Common Bankruptcy Questions

As a Rainwater, Holt & Sexton bankruptcy attorney I have been able to help many people through the bankruptcy process. I have also realized there are a lot of questions that most people have up front. Here are a few of those questions:

Do I need Chapter 7 or 13 Protection?

Bankruptcy is designed to give an individual a fresh start. If you have creditors harassing you, threats of repossession or lawsuits, or just can’t find a way to get all the bills paid each month, we would encourage you to come in for a bankruptcy consultation. An individual can file either a Chapter 7 or a Chapter 13 bankruptcy case – both types will protect an individual from garnishment and harassment upon filing.  A Chapter 7 bankruptcy is a great option if you need to shed unsecured debts such a credit cards or broken phone contracts. A Chapter 7 is designed to get rid of the unsecured debts weighing you down so you can focus on home or vehicle payments. It is generally important in a Chapter 7 to be current on car or house payments in order to keep the collateral.  A Chapter 13 bankruptcy will immediately protect a client from garnishment, foreclosure or even repossession by setting up a payment arrangement. If you have gotten behind on your car, a Chapter 13 will give you the chance to restart your payments fresh. A Chapter 13 bankruptcy will also allow you to catch up a mortgage while still getting rid of your credit card or medical debts.

Does BK ruin my credit for good?

Filing bankruptcy can be an intimidating but necessary thing. If you are worried about how a bankruptcy will affect your credit score, it is important to discuss that with a bankruptcy attorney before deciding to file. The impact a bankruptcy has on your credit depends on several factors. If you have really great credit before you file bankruptcy- your score will take a large hit. However, if delinquent accounts, lawsuits, or high debt to asset ratio, have already dragged your score down the impact will be much smaller. For many clients, delinquent accounts and repossessions have already eaten a hole in their credit scores and a bankruptcy may be the only way to clear these out in order to rebuild. Bankruptcy will allow these old, delinquent accounts to come off a person’s credit giving them a fresh chance to rebuild. A bankruptcy will be a mark on your credit history for up to ten years. However, once you have completed your bankruptcy you can begin to put good history on your credit to rebuild you score. We have had some clients begin this process within 12 months of completing bankruptcy.

Do I have to include all my debt in my bankruptcy filing?

A bankruptcy is designed to incorporate the big picture on an individual’s financial situation. So every debt a client has must be treated in some way during their bankruptcy. This may mean that a client will keep paying their mortgage themselves because they are current but get rid of all their credit cards when they file. It can mean that a client’s car and credit cards are working into a payment plan to pay off the vehicle over time and give a small percentage to their unsecured debts. The bottom line is that each debt must receive treatment in the bankruptcy whether it is repayment or discharge.

Can I file Bankruptcy for just me and not my spouse?

A bankruptcy can be designed as a joint filing to take marital debt together or as an individual filing. An individual is not required to file with their spouse at any time. However, we strongly encourage clients to review all their debts before making a decision as joint debts often require a joint filing to ensure the debts are discharged. If a couple is co-signed on a vehicle together, one spouse’s bankruptcy filing can affect the other. So we encourage clients to review all their debts and discuss with one of our bankruptcy attorney’s if filing joint or individually would serve their family best.

If you are considering filing for bankruptcy, call a Rainwater, Holt & Sexton bankruptcy attorney today.

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