The most well-known downside of bankruptcy is the loss of property. In either Chapter 7 or 13 this means during the bankruptcy proceedings you may have to give up your possessions to repay your debt. This may include real estate, vehicles, etc.

If you have any co-signers for a debt that you are filing to have discharged, such as friends, business partners or parents, this can adversely affect them as well. If they or you need credit for any future endeavors, creditors may deny your loan, give you less favorable terms or require higher interest rates.

Lastly, having a bankruptcy on your record can negatively impact your credit and your financial integrity. This can last up to a decade and can overall negatively impact your financial future.

Going through bankruptcy alone can be an incredibly difficult process but working with an attorney or advocate can help ensure your bankruptcy goes as smoothly as possible. With the assistance of a knowledgeable attorney or advocate, we can make sure your bankruptcy complies with all applicable rules and regulations set in place by the government.

To qualify for bankruptcy, you will need to demonstrate the need to file for bankruptcy. To do this, you will need to prove that you cannot repay your debts and complete credit counseling with an approved credit counselor from the government.

Upon filing for bankruptcy, you will need to decide what “Chapter” you qualify for, Chapter 7 or 13. Both chapter help eliminate unsecured debt, halt foreclosures, repossessions, stop wage-garnishments, utility shut-offs, and other debt collection actions. Also, with both types, you will be expected to pay your court and attorney/advocate fees. Lastly, both types relieve debt in much different ways.

The legal process overseen by federal courts, bankruptcy is a system designed to help individuals and businesses discharge debt accumulated. This process can be used to eliminate all or part of the said debt to repay a smaller portion of what they owe.

Filing for Bankruptcy can help you find relief, but it is important to be aware that declaring bankruptcy can have many risks including and not subject to long-term effects on your credit. The effects of filing for bankruptcy can remain on one’s credit report for up to ten years. It may also affect your ability to get approved for loans with more favorable rates.

Chapter 7 Bankruptcy

The form of bankruptcy that most people think of when considering filing is what is known as “Straight Bankruptcy” or Chapter 7.  This type of bankruptcy requires the filer to have a trustee from a federal court to supervise the sale of any assets that aren’t exempt. Certain assets, such as cars or work-related tools, and basic household furnishings may be exempt. All profits from the sale are then put towards your debt and once the remaining balance is discharged it is eliminated. Although, Chapter 7 is powerful option, it can’t eliminate all types of debt. You may still have to pay back student loans, some taxes, alimony, and child support.

Overall Chapter 7 can give you a significant chance to change your life, it is also extremely risky. You will most likely lose property; your credit score will be decimated and will remain on your report for up to ten years. Lastly, if you get into debt once again, you cannot file again for at least eight years.

Chapter 13 Bankruptcy

Another type of popular bankruptcy, Chapter 13 works by allowing you to keep your property in exchange for partially or completely repaying your debt by paying on your debt for three to five years. Depending on what’s negotiated, any remaining debt is thus eliminated or discharged at the end of the plan, even if you only repaid part of what you owe.

Compared to Chapter 7 or other types of bankruptcy, Chapter 13 may be the more favorable option. Typically, you repay only part of your debt and you may be able to retain some of your assets. Also, Chapter 13 does not remain on your credit report for as long as other forms of bankruptcy, and you can file again in as little as two years.