Bankruptcy 101

: Chris Lee Law Firm

  Filed under: Bankruptcy

bankruptcy

Personal bankruptcy is a legal action that can eliminate an individual’s legal obligations to pay certain types of debts, such as credit cards and medical bills. Bankruptcy can also stop, at least temporarily, a foreclosure, repossession of a property, or shutdown of utility services. By filing for bankruptcy, an individual can eliminate debt, protect future income from collection, and achieve a new financial start.

Get An Attorneys Advice

The decision to file bankruptcy is a complicated one, and you should consult with an attorney. If you have fallen behind in your debts and have income or assets that you want to protect from your creditors, filing for bankruptcy might be a good option. Most individuals can file bankruptcy; Chapter 7 is the most common form of personal bankruptcy. It allows the person to keep some assets and all the income received after starting the bankruptcy process and eliminate as many debts as possible.

Personal bankruptcy has several significant advantages:

  • When you file for bankruptcy, an automatic stay occurs that prevents creditors from taking action to recover what is owed.
  • The automatic suspension will delay. And perhaps we permanently suspend an eviction, a mortgage settlement, a repossession, or a lien.
  • At the end of the bankruptcy process, most of the debt will be liquidated, which means that the bankruptcy court issues a resolution by which you do not have to pay your debts. Most credit card debt, personal loans, overpayment of public benefits, and medical debt can also be eliminated.
  • A bankruptcy discharge is a permanent court order stating that certain debts do not have to be paid. No one can make you pay on a settled debt, even though you can pay it voluntarily if you want to. A creditor with secured debt, such as a mortgage or auto loan, can seize the collateral if you do not pay on the debt. Certain debts, like most student loans, child support, alimony, criminal fines, and some tax debts, cannot be discharged.

The discharge only covers debts incurred before since your bankruptcy. A creditor can also object to the settlement if a debt was contracted for fraud or scam. Similarly, the court can deny the discharge if you were not honest about the bankruptcy.

Before filing for personal bankruptcy, you need to complete a mandatory credit counseling session. A bankruptcy proceeding begins when you submit a document called a “petition” with the bankruptcy court. After being filed, the automatic stay goes into effect, and creditors cannot take any action to collect any debt.

Credit Rating

Bankruptcy will have a negative impact on your credit rating, even more so than any other credit problem. But this does not mean that you cannot obtain credit after filing for bankruptcy. You can improve your credit if you don’t open a line of credit, keep low balances in your current accounts, and pay your bills on time. After filing for bankruptcy, lenders may ask you to reaffirm each of your debts. In other words, you agree to pay them even when they were liquidated during the bankruptcy process.

If you are overwhelmed in debt, contact a Fort Worth bankruptcy attorney to find out how you can get financial relief.


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