The decision to file for bankruptcy is not an easy one. The stigma, the damage to your credit and the loss of certain assets can be a struggle. However, filing for bankruptcy is often the best option to reset your finances and move forward into the future without the burden of mounting debt.
For individuals considering bankruptcy for the first-time, here is some important information that will prepare you for the process.
The Difference Between Chapter 7 and Chapter 13 Bankruptcy
Chapter 7 bankruptcy involves liquidating assets in order to discharge most or all of your debt. If you opt for Chapter 7, then you may be able to keep some of your assets. However, you will most likely have to give up the majority of your non-exempt assets.
On the other hand, Chapter 13 bankruptcy involves creating a payment plan to pay creditors over a period of time. Chapter 7 tends to be a shorter process, lasting only a few months. Chapter 13 takes years to complete.
How Much Does Filing for Bankruptcy Cost?
Bankruptcy costs money. Costs can add up quickly between legal representation, filing fees and potential court costs. Additionally, your ability to borrow money will be diminished due to your reduced credit score. A bankruptcy attorney can give you a rough estimate of what your bankruptcy will cost after an initial consultation.
Can All of My Debt Be Discharged in Bankruptcy?
No. Some debts cannot be discharged, so after bankruptcy you will still be on the hook. Examples of nondischargeable debt include:
- Student loans
- Spousal support
- Child support
- Property liens
- Certain luxury items
How Will Filing for Bankruptcy Affect My Credit Score?
Your credit score will most likely decline after filing for bankruptcy. Your overall score will depend upon the amount of debt you had before bankruptcy, your number of delinquent accounts and other important factors.
Also, bankruptcies frequently leave incorrect information on your credit report. Keep an eye on your report by using an online service like Credit Karma. You can request one free copy per year from each of the three main credit reporting bureaus.
Our Law Firm Will Prepare You for the Bankruptcy Process
Never be afraid to ask for help if you are struggling with the decision to file for bankruptcy. Attorney Kevin D. Judd has decades of experience and is prepared to answer any questions that you might have. Contact him today at (202) 483-6070 to schedule a free consultation.