Common bankruptcy questions

In this blog post, we will briefly address some of the common questions our clients have about bankruptcy. Please keep in mind that this is general information and should not be construed as legal advice.

Will I be able to get a credit card after bankruptcy?

Yes. In fact, many people end up with a higher credit score in the decade after their bankruptcy than they had prior to filing for bankruptcy. It is true that a bankruptcy can stay on your credit report for 10 years. However, that will not prevent you from obtaining a credit card. While your interest rates may be higher, credit card companies may actually view you as a lower risk than other consumers since some years have to pass before you can file for bankruptcy again.

Will I be able to rent an apartment after bankruptcy?

Yes. Again, you may end up paying more (in this case, a higher deposit), but you should be able to rent an apartment after filing for bankruptcy.

Will I be able to buy a house?

Yes, though you may have to wait a few years. Fannie Mae, for example, has a two-year rule. It will finance an individual for a home if that individual has been out of bankruptcy for two or more years.

Will the bankruptcy trustee take all of my property?

No. Certain property is considered “exempt” property, which means a bankruptcy trustee cannot touch it. In fact, many individuals going through bankruptcy can protect a large portion of their property. There are very specific rules in California for what property is exempt during bankruptcy. Speak with a bankruptcy attorney to learn more.

Should I worry about my job?

No. Federal law forbids your employer from discriminating against you when you file for bankruptcy.

What do “Chapter 7” and “Chapter 13” mean?

These are the sections of the United States Bankruptcy Code under which an individual debtor can file for bankruptcy. Chapter 7 bankruptcy is considered “liquidation” or “fresh start” bankruptcy since those that qualify can usually wipe out a large portion of their debt through Chapter 7. Chapter 13 bankruptcy allows debtors to create a 3- or 5-year repayment plan with their creditors. After the repayment plan is complete, they will leave bankruptcy relatively debt free.


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