DOES MY BUSINESS HAVE TO FILE FOR BANKRUPTCY?
No. If the business is duly organized as a separate legal entity, the business entity is not required to file a bankruptcy if one of its principals files for individual bankruptcy protection. In the case of a corporation, a shareholder's bankruptcy generally does not affect the business, but the shareholder's stock in the business is an asset of his or her individual bankruptcy estate. Similarly, the filing of a corporate bankruptcy does not automatically require the shareholder(s) to then file a personal bankruptcy. However, if the shareholder(s) is/are personally liable for the debts of the business, they then may need to review their options relating to their personal exposure for the business debts.
CAN I KEEP MY HOUSE AND/OR MY CAR?
Yes. If the equity in your house or car is exempt, you are current on your payments and you are financially able to continue to make the payments on the house and/or car, then you should be able to retain your house and/or car. You will be required to discuss the process called “Reaffirmation of Debt” with your attorney. Please note that it is sometimes advisable to surrender your house or your car if the amount of the debt owed on the house or the car exceeds the value of the house or the car, or if the continued payment of these obligations will cause an undue financial hardship on you and/or your dependents.
CAN I SAVE MY HOUSE?
Yes. If the equity in your house is exempt, and if you can continue to make payments on the house, then you will be able to keep your house. However, it is sometimes advisable to give up your house if the debt on the house is greater than the value of the house, or if the cost of paying a mortgage is more than the cost of renting a home.
WILL I LOSE MY BUSINESS?
Not necessarily. If the business can successfully confirm a chapter 11 plan of reorganization, or if an out of court workout can be negotiated successfully, then the business owner need not lose his/her business. However, if an acceptable reorganization plan, whether through the bankruptcy court, or out of court, cannot be reached, then the business may be forced to cease operations and the assets of the business will likely be liquidated.
WILL I BE ABLE TO OBTAIN A LOAN/CREDIT OR BUY A CAR?
It is possible. Though it will likely be more expensive (higher interest rates or points) and the credit limits may be low, credit is often available to those who recently filed for bankruptcy. The amount and type of the credit sought, and various other factors, will dictate how soon a Debtor may be able to obtain credit after filing a bankruptcy case. In addition, the Debtor must be mindful of the cost of the credit in terms of the interest rate and the cost of the loan (i. e. points, fees, etc.).
WILL BANKRUPTCY AFFECT MY PROSPECTS FOR FUTURE EMPLOYMENT?
Federal law prohibits employers from discriminating against or using a person's bankruptcy as a basis to terminate or deny employment to that person.
DOES MY SPOUSE HAVE TO FILE FOR BANKRUPTCY?
No. If only one spouse is responsible for the debt, then the other spouse need not file. There is no legal requirement that a husband and wife must file together. On the other hand, only a husband and a wife can file a joint personal bankruptcy.
WHAT DEBTS WILL NOT BE DISCHARGED?
Debts not listed in a Debtor's bankruptcy schedules may not be discharged. Other debts that cannot be discharged include most taxes, student loans, domestic support obligations including alimony and child support payments, debts obtained through fraud, debts incurred through the deliberate injury to another person or person's property, debts resulting from injuries caused by a motor vehicle accident while under the influence of drugs or alcohol, and debts for criminal restitution or reimbursement orders.