When it’s done right, filing for bankruptcy can provide the fresh start you may need to regain financial stability. However, the process is a bit complicated. Here, Rafael Gil III of The Gil Law Firm in Dothan, AL, shares common questions he receives about the process and essential information on filing.
What to Know About Bankruptcy
Can It Clear All Your Debts?
When you file for bankruptcy, the courts issue a protective order, a so-called automatic stay, preventing creditors from hassling you. However, bankruptcy doesn’t apply to all debts. Unsecured debt from credit cards can be forgiven, for instance, while back taxes or child support payments cannot.
What Types Are There?
The most common types of personal bankruptcy are chapter 7 and chapter 13. Chapter 7 focuses on liquidation; your non-protected assets are seized and sold to pay off creditors, and the remainder of the debts are discharged. Chapter 13 focuses on reorganization; the debts are restructured into a more reasonable payment plan, and after three to five years of regular payments, the remainder of the debt is discharged.
Which Option Is Best for You?
The United States bankruptcy courts provide information regarding eligibility for chapter 7 and chapter 13 bankruptcy. If you qualify for both, the right choice depends on the nature and amount of your debts and future plans. There are pros and cons to both options. For instance, while chapter 7 discharges debts more quickly, you risk losing assets.
How Will Filing Impact Your Credit Score?
A chapter 7 filing will appear on a credit report for ten years, while chapter 13 will appear for seven years. However, there are many ways you can regain good credit after a bankruptcy filing, such as getting a secured credit card and making regular payments.
If you are considering bankruptcy, enlist the help of an attorney as soon as possible. They can advise you on which type to file, handle the necessary paperwork, and oversee the process to ensure the best possible outcome. They also provide advice on preparing for a better financial future after filing.
For a skilled bankruptcy lawyer in Dothan, AL, trust The Gil Law Firm. Since opening their doors in 2000, these professionals have been providing top-quality legal support to clients through Alabama, Georgia and Florida. Read what past clients have to say online. For an appointment, call (334) 673-0100.