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Banruptcy Information
Chapter 7 is selling off what is owned in order to satisfy the creditors. This wipes out many debts completely. It is fairly quick to be executed. Once completed, the courts wipe out the remaining non-exempt bills. This will be on your credit report for 10 years.
Chapter 11, 12, 13 are re-organizational in nature, which means you are given a second chance to try to pay your creditors some of what is owed. This usually involves a pay back plan of 3-5 years. The courts often wipe out any bills left after that time that are non-exempt. This will be on your credit report for 7 years.
Be Aware: Bankruptcy can help in some instances:
- It will stop foreclosure and repossession proceedings.
- It can stop the garnishment of wages.
- It can get you a fresh start.
However, it must be noted that even though a bankruptcy is deleted from the credit reports after 7-10 years, it is a public record available for viewing for literally the rest of your life. After your bankruptcy is discharged, whenever you apply for employment, loans, or insurance over $25,000 the application asks "Have you EVER filed a bankruptcy?"
Some Exemptions Apply: Federal tax debts, alimony, maintenance, child support, divorce settlements and student loans are exempt and not discharged through bankruptcy. Sometimes you can keep your car, but it depends on the equity in these assets, which chapter of bankruptcy you choose, and whether the items are pledged as collateral. Your lawyer can best advise.
Credit Affected: First of all, credit is a history of how you paid debts in the past. If you continue to pay on time, your credit will reflect that fact. Secondly, some creditors will actually look at you as a better risk after a bankruptcy because bankruptcy is no longer an option for you in the next 7-10 years. If you do a bankruptcy, wait only 6 months after discharge and then begin rebuilding your credit history by getting a secured Master card or Visa. (We can help you with this.) Also check your credit report to be sure all credit is being reported accurately. (We can help you with this too.)
