federal
exemptions.
The debtor may also be able to reaffirm the debt obligations in specific property items such as a
home or a car if the creditor and the Bankruptcy Court agree and if the debtor has some
equitable interest in the property.
Debtors do need to pass a means test to make sure they really can't afford to pay the unsecured
creditors. Debtors do attend a creditor's meeting which is held by the Trustee. The whole
process usually takes about six months to complete.

3. Action Advocacy, PC 3
Frequently Asked Questions in Bankruptcy
2. What is a Chapter 13 Bankruptcy?
A Chapter 13 bankruptcy is a reorganization plan. It allows a debtor the right to keep secured
property such as a home, a car, and work tools if the debtor can show he/she can pay the
monthly bills and pay off the arrears over a five year period or less.
The debtor also has to propose to pay off some of the unsecured debt depending on his/her
disposable income. The payments to the unsecured debtors are usually minimal.
Debtors do also need to attend a creditor's meetings. If their plan is approved, they will make
monthly payments to a Trustee for up to 60 months.

4. Action Advocacy, PC 4
Frequently Asked Questions in Bankruptcy
3. How Can I Save My Home in Bankruptcy?
Debtors may be able to save their home in bankruptcy if they have some equity in the home or, at
least some equity after they use their state or federal exemptions.
In Chapter 7, the debtor will need to reaffirm the home loan, get the OK from the creditor and also
get approval from the bankruptcy court.
In Chapter 13, the debtor will propose a plan to continue the regular mortgage payments. The
debtor will also arrange to pay the arrears over a three to five year period.

5. Action Advocacy, PC 5
Frequently Asked Questions in Bankruptcy
4. How Can I Save My Car in Bankruptcy?
Debtors save their car in basically the same way they save their home – through a reaffirmation
agreement or through a Chapter 13 bankruptcy plan.
If the debtor just wants to save his/her car without saving the home, then the odds are pretty
good they can do so because the federal exemptions really help debtors in this situation.
Cars really have to be expensive or the debtor has to have very little income to lose the car. A
bankruptcy lawyer will help the debtor try to save the car.

6. Action Advocacy, PC 6
Frequently Asked Questions in Bankruptcy
5. How Can I Stop Harassing Phone Calls?
The filing of a bankruptcy petition acts as an automatic stay.
The moment the petition is filed, creditors and collection agencies have to stop any attempts to
collect the debt on their own. Instead, creditors and collection agencies need to process their
claim through the Bankruptcy Court and communicate their concerns with the Bankruptcy
Trustee.
The Fair Credit Debt Collection Act is another way to limit harassing calls before bankruptcy.
Credit collection agencies, under the law, can only call during daytime hours and they have to be
civil when they call.

7. Action Advocacy, PC 7
Frequently Asked Questions in Bankruptcy
6. What is Credit Counseling in Bankruptcy?
Any debtor who files for bankruptcy has to first take an approved credit counseling course. This
applies to Chapter 7 and Chapter 13 bankruptcies.
The course can usually be taken online.
The purpose of the course is to give the debtor a better understanding of his/her financial
problems and some ideas on how to handle them. It is usually affordable.

8. Action Advocacy, PC 8
Frequently Asked Questions in Bankruptcy
7. How Does Bankruptcy Affect My Credit?
Bankruptcy will affect a debtor's credit. The bankruptcy will be reported to credit agencies like
Equifax. The bankruptcy will be kept on the credit reports for up to ten years. Still, there are
some positives.
The main positive is that the debtor will have properly addressed his/her finances so that they
aren't getting into further trouble.
Many debts will be discharged or paid for a small amount. Some debts may continue, such as
payment on a home or a car, but under better terms.
Some creditors, knowing that the bankruptcy means the debtor has taken care of his current
financial problems, will extend credit.

9. Action Advocacy, PC 9
Frequently Asked Questions in Bankruptcy
8. What is a Means Test?
A means test is a recent test for Chapter 7 bankruptcy filers. It used to be that debtors, no matter
how much income they made, would be allowed to file for a Chapter 7 bankruptcy.
Many creditors complained to the US Congress that some debtors were earning a really good
living and still not paying anything to the creditors. The US Congress revised the bankruptcy
laws to require some showing that the debtor really couldn't pay.
The means test tests whether the Chapter 7 debtor should really be in a Chapter 13 bankruptcy
where even unsecured creditors will get some money. The test mainly looks to the average
income for a family of the same size and location.
If the debtor's income is below the average, then the debtor can file for Chapter 7. Otherwise, the
debtor has to file for Chapter 13. Most debtors fall below the average for the simple reason
that if they were above the average, they could probably handle their financial affairs.

10. Action Advocacy, PC 10
Frequently Asked Questions in Bankruptcy
9. What Debts Can't I Discharge?
Some unsecured debts can't be discharged, even in a Chapter 7 bankruptcy, because they're
considered too important.
Some of the common debts people can't discharge are student loans, support payments to
children, spousal alimony payments, money owed because the debtor committed a crime,
debts owed because the driver drove while intoxicated and injured someone, and certain tax
obligations.

11. Action Advocacy, PC 11
Frequently Asked Questions in Bankruptcy
For more information on bankruptcy, including bankruptcy statistics for Connecticut filers, from
2012 to 2015, visit the Action Advocacy, PC website at www.actionadvocacy.com