Bankruptcy can often seem like a complex and daunting process. It’s normal to have numerous questions about how it works and how it affects your financial future. In this blog, we address the three most commonly asked questions about bankruptcy to help clarify the process and provide insight into what you can expect.
If you have questions or would like a free consultation from a bankruptcy attorney, contact The Law Offices of Paul Y. Lee at 951-755-1000 today.
What Exactly Does Filing for Bankruptcy Mean?
Filing for bankruptcy is a legal process that allows individuals or businesses to get relief from their debts. It’s a way to address situations where debts have become unmanageable, offering a fresh financial start. The two most common types of bankruptcy for individuals are Chapter 7 and Chapter 13. Chapter 7, also known as liquidation bankruptcy, involves the sale of certain assets to pay off debts. In contrast, Chapter 13, or wage earner’s bankruptcy, allows you to create a plan to repay debts over time, usually within three to five years.
Will I Lose Everything if I File for Bankruptcy?
One of the biggest misconceptions about bankruptcy is that you will lose all your possessions. This is not necessarily true. The purpose of bankruptcy is not to leave you with nothing, but to give you a chance to start over. In a Chapter 7 bankruptcy, many of your assets will be protected by exemptions, meaning you can keep them. These might include basic household items, tools for your job, and possibly your home and car, depending on their value and the laws in your state. Chapter 13 bankruptcy, meanwhile, generally allows you to keep your assets as long as you adhere to the repayment plan.
How Will Filing for Bankruptcy Affect My Credit?
Filing for bankruptcy will have an impact on your credit score, and it can remain on your credit report for up to 10 years. However, its impact lessens over time. Post-bankruptcy, you can start rebuilding your credit by making timely payments on any remaining debts and avoiding taking on new debt that you can’t manage. Some people find that filing for bankruptcy is actually a step towards improving their credit, as it can eliminate debt that is damaging their credit score and give them a clean slate to start from.
Rebuilding Your Financial Future
Bankruptcy can offer a pathway out of overwhelming debt, but it’s important to consider it carefully and understand all of your options. If you’re considering filing for bankruptcy, consulting with a bankruptcy attorney can provide you with personalized advice based on your specific financial situation. The Law Offices of Paul Y. Lee is here to help guide you through the bankruptcy process and answer any further questions you might have. You can reach us at 951-755-1000 for more information and to discuss your individual needs.
