Bankruptcy is a legal process that is designed to allow people an opportunity to get their finances in order and potentially a fresh start. Bankruptcy usually is considered a last resort option for those going through financial difficulties. While bankruptcy may give you a clean financial slate, it has negative consequences that can affect your belongings and can impact your credit, making it difficult to be approved for credit for years to come.
So, what happens if you declare bankruptcy? Continue reading to find out.
The Basics of Bankruptcy
Before filing for bankruptcy, there are a few things you will need to do.
- Consider hiring a professional to help you through this complicated process. Most individuals are not equipped to handle it. Complying with all the rules and regulations applicable to bankruptcy can be overwhelming and complex.
- You will need to show you are unable to repay your debts.
- You are required to meet with a counselor who is approved by the government to give credit counseling, look over your finances, look at other potential options, and to assist in coming up with a budget for you.
If you choose to file for bankruptcy, you will need to determine which type you will file. Both Chapter 7 and Chapter 13 can assist in eliminating debts in different ways. They can also stop foreclosures and repossessions, prevent utility shut-offs, stop wage garnishments, and halt debt collection actions.
What Happens When I Declare Bankruptcy?
Bankruptcy gives you a chance to pay down your debts over time or have some of them eliminated. Declaring bankruptcy grants you automatic stay, which temporarily blocks collection agencies, creditors, and other individuals from trying to collect money to pay off debts. Automatic stays protect you from money being deducted from your bank accounts and wages being garnished. During this time, you and your lawyer will be able to work with the court and creditors to determine your next move.
If you file for Chapter 7 bankruptcy, you are given a case number, and a bankruptcy trustee, who will oversee your bankruptcy filing, is assigned to your case. Your bankruptcy trustee will review your bankruptcy forms and gather any other necessary documents, as well as direct the 341 meeting, also known as the meeting of creditors (one of the most important parts of your case).
You can typically expect a 100 to 200 point drop in your credit score after filing for either Chapter 7 or Chapter 13 bankruptcy. When it will show up on your credit report and how long it remains there depends on which bankruptcy type you file.
The Law Offices of Charles W. Daff Can Help
If you are considering filing for bankruptcy, contact The Law Offices of Charles W. Daff. Attorney Charles W. Daff has over 40 years of experience with bankruptcy and has the knowledge to guide you through this process. Whether you are a bank, trustee, business, or individual, we can help you. Call us to schedule your free initial consultation today.