For borrowers struggling with debts they can’t pay, bankruptcy may provide welcome relief, allowing you to wipe the slate clean and start over. However, misinformation and urban myths often leave borrowers confused about the benefits of bankruptcy and unsure about the best path forward. Here are answers to some of the most common questions you might have about filing for bankruptcy.
Answers to Common Bankruptcy Questions
Will I have to give up all of my belongings?
In a Chapter 7 bankruptcy, the trustee has the right to seize some of your assets to pay back your creditors. However, each state allows debtors to exempt a portion of their personal belongings, including some home equity, vehicles, and tools. In many cases, you may be able to file for bankruptcy without surrendering anything at all.
Are all debts dischargeable in bankruptcy?
Both Chapter 7 and 13 bankruptcies allow you to discharge a variety of unsecured debts, including credit cards, personal loans, hospital bills, and some back taxes. However, some debts, such as payroll taxes, back child support, and DUI penalties, are immune from bankruptcy.
What’s the difference between Chapter 7 and 13 bankruptcies?
A Chapter 7 bankruptcy allows borrowers to completely eliminate unsecured debts in exchange for surrendering nonexempt assets. A Chapter 13 bankruptcy, on the other hand, is designed to allow borrowers to make up arrears on secured debts through a payment plan managed by the court.
Will filing for bankruptcy permanently destroy my credit?
After filing for bankruptcy, it’s normal for your credit score to drop dramatically, sometimes by several hundred points. However, within a few months, you should be able to start rebuilding your credit rating, and many people find that they can qualify for auto loans or unsecured credit cards within a year.
If you’re struggling to meet your financial obligations, The Gil Law Firm in Dothan, AL, can help you get the second chance you deserve. For nearly 20 years, they’ve helped borrowers throughout Alabama, Florida, and Georgia navigate the complexities of the bankruptcy process and achieve the best possible results. Visit their website to learn more about their bankruptcy services, follow their Twitter page for more tips and advice, or call (334) 673-0100 to schedule a consultation with an attorney today.