A Bankruptcy Quiz

Fri, Sep 28, 2012

Bankruptcy, Debt Mitigation

Attorney Christopher D. Smith of SmithLaw offers this quiz about bankruptcies in Florida.

1) You will lose all your money, property, and valuables in a bankruptcy. True or False?

False. Chapter 7 usually requires more property to be handed over than Chapter 13 does. If you do not own a home, Chapter 7 bankruptcy allows you to keep $1000 worth of your vehicle and up to $4000 of other types of property (can be applied to the vehicle if you need it to). You are allowed to keep standard clothing, necessities, social security or disability money, retirement accounts, etc.

2) Your credit can recover from a bankruptcy. True or False?

True. Your credit will not be stellar for a while, but it will recover with time. We usually see some form of recovery after about a year. This is because debt ratios change, among other things.

3) All debts are discharged in bankruptcy. True or False?

False. Debts that cannot be discharged in bankruptcy include child support, taxes, some student loans, and judgments. This is a short list–there may be other debts that cannot be discharged that cannot be anticipated in a blog post.

4) Your LLC will always protect you from losing business and personal assets. True or False?

False. LLCs do not provide ironclad protection during bankruptcy. This is true if it is a business or personal bankruptcy, especially for a single person LLC. Check out our blog post on the subject.

5) Married couples must file bankruptcy together. True or False?

False. Some situations make it advisable for both husband and wife to file bankruptcy together, but it depends on the specific situation. An attorney best advises this. But, keep in mind that joint debts are truly joint debts—usually one person owes if the other person cannot pay.

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