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Bankruptcy definition

Our lawyers know that after evaluating your debt management options, you may choose to file for bankruptcy. This legal process provides a way for you to obtain a clean financial start. Bankruptcy can help you to get your finances back on track and can put an end to relentless collection efforts. With that said, it is important to note that filing for bankruptcy will temporarily damage your credit. As credit is essential to buying things like homes and cars, you may understandably be wondering how long will it take for yours to improve in the wake of filing for bankruptcy. The timeline for regaining post-bankruptcy positive credit varies, but some general guidelines can help give you an idea as to when it may happen for you. Keep in mind that every individual’s situation is different, so it is generally important to consult the knowledgeable lawyers that residents recommend at Fair Fee Legal Services before making any assumptions about your case specifically.

Bankruptcy Type and Discharge

Chapter 7 bankruptcy allows you to eliminate your eligible debts without repaying them. Before your bankruptcy discharge will be approved, the Court will determine whether any of your assets are eligible to be sold to repay your creditors. However, most Chapter 7 filers are able to exempt most (if not all) of their property from this liquidation threat. At the end of the bankruptcy period, the court will order all eligible debts discharged, essentially wiping your debt away. As this chapter of the Bankruptcy Code doesn’t require filers to stick to a repayment plan, the temporary damage to their credit lasts longer than it does for filers of Chapter 13 bankruptcy. Our firm’s lawyers can clarify exactly how long it will take for your credit to improve if you file for either form of bankruptcy.

Chapter 13 bankruptcy establishes a repayment plan for creditors that enables you, the debtor, to pay off some or all of the money you owe on a schedule and in an amount that works for you. The payment plan must end between three and five years from the date it is started. When the terms are successfully fulfilled, the remaining debt is discharged. This form of bankruptcy is less damaging to the credit of those who file because they continue to pay their creditors back over time.

Timing and Frequency of Bankruptcy Filings

In an ideal world, filers would only ever need to file for bankruptcy once. However, life is unpredictable and you may find yourself faced with the prospect of doing it again. The limitations on filing may vary, so check your local laws. However, it is typically possible to file again eight years after a Chapter 7 filing and two years after Chapter 13. The fact that you are limited in filing bankruptcy again may be appealing to some creditors. You may find yourself fielding credit card and personal loan offers very soon after your bankruptcy discharges. If you are careful, you can start rebuilding your credit soon after your filing, regardless of how many times you need to file. Our lawyers can help you understand the benefits and limitations associated with filing multiple times.

Pros and Cons of Chapter 13 Bankruptcy

Chapter 13 is a type of bankruptcy that requires the debtor to make a monthly payment to a Chapter 13 trustee for 30 to 60 months to pay off their debts. These debts include child support, taxes, auto loans, and mortgages. Once the secured debts are paid off, any income you have left will be applied to unsecured debts like medical bills and credit cards. This type of bankruptcy is most appropriate for those who still make significant income and want to keep their property. However, before you decide to file for Chapter 13, it’s important to be aware of the positives and negatives.

Here are the pros and cons of filing Chapter 13 bankruptcy.


You Have More Time to Get Out of Debt

Our half-price lawyers know debtors who file Chapter 13 may get up to five years to pay off all their debts. This is because they’re given more time to make payments through the restructuring process. Chapter 13 may help reduce the amount of the payment or extend the number of payments required.

It Will Look Better to Future Lenders

If you choose Chapter 13 or Chapter 7 bankruptcy, you may have an easier time getting approved for loans in the future. Because Chapter 13 involves reorganizing your debt rather than completely eliminating it, lenders know that you’re still taking responsibility for your debt and might be a good credit risk.

You Don’t Have to Worry About Losing Your Assets

When you file for Chapter 7 bankruptcy, you may be in danger of losing some of your assets like your home to pay off your debts. In Chapter 13 bankruptcy, however, you don’t have to worry about that. You’re still paying off your debts, so none of your assets can be taken away.


You Won’t Have As Much Disposable Cash

Because you’re required to pay off your debts in Chapter 13 bankruptcy, you might not have as much disposable cash available. You might have to have a very strict budget and only have money for essentials, like your mortgage, utilities, and groceries. That means you may not have money to spend on vacations, restaurants, and other entertainment for a long time.

It Will Remain on Your Credit Report for Seven Years

Chapter 13 bankruptcy stays on your report for seven years, which is three years less than Chapter 7 bankruptcy. However, it can still be difficult to purchase big-ticket items, such as a home, during that time.

Rebuilding Credit With Credit

It seems contradictory that you need credit to get credit, especially after a bankruptcy. Companies who extend offers of loans, even in the form of credit cards, want to ensure that you can handle making monthly payments. Thus, taking on debt a small amount at a time is one of the best ways to re-establish your creditworthiness. Some of the best ways to do this include:

  • Obtaining a secured loan or credit card
  • Becoming an authorized user on someone else’s credit card
  • Having someone co-sign a loan for you

Stay out of deep debt by only utilizing 10% of available credit and making payments early.

Our lawyers can serve as invaluable resources for getting your credit back on track. Schedule an appointment to speak with someone sooner rather than later to learn about your options. We look forward to speaking with you.

The sooner you contact our half-price lawyers, the sooner residents can trust at Fair Fee Legal Services, A Fair Fee Legal Services Company, the sooner they may be able to start protecting your rights.

Common Bankruptcy Questions 

For many Americans who find themselves over their heads in debt and unable to pay their bills, filing for bankruptcy is a viable solution to help get back on their feet.  Chapter 7 bankruptcy will, in theory, wipe out many of your debts and allow you to start over financially with a clean slate.

Many people considering filing for bankruptcy may have numerous questions about how bankruptcy will affect their future, financially and otherwise.  Though every individual’s situation may be slightly different, below are some common questions and answers regarding life after bankruptcy. For more detailed information that pertains to your specific case, contact our office to speak with a lawyer.

Will the creditors stop calling?

Yes.  When you file for bankruptcy, an automatic stay will go into effect, prohibiting creditors and bill collectors from engaging in further collection attempts.  Creditors that continue to try to collect may face legal penalties.  There are certain exceptions to the automatic stay, however, such as proceedings related to the collection of child or spousal support and certain actions by the IRS.

Will bankruptcy affect my credit?

This answer truly depends on each individual’s situation.  Bankruptcy will show up on your credit report and may remain there for up to ten years.  However, if you were behind on all of your credit cards, mortgage, etc., having all of those accounts paid and showing as the current can actually improve your credit situation even with the reported bankruptcy.  Though you may not be able to receive a true credit card immediately after a bankruptcy, you can use a secured credit card or other account tied to your bank account to help rebuild positive credit history.

Will bankruptcy clear all of my debt?

Not every debt is eligible for discharge in bankruptcy.  Some debts that will survive include child support and alimony, most student loans, mortgages, liens, and any debts obtained through providing false information. Your lawyer can discuss with you the different types of bankruptcy and which would be more beneficial for your case.

Will it affect my utilities?

Public utility companies, including electric, gas, water, etc., are not allowed to deny you service because of a bankruptcy.  The companies can, however, put you in a “credit risk” category and require a deposit for future services.

What if employers check my credit?

Federal law prohibits any private employer from terminating or otherwise discriminating against an employee or prospective employee who has filed for bankruptcy or not paid a debt that can be discharged through bankruptcy.

Let a Half-Price Lawyer in Las Vegas Help

Although these are some basic answers to common questions, every bankruptcy is a little different and an experienced bankruptcy attorney can answer questions based on your individual circumstances.  Contact Fair Fee Legal Services to schedule a free can confidential consultation to find out how one of our lawyers can help you get a new financial start. We even offer options where you can start your bankruptcy with $0 down. Call our office today.

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