Personalized and affordable help for people under financial stress.

Common Questions

I will automatically lose my house, car, or retirement account if I file for bankruptcy.

FALSE.  Many individuals who file bankruptcy are allowed to keep their house and cars when they file a bankruptcy.  If using the Indiana exemption scheme in your bankruptcy, an individual can keep up to $19,300.00 of equity in their primary residence (equity equals the fair market value of your house minus any real estate taxes, mortgages, and judgment liens) and up to $10,250.00 of personal property.  These amounts are doubled for a married couple.  Again, if using the Indiana exemption scheme, most individuals are allowed to keep their retirement accounts, regardless of the amount.

Bankruptcy erases negative information on my credit report.

FALSE.  If a bankruptcy is successful, a consumer receives a “discharge order” from the court. This order is a permanent injunction against the listed creditors from collecting on the debts, but it does not erase negative information on your credit report.  That information will stay on your report typically for 10-11 years, depending on the information being reported.

I must include all of my creditors when I file a bankruptcy.

TRUE.  The bankruptcy code mandates that all creditors must be included in the bankruptcy case.  However, some creditors can be treated differently in the bankruptcy case.

A bankruptcy filing will stop collection efforts.

TRUE.  In most cases, when a bankruptcy case is filed, the bankruptcy court issues an order preventing creditors from continuing their collection efforts outside of bankruptcy court.  Therefore, in most cases once a bankruptcy case is filed, creditors must stop calling debtors, stop sending letters, and suspend any garnishments, home foreclosure actions, or car repossessions.

Filing a Ch. 13 bankruptcy means I have to pay back all of my creditors.

FALSE.  The amount you have to pay in a Chapter 13 bankruptcy is dependent on your income, expenses, and your assets.  Many clients who file a Ch. 13 bankruptcy are only legally obligated to pay a small percentage of money back to their unsecured creditors, or sometimes, nothing at all, depending on the court jurisdiction.