Bankruptcy FAQs

Q: What is bankruptcy?

A: Bankruptcy is a legal mechanism that allows a person or entity to either discharge or restructure their debts. It’s a “fresh start.”

Q: Will it get me out of all my debt?

A: While bankruptcy will get rid of most debts, there are some that it does not discharge. The most common debts not discharged are student loans, recent income tax debt, spousal/child support, criminal fines/penalties, and fraud debts. Medical debts and credit card debts almost universally get discharged.

Q: What are the differences between Chapter 7 and Chapter 13 bankruptcy?

A: The single greatest difference between a chapter 7 and a chapter 13 bankruptcy is the requirement for a chapter 13 debtor to pay a monthly payment to the bankruptcy court/trustee for three to five years after filing bankruptcy. Whereas in a chapter 7 bankruptcy, a debtor never makes any payments after filing for bankruptcy. Another notable difference includes the ability to file a chapter 13 case every five years, but chapter 7’s may only be filed every eight years.

Q: How much of my stuff do I lose when filing bankruptcy?

A: Most people who file chapter 7 bankruptcy don’t end up losing anything. The vast majority of debtors are able to keep everything they have by filing exemptions on their property.

Q: How much does it cost to file bankruptcy?

A: There are three costs involved with a bankruptcy filing: 1) a Bankruptcy court filing fee, 2) the cost of taking two required online credit counseling courses, and 3) the attorney’s fee. The filing fee is $335. The credit counseling courses usually cost less than $25. The attorney’s fee, depending on where you live, typically ranges anywhere from $800 to $1,500. In Kootenai County, Idaho, you can expect an attorney’s fee of $1,000 – $1,200.

Q: How do I know if I qualify for bankruptcy?

A: Anyone can qualify for bankruptcy as long as they haven’t filed a chapter 7 bankruptcy in the last eight years or a chapter 13 in the last five years. In order to know whether or not bankruptcy is a good option, I recommend talking with a bankruptcy lawyer. Nearly all bankruptcy lawyers offer free consultations.

Q: Can I be fired for filing bankruptcy?

A: While there are a small handful of jobs that prohibit bankrupt individuals from employment, most do not. Moreover, it’s rare for employers to make such an inquiry. In the vast majority of cases, your boss will never even know that you’ve filed for bankruptcy.