If you are eligible to file for Chapter 7 Bankruptcy, your attorney will file the bankruptcy on your behalf triggering an automatic stay which stops creditors from further collection efforts.
Anywhere from 3 to 6 weeks after filing, you will meet with a bankruptcy trustee to go over your financial records. Creditors are provided a 60 day window to object to the findings, after which time eligible debt will be discharged.
For Chapter 13 bankruptcy, the procedure is similar, but instead of discharging debt, the repayment plan will start immediately after the court approves the plan. Interest rates, principles, credit card debt and other debts may be reduced to make repayment feasible, and again, remaining balances may be eligible for discharge at the conclusion of the repayment period.
Repercussions of Filing Bankruptcy
Although bankruptcy offers those who are facing a difficult financial situation an opportunity to hit the reset button, there are consequences to consider. A Chapter 7 or 13 Bankruptcy will be reflected on your credit report – a chapter 7 for 10 years and a Chapter 13 for 7 years. A bankruptcy can also reduce your credit score depending on how much debt is discharged and how many accounts were involved.
Although bankruptcy can impact your credit worthiness, lenders often view bankruptcy as a proactive step someone takes to get finances back on track. While it may be difficult to borrow at a favorable interest rate for a period of time following bankruptcy, there are a number of steps a filer can take to rebuild their credit more quickly such as making timely payments on a secured credit card or loans taken out against collateral.
Bankruptcy is not the right strategy for every situation. The best advice is to discuss your case with an experienced bankruptcy attorney to determine the best course of action. When you have questions regarding the bankruptcy process, contact Peoria bankruptcy attorney Charles E. Covey for answers at 309-674-8125.
