What’s the process of filing bankruptcy?
Prior to filing bankruptcy under Chapter Seven (7) or Chapter Thirteen (13), a debtor must participate in credit counseling. This can be done over the phone or the internet. The debtor must then participate in another session of credit counseling prior to the discharge of bankruptcy.
Whether you file Chapter 7 or Chapter 13, a debtor must initiate credit counseling prior to filing bankruptcy and prior to the discharge.
Once bankruptcy you’ve filed, creditors are required by law to stop contacting you. Creditors can no longer continue with lawsuits, wage garnishment, or contact the your or your family by phone or mail.
No matter what chapter the debtor files for, a trustee will be appointed over his or her case. The trustee is the person who reviews the debtor's financial information and bankruptcy petition to ensure the debtor is not committing fraud and is following the applicable laws appropriately. Likewise, the trustee helps to determine if there are any sources to pay creditors and how much.
How does bankruptcy affect my credit?
Filing bankruptcy can remain on the debtor's credit for a period of up to 10 years. Filing bankruptcy doesn’t mean the end of the world, but it can make borrowing money more difficult.
When you file for bankruptcy, the accounts you are relieved from will still be reported on your credit reports as either “discharged” or “included in bankruptcy.” However, accounts included in bankruptcy will not be reported as “unpaid” or “past due.” No matter the wording on your credit report, lenders will see the bankruptcy file and may decline your loan based upon it.
Eventually, your credit score will start to rebound, but that’s only contingent on your personal financial responsibility from here on out.
Whether you’re thinking about filing for bankruptcy or you have already made up your mind, consulting an experienced bankruptcy attorney is the best way to ensure you make the best decisions for your future. If you or someone you know is in need of this counseling, call me. I want to help.