COVID-19 has affected many Americans financially. Many of those in undue hardship are swamped in debt and hounded by debt collectors. Bankruptcy protection may give you a reprieve from your financial problems and give you a fresh start at a secure future.
Bankruptcy filings can be complicated. Each case has its unique challenges, thus it may be best to talk to a Pasadena bankruptcy attorney to help you with your bankruptcy case. They can discuss the automatic stay, your exempt property, bankruptcy law, and other bankruptcy information.
Bankruptcy Overview
Before getting into the things you need to know, here’s a summary of the two common types of bankruptcy filed in the bankruptcy code.
Chapter 7
Bankruptcy Chapter 7 is also known as liquidation bankruptcy. Here, a trustee takes a debtor’s nonexempt property and sells them for the benefit of creditors. Your unsecured debts are then discharged after bankruptcy.
Chapter 13
Chapter 13 bankruptcy is a reorganization bankruptcy. You submit a repayment plan to the court that spans 3-5 years, outlining how you plan to repay the debt per month. The debt remaining after the bankruptcy period may be discharged. People generally file under this chapter if they don’t fit the income requirements of Chapter 7 or if they want to save their property from foreclosure or repossession. A bankruptcy means test determines your eligibility for bankruptcy.
5 Things to Know When You Declare Bankruptcy
Bankruptcy Stays on Your Credit Report for Years
It can take 7 years for completed Chapter 13 bankruptcies and 10 years for Chapter 7 bankruptcies to be wiped from your credit report.
It still is possible to receive credit. Find some way to loan money to slowly rebuild your credit score. Of course, make sure you’re able to make your monthly payments on time to avoid hurting your score any further.
Bankruptcy Discharge is Personal Only
Discharge is the goal of filing bankruptcy. It prevents collection agencies and creditors from any collection efforts. This discharge only affects you.
This means if you share the debt with other people, it only eliminates your liability. The lender may still attempt to collect from other people who share the debt, like co-signers. Take this into consideration before you file bankruptcy.
Bankruptcy Forms and Paperwork are Complex
The bankruptcy forms allow the court to see a complete picture of your financial situation. It contains complicated questions that require some time to completely understand.
Experienced consumer bankruptcy attorneys can help you fill out these forms completely and accurately. A bankruptcy lawyer will ensure that there’s no mistake in these complicated forms which will cause a denial of your bankruptcy petition.
Bankruptcy Filing Makes your Finances Public
People are usually uncomfortable talking about their finances even with friends and family. The bankruptcy proceedings open up your finances for public scrutiny.
When you file for bankruptcy, you’ll be filing something called bankruptcy schedules. These will list your assets, expenses, debts, income, and transactions.
You’ll also attend a meeting of creditors with your bankruptcy trustee. In this meeting, the trustee in bankruptcy will probe you in public. Any creditor can bring up questions and concerns in this meeting.
The bankruptcy trustees aren’t supposed to intentionally shame you and will strive to maintain your dignity. These meetings are still a public proceeding and it may be embarrassing for you.
The Bankruptcy Process Takes a Long Time
If it’s your first time in bankruptcy court, you may have the impression that the process is just as simple as submitting the bankruptcy petition and awaiting the decision. Chapter 7 can last 4-6 months. Chapter 13 is between 3-5 years.
Final Thoughts
It can be difficult to file for bankruptcy. However, the debt relief given after your debts are discharged lets you start working to become financially secure. If you’re ready to file for bankruptcy, you’re welcome into the law office of Daniela Romero, the Pasadena Bankruptcy Attorney. Our experienced lawyers will help you resolve your case quickly, deal with your debt, and get you started repairing your credit. Contact our Pasadena bankruptcy attorneys now!