If you’re struggling to keep up with your debts, filing for personal bankruptcy could be the most effective solution to get back on track. However, before you get started, you should learn what to expect. Consult the following guide to learn more about this legal process. 

4 FAQ About Filing for Bankruptcy

What is involved in the bankruptcy process?

Once your attorney has identified the right personal bankruptcy option (Chapter 13 vs. Chapter 7), they’ll file a petition, which will immediately stop all debt collection efforts. Next, the courts will appoint a supervising trustee to oversee your case, and you’ll be asked to provide a thorough record of all your finances and financial history. At this point, your attorney will submit a statement of intention that outlines how you plan to deal with your debts. Your trustee will then get approval or denial from any existing creditors to move forward with the bankruptcy.

Can all your debts be eliminated? 

You can’t get out of paying certain expenses, regardless of your financial situation. These are called nondischargeable debts, and they include government-associated costs, such as unpaid taxes or fines, spousal or child support payments, and student loans. 

How does filing for personal bankruptcy affect your credit score? 

Filing for bankruptcy will have a long-lasting impact on your credit, but it won’t be permanent. On average, your score may drop anywhere from 160 to 220 points. Depending on the type of bankruptcy you filed for, it may stay on your credit history for anywhere from three to seven years. 

Will all of your assets be vulnerable to liquidation?

Most of your belongings, from your savings to your home, will be susceptible to liquidation. However, the court might consider certain items necessary for day-to-day life, like furniture, household appliances, clothing, and business equipment, so you’ll get to keep them. 

If you need help getting your finances back on track, turn to Donald L. Spafford, Jr., Attorney at Law in Honolulu, HI. For over 30 years, he has guided clients through the personal bankruptcy process to ensure successful filing and improved financial health. Call (808) 532-6300 to schedule a free initial consultation, and visit his website for more information on his firm.