Which Bankruptcy is Right for Me?
There are two types of bankruptcy, Chapter 7 and Chapter 13. This bankruptcy attorney reviews your case and recommends which type of bankruptcy meets your situation. Your attorney explains to you the differences between these types and why you chose one type over another.
You May Discover the Following After Filing Bankruptcy
When you file for bankruptcy, you may feel like the world is ending. Bankruptcy allows you the time and the ability to restructure the finances you have left after the bankruptcy process is completed. Most bankruptcy clients may experience some generalized feelings of relief after filing for bankruptcy.
- Filing for bankruptcy gives you an answer to your finances when finding no solutions to your financial dilemma.
- Filing for bankruptcy feels like you and your family received a new lease on life.
- Filing for bankruptcy places you back to square one with most debts released, giving you more out of your paycheck each month.
- There is now a newfound hope for the future.
- You experience great peace of mind.
You cannot declare bankruptcy on some debts, such as student loans and your house mortgage. There are specific steps to temporarily help you out with these debts while getting on your feet financially. These steps give you the time you need to restructure the debt you have left. Steps may include,
- A mortgage refinance or modification
- A student loan deferment
What to expect When Filing for Bankruptcy
When your outgoing debts exceed your income, you are in trouble financially. You tire of working so hard to pay for the interest on loans, credit cards, and the like without seeing a reduction in your debts. Minimum payments are all you can afford, and minimum payments will not help you get out of debt.
This debt overwhelms you, and you feel there are no answers to your indebtedness. Creditors keep calling demanding payment, and you have no money to meet these obligations. We are here to tell you that there is hope, peace of mind once again, and a way out. We can help you solve life’s most complex financial problems such as taxes, back mortgages, suffering businesses, and threatened credit collection calls.
Filing for bankruptcy means that some of your debt is forgiven, such as,
- Unsecured loans
- Credit cards
- Material supplier debts
- Medical bills
- Lawsuits and judgments
- Unpaid rent and evictions
- Unpaid utility bills
- Foreclosure balances
Filing for bankruptcy does not mean you must give up personal possessions such as,
- Furniture
- Household possessions
- Clothing
- Some jewelry
- Tools for work
- Retirement accounts
- Your car and house
Know that bankruptcy does not dismiss particular debt. You must work with your creditors to settle or make a workable repayment schedule. Bankruptcy will not affect,
- Child support and alimony
- Unpaid taxes
- Social Security tax
- Back taxes on income and property
- Federal student loans.
- Payroll taxes
- Judgments for DUI
- Penalties to the federal government
Once your bankruptcy is complete and specific debts discharged, you have no legal protection against any new obligation you incur. Creditors can sue you and garnish your wages. You can lose your home and your car due to new debts you incur.
Bankruptcy gives you a second chance and a fresh financial start; the process remains a bit scary without your attorney by your side. Your attorney guides and directs you through the bankruptcy process from beginning to end and into the future.
Once you file for bankruptcy,
- A trustee is assigned to you. The responsibility of this professional is to administer your filing depending on which type of bankruptcy your attorney decides is best for you. In a Chapter 7 bankruptcy, this trustee oversees the liquidation of assets. In a Chapter 13 bankruptcy, this trustee manages all the repayment of your debt.
- A meeting is set up between you and your trustee. Your creditors are invited to attend, but, in most cases, do not. This meeting is to review all of your debts.
- When you file for bankruptcy, an automatic stay is initiated. This stay means that creditors cannot try to collect from you while your case is pending. This stay additionally stops any garnishment of wages. Creditors cannot sue you for payment.
- The court will not dismiss or discharge any of your debts, until you attend a credit counseling course before filing for bankruptcy. After bankruptcy, you must take another course in financial management.
- Generally, this trustee liquidates some assets and pays off creditors according to their priority. There are many assets that you are allowed to keep, as already explained. At this time, you begin your repayment plan except for those debts not affected by bankruptcy.
After you meet all specifications as stated by the bankruptcy law, the court discharges most debts. Creditors cannot try to collect on these debts. You must continue regular payments on all secured debt, such as your home mortgage and car. If you do not continue paying the remaining debts as agreed upon, the creditor can take them.
Expect a bankruptcy to lower your FICO score and stay on your credit report for ten years if you file for Chapter 13. If you file for Chapter 7, it will remain on your credit report for seven years.
After bankruptcy is a time to start rebuilding your credit, you do this by paying the remaining bills on time, by obtaining a new credit card. Never use more than 30 percent of your allowed credit. And never borrow more money than you can repay. It takes time to rebuild credit and lenders trust you enough to loan you money for such items as a home or car.
You do not want to get in the position of filing for bankruptcy again, although some people make the same mistake. Know that you cannot file Chapter 7 for eight years and Chapter 13 for two years. Always make sure to explore your legal options with an attorney such as Indianapolis bankruptcy lawyer Jerry E. Smith.