An individual might choose a bankruptcy when a life event, such as a job loss, divorce or medical emergency, causes a disruption in income or a complete lifestyle change. For a consumer, when income is disrupted, and debts can be repaid, a chapter 13 may be the best option to repay any home, vehicle or tax arrears over a period of 3 to 5 years. In other situations, such as when the mortgage has not fallen behind, or income is below average, a chapter 7 may be the best option. It is important to consult with a bankruptcy attorney since bankruptcy is extremely complex. Your circumstances may not fit neatly into the descriptions listed here.

Filing fees in a chapter 13 bankruptcy are $310. Filing fees in a chapter 7 bankruptcy are $335.00. You will also be responsible for a credit counseling class, a credit report and possibly a financial management class if your Trustee does not offer this course free.

The term of a bankruptcy depends on the chapter you have filed, your repayment plan and your current monthly income. If you have filed a chapter 7, your case is likely to last 3 to 5 months. In a chapter 13, the term is 36 to 60 months. In a chapter 7, the term is shorter because you are not proposing a repayment plan.

Only if you have non-exempt assets. Exempt assets are beyond the reach of your creditors. Non-exempt assets may be used to pay your debts. Since the exemption statutes are generous, most clients do not have any non-exempt assets. However, it is important to disclose all your assets.

Yes, if you stay current on the rent and your landlord agrees.

Yes, debts sold to a factoring company or collection agency can be discharged just as a normal unsecured debt.

Debtor: the individual, couple or business who owes money

Creditors: the entities who loaned the individual, couple or business money

Trustee: The individual who administers the bankruptcy estate

United States Trustee: part of the Department of Justice that oversees bankruptcy cases and trustees

Judges: the person who resolves disputes