Answers to Four Bankruptcy Questions

Bankruptcy involves a lot of complicated legal issues, and many first time bankruptcy filers have a lot of questions about bankruptcy. As an example of some of the complexity, here are answers to four bankruptcy questions.

What happens when someone you co-signed for has filed for bankruptcy?

As a cosigner, you are saying you are capable of and intend to repay a debt when the borrower cannot pay, the borrower refuses to pay, or the borrower files for bankruptcy protection.

As the cosigner of a borrower who has defaulted on a loan, regardless of your intentions to pay back the loan, you will receive negative credit reporting just as the borrower will who has defaulted.

Nevertheless, if you are not able or willing to repay the debt, you should not cosign any note for a loan. So, in effect, if the borrower files for bankruptcy protection, you will have to pay off the debt or the creditors can come after you.

When did the chapter 7 bankruptcy laws change from 7 to 10 years for credit reporting?

Actually, the laws have never changed. A Chapter 7 bankruptcy will be placed on your credit reports for up to 10 years. A Chapter 13 bankruptcy can be placed on your credit reports for up to 7 years. Under some circumstances, credit agencies may remove the bankruptcy from the reports earlier.

After being dismissed from bankruptcy can you refile for it immediately after?

When a bankruptcy is dismissed by a bankruptcy court, the process is stopped and the effect is similar to the bankruptcy not taking place. There are two kinds of bankruptcy dismissals- voluntary and involuntary. Depending on which type of dismissal occurs will determine whether or not and when you can refile a bankruptcy.

You can refile a voluntary dismissal in bankruptcy immediately most of the time, but if your case was involuntarily dismissed because of fraud issues, a bankruptcy court can limit you on whether of not you can ever file again.

In a Chapter 7 bankruptcy case, the time frame for refiling a bankruptcy after voluntarily dismissing it and the number of times your case has been dismissed within a certain time frame are important to the bankruptcy process. Both of these circumstances can have an influence on the automatic stay of the next bankruptcy you file.

Can you buy a car with cash and then declare bankruptcy?

There is a six month look back when you file any bankruptcy. That means the bankruptcy court will look back at least for the past six months to see how you have spent your income. They can look back further if there is any indication fraud has taken place. Buying a car with cash right before a bankruptcy can be viewed as preferential treatment toward your debts. A bankruptcy court could potentially take the money back from the institution you bought the vehicle. In return, the institution would most likely take the vehicle back from you.

As you can see from these illustrations, bankruptcy laws can be very complicated. It is recommended you seek out a bankruptcy lawyer who may help you understand how these complicated laws might apply in your particular situation.

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