If you’re considering filing for Chapter 7 bankruptcy, learn what you can expect once the filing is complete. For more personalized advice, contact a bankruptcy attorney.
If you’re working with a bankruptcy attorney to help discharge your
debts, you’re probably curious about how your life will be affected
after filing a Chapter 7 bankruptcy. Although it’s important to receive
information directly from a bankruptcy attorney and do your research
regarding your specific situation, here are some things you can expect
after filing for Chapter 7.
Debts That Will Not Go Away Under Chapter 7
There
are some debts that you’ll continue to be responsible for, even after
filing for Chapter 7. Some of these debts include government funded
student loans, child support, alimony, personal injury payments and
fines associated with tickets or lawbreaking. Private student loans,
such as those obtained directly from a bank that are not federally
funded, may be discharged, but they aren’t typically included in the
filing.
In some cases, tax debt can be forgiven, but only if it’s
income tax. If you’re a business, payroll taxes can never be discharged.
Tax debt is discharged on a case by case basis, so while a bankruptcy
attorney can help you file to have it discharged, he or she may never
truly know which way the judge will rule.
Debts That Will Go Away Under Chapter 7
Debts
that will go away under a Chapter 7 filing include credit card debt,
medical bills and other types of unsecured debt. In many cases, people
who are working with a bankruptcy attorney to file are able to keep
their homes and cars. This is because a home and a vehicle are both
considered secured debts, that is, a bank could come and take physical
possession of the property in order to repay the debt. However, if they
want to return the property back to the bank that holds the lien, it’s
possible to include homes and vehicles in with the filing done by your
bankruptcy lawyer.
Repairing Your Credit
It
will probably take two months or more to complete the bankruptcy. A
judge will issue the order and any money owed will be forgiven.
Afterwards, you’ll need to start repairing your credit. If you needed to
file because of overuse of credit cards, consider working with a
financial counselor to help you create a budget and stick with it. You
may start to receive applications soon after you file, but avoid the
temptation to use them! Oftentimes these cards have very high interest
rates, which could lead you right back where you started! However, don’t
let too much time pass without adding something positive to your credit
rating. If you go too long without using credit — even if you just
charge something each month and instantly pay it off — you aren’t
showing creditors that you can use credit responsibly. It’s a fine line
and one that takes a great deal of restraint so make sure you can handle
a line of credit before opening one.
If you’re struggling under
massive credit card debt, medical debt or others
, consider working with a
bankruptcy lawyer to see whether filing is right for you.
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