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Frequently Asked Question on Bankruptcy


Caplea and Variola logo white 50x50

Frequently Asked Question on Bankruptcy


Here are some of the most commonly asked questions Caplea & Variola gets on bankruptcy:

What is bankruptcy?

Bankruptcy is a legal process through which individuals and businesses can seek debt-relief by reconsolidating loans or forfeiting assets. Generally, clients filing for bankruptcy can choose between different chapters and customized payment plans.

What happens if I declare bankruptcy?

Many clients think that all their debt will magically disappear when they declare bankruptcy. However, that couldn’t be further from the truth. In fact, even if you have no money in your account, very few assets, and have a family to feed, you’ll still need to pay your debt obligations.

The only difference is that creditors and lenders won’t be able to charge you with as much interest rates on your debt as they initially did. You can also customize your payment plans to better suit your financial capacity. In some cases, the bankruptcy judge can decide to lower the total debt amount if the one filing for bankruptcy can prove that they truly have no capacity to pay.

What are the different bankruptcy chapters?

1. Chapter 7

Chapter 7 bankruptcy allows the debtor to pay off some of their debt obligations by sacrificing their assets. Now, the bank or court does not repossess all your assets, but rather, they divide your assets into two categories: exempt and non-exempt. Then, they take possession of your non-exempt assets. These may include:

  • Second homes or vacation homes
  • Second cars and trucks
  • Collections of valuable items such as art and coins
  • Family heirlooms
  • Cash, savings accounts, bonds, and other similar investments

Meanwhile, assets that may be exempt include your:

  • Primary home
  • Necessary clothing
  • Basic household appliances
  • Pensions
  • Tools needed so debtor can work
  • Public benefits

2.  Chapter 13

Unlike with Chapter 7 bankruptcy, you don’t need to sacrifice your assets to the court or bank. You get to keep your assets, but you’ll have to pay all your debt within the next three to five years. The good news is that you reconsolidate your debt to get better rates and easier payment options. This filing requires you to work with a trustee.

3. Chapter 11

Chapter 11 bankruptcy is strictly reserved for businesses. Similar to Chapter 13, the debtor can reconsolidate and reorganize their debt to make payments easier. Of course, businesses can also file for Chapter 7 bankruptcy, but liquidating assets often leads to the demise of any company. Instead, they’ll take their chances on a Chapter 11 bankruptcy and work hard to regain the money they lost.

There are other bankruptcy chapters, but these three are the most common in the country.

How does bankruptcy affect credit reports?

Keep in mind that filing for bankruptcy is often seen as a last resort because it has a negative impact on your credit score. In fact, it sticks to your report for one decade making it very difficult to apply for credit loans, housing loans, life insurance, or even a decent job.

So before you decide to file for bankruptcy, make sure you speak with an expert beforehand. That way, you can explore your other options on how to get rid of your existing debt. Only file for bankruptcy if it’s absolutely necessary.

Can I rent after bankruptcy?

In severe cases, some debtors lose their primary home to the court. So after declaring bankruptcy, their next itinerary would be to secure a place to live in.

Now, can debtors rent after filing for bankruptcy? It won’t be impossible, but most landlords won’t be too excited to lease out their property to someone who has just declared bankruptcy. In fact, you might have to look at properties from a bad neighborhood with unfairly high rates.

Contact Caplea & Variola!

Have more questions about bankruptcy? Then reach out to Caplea & Variola today! Our bankruptcy attorney will explain to you in detail everything you need to know on how to live a debt-free life. Book an appointment with the team at (330) 455-5195.

Service Areas:

  • Ashland, OH
  • Canfield, OH
  • Canton, OH
  • Hartville, OH
  • Louisville, OH
  • Middlebranch, OH
  • North Benton, OH
  • North Canton, OH
  • Richland County, OH
  • Stark County, OH
  • Youngstown, OH
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610 Market Avenue North, Canton, OH 44702


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The information contained on this website is presented for informational and marketing purposes only and is not to be understood as legal advice. You should consult an attorney for advice respecting your individual needs. Caplea & Variola Co looks forward to speaking with you about your particular needs. Please note, however, that the mere act of contacting our firm does not create an attorney-client relationship. As a result, you should never send any confidential information to our office until a Representation Agreement has been signed by both you and Caplea & Variola Co.

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