Four Common Questions Regarding Declaring Bankruptcy
Bankruptcy is one of the most misunderstood financial tools that debtors have at their disposal. While it is perceived to be an event that causes you to lose everything, that is not necessarily true. It is actually a very freeing experience for many who utilize it. Bankruptcy can allow people to recover from serious financial woes with the least amount of disruption to their everyday lives. It comes with some important responsibilities, but it isn’t always as terrible as many people make it out to be in their minds. It varies from place to place, but a local professional can help you understand how it works in your jurisdiction under local laws and regulations. There are also different kinds of bankruptcy. This article will take a look at some common bankruptcy questions many people have, and will hopefully be able to clarify some of what bankruptcy is and what it is not.
1) Do I Lose Everything When I File?
No, you won’t lose all of your belongings when you file. State law will determine what possessions are protected in a bankruptcy case. In many states, you will not lose your retirement savings, money from an annuity or any money that you won in a judgment. When you file for bankruptcy, your assets are collected and liquidated to pay as much as possible to your creditors. Typically, the trustee who oversees your bankruptcy won’t sell anything that isn’t valuable such as clothes, silverware and other small items.
2) How Does Bankruptcy Impact My Credit?
Like many other facets of bankruptcy policy and impact, the answer to this question relies heavily on the type of bankruptcy for which you file. A Chapter 7 bankruptcy will stay on your credit report for a decade while a Chapter 13 bankruptcy stays on your credit report for no longer than seven years. While most people will suffer from a lower credit score, some people may see their score increase depending on their situation before they filed. If you have a stable income after bankruptcy, you may be able to open new lines of credit right away.
3) Do I Still Owe Money After My Petition Is Approved?
The answer to this question depends on the type of bankruptcy for which you apply. If you apply for Chapter 13 bankruptcy, you will likely have to pay your creditors back for a set period of time. This predetermined amount of time will become your timeframe for paying back some amount of your debts. Once that period of time is over, you no longer owe on your previous debt. Other types of bankruptcy may not require as much.
4) Can I Declare Bankruptcy for Just Certain Debt?
It may be possible to declare a partial bankruptcy. For example, if you are unable to pay a medical debt, you could file for bankruptcy just to rid yourself of that debt. While your credit still suffers, you will remain in good standing with your other creditors, which could help you get loans from them in the future.
If you are considering filing for bankruptcy, it is important to know what you are getting yourself into. Those who need help evaluating their options can talk to an attorney or a credit counselor prior to making any decision about what to do about their debt. You should look to your local area for a professional to help, as a bankruptcy in Mexico City is not the same as a Toronto bankruptcy. Firms such as Harris & Partners Inc. or others can help you assess where you stand and whether bankruptcy is a viable option for you.
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Category: Bankruptcy
