Bankruptcy

Many people have great misconceptions about filing for bankruptcy. For example, individuals worry that if they file for bankruptcy, they’ll never get credit again. Or they think that while their debts may go away, they’ll walk away with only the shirt on their back, losing their retirement or their home. Many people also think that only free-spenders and the financially irresponsible file for bankruptcy, and so they worry about the stigma or moral failure with which they’ll be tagged by others if they have to file. These are all understandable thoughts. But here’s the truth:

  • In our experience, the most common reasons people file for bankruptcy are: un(der)-employed, suffering from the effects of the housing and credit crises, going/went through a divorce, and/or have unexpected medical bills.
  • Yes, the fact that you have had to file for bankruptcy will result in a statement on your credit report (for up to 10 years, actually). But if you’re really considering it, odds are your credit has already taken a hit. And you’ll probably have a chance to rebuild your credit again soon after your bankruptcy.
  • However, you will be able to hold on to many of your assets if you file. Our job is to find a way to let you hold on to as many of your assets as the law allows. One of those assets is often a retirement account (so call an attorney before you decide to cash it out).

 

It’s not our job or place to tell you how you should feel, but we can say that it’s not worth losing sleep over, or panicking. Your financial situation may feel overwhelming, or you may feel a sense of guilt or shame about even considering the idea of bankruptcy. It is our job is to take some of that worry away. Here’s some basic information on some common types of bankruptcy:

 

CHAPTER 7 (liquidation) – Chapter 7 is the most common form of bankruptcy for individuals because it eliminates all eligible debt and allows you to hold onto that property that’s “exempted” by law. It’s quick, easy, and relatively pain-free. But as of 2005, filing for chapter 7 became a bit harder. Our job is to get you into a chapter 7 if we can (and you want), and to maximize these exemptions, while allowing you to hold on to as much property as is legally permitted.

 

CHAPTER 13 (repayment) – Chapter 13 involves a payment plan where you pay back those debts that cannot be discharged and any unsecured debts using your disposable income. Upon the completion of your plan, the remaining debt will be discharged.