A bankruptcy filing is a legal proceeding that helps individuals who are no longer capable of paying their debts. Dealing with debt and financial problems is extremely stressful. That is why it is very important to have a bankruptcy attorney who will assist you throughout the bankruptcy procedure.

Once your bankruptcy petition has been approved by the bankruptcy court, an automatic stay will take effect. This will protect you from creditor harassment, wage garnishment, and foreclosure. This is also one of the advantages of filing a bankruptcy petition.

There are several types of bankruptcy that you may choose from depending on your situation. The most commonly used bankruptcy chapter is Chapter 7, or liquidation bankruptcy, and Chapter 13, or reorganization. The qualifications for each bankruptcy option will depend on the filer’s monthly income, living expenses, and the types of debt that they owe from their creditors. A means test is used to determine under which type of bankruptcy you are qualified to file a bankruptcy petition.

Bankruptcy DischargeThe main objective of filing bankruptcy is to have your debts discharged. A bankruptcy discharge is a court order that releases you from the obligations of making payments to your lenders. It essentially prohibits creditors from further collecting outstanding debts. If you have been granted a discharge, they are no longer allowed to contact you and demand any payments.

Bankruptcy Chapter 13 usually lasts from three to five years. Under this chapter, the bankruptcy discharge is obtained when a debtor has completed all payments following the debt repayment plan.

On the other hand, when filing Chapter 7, you may be granted a discharge within four months after your bankruptcy petition.

When you file bankruptcy, you must take into consideration that not all types of debt may be wiped-out. Even though you have been granted a discharge, you will still need to pay off certain unpaid debt, depending on the declaration of bankruptcy that you choose.

Once you filed for bankruptcy and you were able to fulfill the conditions specified in the bankruptcy code, you may be entitled to eliminate specific debts. Note that not all types of debt fit into this category. Debts such as credit card bills, medical bills, personal loans, business loans, unpaid utility debts, missed rent payments, contractual debts, unsecured debts, certain tax debt, and civil court judgments are the types of debt that could be discharged.

Some debts cannot be wiped out, in particular bankruptcy forms. In Chapter 13, non-dischargeable debts include criminal fines and penalties, student loan debt, child support, alimony, certain tax debt, and mortgage payment.

Under Chapter 7, meanwhile, debts that cannot be discharged include secured debt, criminal fines and penalties, student loan debt, car loans, court fees, child support, alimony, and mortgage payments.

If the legal order for the discharge has been issued, all the creditors that are part of your bankruptcy case will be given a notice. The notice of discharge is intended to let the creditors know that they are no longer permitted to ask you to repay your debts. If the debt collectors continue to harass you after the notice, you can file a petition to the court and the creditor will face punishment. 

However, after the discharge, creditors who have given you secured debt will try to repossess personal property that served as collateral. For individuals who want to avoid it, consult with your bankruptcy lawyer early on.

If you have filed bankruptcy, a record will appear in your credit report and will remain there for quite a long period. Chapter 7 bankruptcy cases will remain for around ten years, from the original filing date. Chapter 13 bankruptcies, on the other hand, will remain on your credit report for up to seven years from the initial filing date.

If your credit report mentions a bankruptcy record, it may affect your credit score. When you obtain a discharge, the record in your credit report will change and a record of the bankruptcy discharge will appear. To display a zero balance, every account that has been granted discharge must be revised. Bankruptcy lawyers will also be able to help you learn how to improve and rebuild your credit score.

Struggling with debt is not easy, especially if you are dealing with it alone. Hiring a bankruptcy attorney is highly advisable if you are considering bankruptcy. Bankruptcy attorneys will help you understand how bankruptcy law and the bankruptcy process works.

Get a fresh start with your finances. Call Pasadena Bankruptcy Law at 626-296-6971 for a free consultation.