Bankruptcy is a legal process that you file when you can’t repay your debts, especially if they’ve accumulated and are extensive. If you’re considering filing, you need to understand what it means, from bankruptcy appraisals to the long-term effects. Here are a few FAQ involving bankruptcy to help you understand what the process entails.

What to Know About Bankruptcy

What is it?

There are two types of bankruptcy: chapter 7 and 13. Chapter 7 asks the court to discharge the eligible debts. In return, they liquidate your assets to disburse the amounts back to the creditors. Once a debt has been discharged, you aren’t liable for repaying it.

With chapter 13, you agree to a repayment plan over the course of several years. You may end up paying less overall than what you originally owed, and the repayment is based on your income, assets, and debts.

How does filing for bankruptcy help me right now?

Once you file, an automatic stay goes into place that stops all collection efforts. Creditors can’t contact you or continue with a lawsuit filed against you. Filing protects you from any actions that can be taken against you for the debts, so they can’t repossess your property.

How will it affect me in the long run?

Your credit report will show that you filed for bankruptcy, which will make those who check it a bit wary. Chapter 7 bankruptcy will stay on the report for 10 years, and a chapter 13 bankruptcy will remain for seven.

During this time, it’ll be more difficult to get approved for things that require a credit check, like loans, apartment rentals, and credit cards. If you get approved, expect to pay higher interest rates or larger down payments.

Where do I get started?

Start by contacting a bankruptcy attorney. Compile a list of your income, assets, debts, and expenses, and complete credit counseling before filing. Next, you and a lawyer will work on filing, which involves filling out paperwork and determining which type of bankruptcy you qualify for.

A key part of this process is having a bankruptcy appraisal done, which gives an accurate summation of the home’s value. The appraisal quote can influence whether the home is affected by the bankruptcy. After filing, you’ll meet with a court trustee and creditors.

If you plan to file, turn to Concept Appraisal Services in Littleton, CO. These licensed and certified professionals have provided detailed bankruptcy appraisals in the Denver Metro area since 2003. Learn more about their services online, or call (303) 506-6254 to request a free quote.