Since the early days of wild Monopoly games around the family table, when you hear the word “bankruptcy,” you probably think game over. We’ve said it before and we’ll say it again: filing for bankruptcy does not mean that you’ve failed. Whether it’s a reorganization or a liquidation, bankruptcy is a responsible, strategic move to address an unplanned financial situation.
If you’re one of the many individuals or businesses facing bankruptcy, you most likely have questions about the filing process. Once you get the ball rolling, you’ll start to see the light (and life) at the end of the tunnel—but what exactly does that look like? In this blog, we’ll address some of the most common FAQs about life after bankruptcy to help you learn what to expect on the other side.
What is a discharge?
A bankruptcy discharge is an order from the bankruptcy court that accomplishes two things: 1. It releases the debtor from personal liability of certain debts (although some specific debts do not apply in a bankruptcy case) and 2. It prevents creditors from attempting to collect discharged debts. The timeline for a discharge will vary based on the type of bankruptcy.
How do I know when my bankruptcy case is complete?
Although it might sound like it should be, the bankruptcy case is not over when you receive a discharge. In fact, for some parties involved, it’s just getting started. When the court closes the final decree or order, that is when your bankruptcy case is complete.
Will all my debts be eliminated?
While filing for bankruptcy will help you avoid harassment from collection creditors and release you from specific debts, it does not cover all debts. This contingency depends on the type of bankruptcy you’re filing for, but it’s best to consult with an attorney to determine which debts can be discharged and which ones will survive the bankruptcy.
What will happen to my assets?
Part of the bankruptcy process involves disclosing your income, assets, and existing debts. If you fail to list any assets or property and a trustee finds out, there are serious consequences. The fate of those assets depends upon what type of bankruptcy you’re filing for and the plan of action that you’ve developed with your attorney. Assets can be categorized into exempt and nonexempt; nonexempt assets can be used to repay your creditors, while exempt assets cannot be sold to pay off creditors.
Will my credit be affected?
Bankruptcy does impact your credit score, but you are in control of how you rebuild that credit after the process is complete. All bankruptcy-related debts will remain on your credit report and affect your credit score for seven to ten years, but this impact will decrease over time. You can consult with a financial advisor to make sure you emerge from the other side of bankruptcy and thrive. People often assume that they can’t apply for a credit card or a loan post-bankruptcy, but these are great ways to rebuild your credit score in some circumstances.
Will people know if I’ve filed for bankruptcy?
When you file for bankruptcy, the bankruptcy court and your creditors will have to know, but you are in control of the rest. While bankruptcy records are public knowledge, unless you’re a prominent person in your community, you should be able to complete the process discreetly.
What if I have to file for bankruptcy again?
You can file for bankruptcy more than once, but there is a required wait time for filing again that’s dependent upon the type of bankruptcy you’ve filed for in the past.
What are the long term effects?
The long term effects of bankruptcy include peace of mind and a hopeful future. We’re serious! Remember, bankruptcy is not the problem. The problem is your debt, and bankruptcy is the solution to taking care of that debt in a strategic way.
At Michael H. Moody Law, we review your entire circumstances to provide helpful solutions. We pride ourselves on providing big law quality legal services, at a fraction of the price. Contact us today to learn more about your options.