We’ve noticed over time that there are alot of myths floating around out there about bankruptcy. We thought it would be helpful to post answers to some of the most commonly asked questions here to bust those myths and give you the information you need to help you make the best choices for your financial future.

So, in no particular order, here are some of the most commonly asked bankruptcy and debt-related questions:

Q: What is the difference between Chapter 7 and Chapter 13 Bankruptcy?

A: There are a lot of differences and it can get quite complicated, but let’s keep it simple here. The really easy, basic answer to this question is this: Chapter 7 wipes out all of your debt in one fell swoop (3-4 months), while a Chapter 13 is a repayment plan where you pay some portion of your debt over 3-5 years. There’s obviously a lot more to it than that, pros and cons of each option, and a lot of caveats. To learn more, visit our pages on Chapter 7 Bankruptcy and Chapter 13 Bankruptcy. Because this area of law is so complex, the only way to really know which option is best for your situation is to schedule a free consultation with an experienced bankruptcy attorney.

Q: Can I go to jail for not paying my debts?

A: NO! We are far beyond the days of debtor’s prison. In Georgia, you cannot go to jail or be arrested simply for not paying your debts. Unfortunately, I get a lot of questions about this. But the truth is you simply can’t be arrested or jailed because you failed to pay a debt you owe. In fact, the Fair Debt Collection Practices Act (FDCPA) makes it illegal for a creditor to threaten to arrest you or put you in jail for failing to pay your debt. If you are receiving these kinds of threats, make sure you record them, and then call us and we can sue them and recover $1,000.00 or more for you.


There is one caveat to this, however, which is you have to watch out for something called “Post Judgment Interrogatories.” Post Judgment Interrogatories are written questions your creditor sends to you AFTER they have gotten a legal judgment against you. If you are served with Post Judgment Interrogatories and you fail to answer them within the required timeframe, your creditor could ask the Judge to hold you in “contempt of court.” If that happens, a warrant can be issued for your arrest and you can be jailed for a short time or until you answer the interrogatories. However, this is not being put in jail for not paying your debts, it’s being put in jail for failure to answer the interrogatories (questions). This is a pretty unusual circumstance however, so most people don’t need to worry about it. However, if you have received Post Judgement Interrogatories, please call us immediately! You are in a dangerous place and we should look at filing bankruptcy immediately to protect you.

Q: How long after I file bankruptcy can I get a mortgage to buy a house?

A: This is a great question that I get asked a lot. I recently called up a friend who is a mortgage broker to get some insight directly from him. The answer differs depending upon the type of bankruptcy. Generally speaking, if you filed a Chapter 7 Bankruptcy, you can qualify for a home loan 2 years after your discharge. However, there are what are called “non-QM” loans, which could allow you to qualify earlier. The downside is that non-QM loans will have higher interest rates. If you filed a Chapter 13 Bankruptcy, then you can actually qualify for a home loan after you’ve made 12 successful monthly payments in your Chapter 13 Plan. You will need to have your attorney file a motion with the Trustee to get approval first though. Once your Chapter 13 case ends and you receive your discharge, it’s the same 2 years as a Chapter 7.


One important thing to note is that all other things being equal, a past bankruptcy on your credit does not impact the mortgage lender’s opinion of you. For example, if a mortgage lender is looking at two candidates with the same income, same amount of debt, and otherwise the same creditworthiness, the fact that one of them has a bankruptcy 5 years ago, and the other does not, has no impact on the lender’s decision. Both candidates would be viewed equally.

Q: Will I be able to rent a home or apartment after bankruptcy?

A: In many cases, yes. When you apply for new housing, most landlords are going to run a credit report on you and they will see your bankruptcy filing. However, most landlords are looking mainly at your rental history and your source of income. If you don’t have evictions or unpaid rent on your report and you are employed or have a source of income, the mere fact that a bankruptcy appears on your history will not be as big of a deal.


Before you filed bankruptcy and were looking for housing, a potential landlord would see delinquent accounts and a high debt load on your credit report. After a bankruptcy a potential landlord will not see these. Another factor that will help is that landlords know that if you have recently filed bankruptcy, you can’t file bankruptcy again. The landlords know that if you fall behind on rent, a landlord would be able to collect it.

Q: Will filing bankruptcy ruin my credit forever?

A: Absolutely NOT! Bankruptcy ruining your credit is actually a very common misconception about bankruptcy. For most people, bankruptcy will actually improve your credit score within 1 year after filing. Most people filing bankruptcy will see their credit score improve by more than 100 points 1 year after filing. This is because most people looking at filing bankruptcy already have a low score. It is true that the act of filing bankruptcy initially hurts your credit score. But when your credit score is already low, the impact is minimal. Wiping out all that debt in bankruptcy makes you a better credit risk, and increases your credit score. We have lots of clients who dramatically improve their credit score after filing bankruptcy. I know of one woman who actually got her credit score over 800 within a year and a half after her bankruptcy. Learn how to quickly improve your credit score after bankruptcy here: https://debtfreedomga.com/4-steps-to-rebuilding-your-credit-after-bankruptcy/.

Q: Will I lose my house, my car, or my stuff in bankruptcy?

A: Usually not. We get this question a lot too. One of the main goals in bankruptcy is for you to keep your house, your car, and your stuff, and we work with you to make sure those goals are achieved. Georgia gives you certain exemptions which allow you to keep your house, your car, and your stuff in a Chapter 7 Bankruptcy. Many people fit within the exemptions and can successfully complete a Chapter 7 without any risk to losing any of their stuff. However, if you have assets with value in excess of the exemptions, we can look at a Chapter 13 Bankruptcy for you. The Chapter 13 Bankruptcy allows you to keep your house, your car, and your stuff and simply pay to your creditors what they would have gotten if the unexempt portion of those assets had been liquidated. Similarly, if you’re behind on your house or car payments, we can file a Chapter 13 Bankruptcy and you can keep your house and car while making up the arrears with low monthly payments over time. One powerful provision of the US Bankruptcy Code is for people who find themselves underwater on a mortgage or a car loan. Depending on your situation, we can get your loan reduced through what’s called a “cram-down” or help you simply surrender the car and get a new one that is closer in value to the amount of the loan. The bottom line is that bankruptcy gives you a lot of options for your house, your car, and your stuff. Call us for a free consultation so we can give you your options.

Q: Am I better off just trying to pay off my creditors outside of bankruptcy?

A: Probably not. First, even if you can get some of your creditors to settle for less, you’ll still be on the hook for paying income taxes on any of the debt that you’re forgiven, which is not the case with bankruptcy. Second, paying off all your creditors while the debts are still accumulating interest can be almost impossible once you get past a certain level of debt. It can take years and years to get it all paid off, and you’ll end up paying alot more with interest than you would even in a Chapter 13 repayment plan. With bankruptcy, if you can do a Chapter 7, you won’t have to pay any of the debt at all! You get yourself a fresh start in just 3-4 months. But even if you have to do a Chapter 13, you’ll be paying back your debts with little or no interest, and you’ll have the protection of the bankruptcy court to keep all the creditors off your back. Plus, you may only have to pay a portion of what you actually owe. These are just a few of the many benefits of filing for bankruptcy protection rather than trying to handle all your debts yourself. We’ve had plenty of clients come to us after trying to tackle all their debts themselves, and they always wish they came to us sooner. Don’t make the same mistake!

Got any more questions? We’re happy to answer them! Just give us a call today!

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