Filing for bankruptcy is a significant financial decision that can have some lasting effects for individuals and businesses. Even with these effects in mind, the relief that bankruptcy offers from overwhelming debt that may be worth the temporary repercussions of the filing. Remember to review with experienced bankruptcy lawyers.
Credit Scores and Creditworthiness
One of the primary effects of a bankruptcy filing is that its impact on credit scores and creditworthiness. People often mistakenly believe that a bankruptcy filing prevents them from making financial actions such as applying for a mortgage or car loan. This is false but there are things that an individual should be aware of before they file. The time that a bankruptcy filing lasts on a credit report depends on the type of bankruptcy the debtor filed under and how the case was finished. While the filing is on your credit report, obtaining new credit such as loans is different than if you had not filed for bankruptcy such as higher interest rates. A bankruptcy filing may impact potential landlords’ and employers’ decision on your applications.
Risk of Losing Assets
If one files for bankruptcy without proper guidance, they may risk loss of assets depending on applicable state laws. For example, if one files for Chapter 7 bankruptcy while owning real estate, they may run the risk of having the Bankruptcy Trustee selling their property and liquidating it to pay off the creditors. It is for reasons like this that consulting with one of our experienced attorneys is a powerful resource to have when considering filing for bankruptcy.
Future Bankruptcy Filings
There are a myriad of reasons why a bankruptcy filing can help someone through a difficult debt situation. Something that a person should keep in mind when filing for bankruptcy is a combination of the circumstances/reasons why bankruptcy is an option and the ability to refile in the immediate future. In order to file for Chapter 7 bankruptcy, a person would need to wait 8 years from the date of their most recent Chapter 7 filing or wait 6 years from the date of their most recent Chapter 13 filing to file again. To file a Chapter 13 bankruptcy, it would need be at least 4 years after a prior Chapter 7 filing and at least 2 years from a prior Chapter 13 filing.
Consulting with our Experienced Attorney
Overall, when considering filing for bankruptcy, it is helpful to have an understanding of, not only the benefits, but also the impact it has on your future. On one hand, a bankruptcy can help you clear yourself of overwhelming debt but there will be noticeable effects of the filing. It is imperative that one consults with an experienced attorney so they can best explain the full picture of what a bankruptcy filing looks like.
