5 questions people often ask about bankruptcy

On Behalf of | Jun 4, 2023 | chapter 7 |

Do you have a ton of debt you’re struggling to pay off? You aren’t the only one. When this happens, people typically look for alternative methods to recover from their debt. 

One option you have is to file for bankruptcy. Bankruptcy can help you relieve your debts. There are a few things you may be wondering about bankruptcy. Here’s what you should know:

1. When should you file for bankruptcy?

Many people have small amounts of debt that are easily repayable. These kinds of debts don’t require people to file for bankruptcy. But, debts like medical bills and large credit card bills make it nearly impossible for many people to recover their financial footing without some kind of help. You should consider filing for bankruptcy when you’re living paycheck-to-paycheck because of your debt without any foreseeable solution or when you’ve fallen behind on your bills.

2. Will I lose everything when I file for bankruptcy? 

One of the most common kinds of bankruptcy is Chapter 7. Chapter 7 bankruptcy is also called liquidation bankruptcy because some people have non-exempt assets that may be liquidated by the trustee to repay their debts — but this is very rare. Most people who qualify for Chapter 7 lose nothing.

3. Can I recover my credit score after filing for bankruptcy?

It’s generally known that bankruptcy will damage people’s credit scores. However, people can recover their credit scores quickly with responsible financial decisions after their bankruptcy is over. After a year or two, a bankruptcy may have little residual effect on someone’s credit.

4. When can I file for bankruptcy?

People can file for bankruptcy whenever they want. However, people will have to wait several years before they can file bankruptcy again after their previous filing, if there was one. For example, it would take eight years to file for Chapter 7 bankruptcy after filing for Chapter 7 bankruptcy.

5. Is bankruptcy complicated? 

Bankruptcy is a complicated legal matter that people often shouldn’t handle on their own. People often seek some kind of legal guidance when learning the risks and advantages of bankruptcy.