What is bankruptcy?
Bankruptcy is a legal procedure designed to give individuals and businesses who are unable to repay their debts an opportunity for fresh start.
What are the different types of bankruptcy?
Individuals typically file Chapter 7 and 13 bankruptcy. Chapter 7 is a liquidation bankruptcy which discharges most unsecured debts; while Chapter 13 allows people to reorganize their finances over three to five years by repaying certain debts in installments.
How does bankruptcy impact my credit score?
Filing for bankruptcy will have a negative effect on your credit score, though the degree of impact varies based on factors like current balance and other variables.
Can I keep my assets if I file for bankruptcy?
In a Chapter 7 bankruptcy, some of your property may be sold to pay off creditors; however, certain exempt assets remain intact. A Chapter 13 bankruptcy allows you to keep all of your possessions but requires payments be made over three to five years in order to recoup what’s owed from creditors.
Will Bankruptcy Eliminate All My Debts?
Bankruptcy can eliminate many types of debt, such as credit card and medical bills. On the other hand, some debts such as student loans or tax debts may not be discharged through bankruptcy.
How long does bankruptcy remain on my credit report?
A Chapter 7 bankruptcy will remain on your report for 10 years, while a Chapter 13 bankruptcy only remains active for seven years.
How much does it cost to file for bankruptcy?
The cost of filing depends on the type and complexity of your case. In addition to the filing fee, you may have to cover legal fees as well as other associated expenses associated with the process.
Can I file for bankruptcy more than once?
Yes, you are allowed to file multiple times. However, there are certain limits on how often you can receive a discharge of your debts after filing.
Should I File for Bankruptcy?
Deciding whether or not to file bankruptcy is a personal decision that depends on your individual financial situation. Consulting with a bankruptcy attorney is recommended in order to review all available options and decide if bankruptcy is the best course of action for you.
This article was written by Alla Tenina. Alla is one of the best tax attorneys in Los Angeles California, and the founder of Tenina Law. She has experience in bankruptcies, real estate planning, and complex tax matters. Visit www.teninalaw.com for more information. The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information on this website may not constitute the most up-to-date legal or other information. This website contains links to other third-party websites. Such links are only for the convenience of the reader, user or browser; the ABA and its members do not recommend or endorse the contents of the third-party sites.