If you are facing overwhelming financial issues, bankruptcy may be an option to consider. It’s a serious decision, emotionally fraught and laden with financial consequences, so it’s important to understand the specifics before you decide. Here, we offer some help with that.
Bankruptcy is the legal process through which individuals and businesses are relieved of debts they’re unable to pay. It’s complicated, and might require an attorney who specializes in bankruptcy. When you file for bankruptcy, the court determines whether you can declare bankruptcy based on your financial situation, debt, and ability to repay debt. The court also decides which debts can be dismissed, and you may have to pay back some of the debt. Bankruptcy negatively affects credit, making it harder to get loans or credit cards with good interest rates.
So why would anyone file for bankruptcy? Bankruptcy can relieve you of some debt, and the court will assign you a budget to help you repay what remains. When you go through this process, it can prevent the foreclosure of your home and repossession of property like cars, stop your wages from being garnished, and keep your utilities connected. It will also get creditors and collection agencies off your back: they’re not allowed to contact you post-bankruptcy.
Bankruptcy reduces or dismisses debt from sources like credit cards, past-due utility bills, rent, and medical bills. If it dismisses your car payment, you may lose the car to repossession. Some debt is hardly ever discharged, like child support, alimony, student loans, and taxes.
Businesses typically file Chapter 11 bankruptcy, while individuals usually file Chapter 7 or Chapter 13. The right bankruptcy for you will be determined by your situation. With Chapter 7, the court pays back your debt by selling your property and assets. If this doesn’t cover all the debt, the rest is dismissed. This kind of debt stays on your credit report for 10 years, and you can’t file again for 8 years. A Chapter 13, only stays on your credit report for 7 years, and you can file for bankruptcy again in 2. With Chapter 13, you cooperate with the court in paying back part or all of your debts.
The blow to your credit may be the biggest hardship associated with bankruptcy. It’s possible, however, to rebuild your credit score. Stick with a budget, pay your bills on time, and don’t accrue additional debt, and you’ll begin rebuilding your credit.
If you need information about bankruptcy, trust the compassionate, dedicated attorneys at Cutler & Associates to work with you and keep your best interests in mind. A Chicagoland bankruptcy firm, we have clients throughout the Chicago metropolitan area, and work hard to make sure our clients get what they need. Our offices are conveniently scattered throughout the area, with locations in Aurora, Chicago, Hoffman Estates, Lisle, Naperville, Oak Brook, Schaumburg, and Skokie. Contact us through our website, or call (773) 360-5802 for more information.