As a bankruptcy lawyer people recommend will share filing for bankruptcy comes with its fair share of advantages and disadvantages. While choosing bankruptcy is often difficult, know that there are options when it comes to filing for bankruptcy. Depending upon the specifics of the situation, a lawyer from The Law Offices of Ronald I. Chorches can provide guidance that ensures their clients’ interests remain at the forefront. Advantages of bankruptcy may include:
- Start fresh with debt relief
- Retain some assets through state exemptions
- Calls from creditors are halted with the automatic stay
- A chance to rebuild credit
- Stress relief from crushing debts
To fully realize the benefits, a lawyer can help by reviewing the case and discussing the options available to their clients. Among the many concerns, those considering bankruptcy often have is the impact bankruptcy will have on their credit. However, with diligence, it’s possible to rebuild credit after filing for bankruptcy.
Personal Bankruptcy Filing Options
There are several types of bankruptcy options that may be available. However, two primary options are available in situations involving personal bankruptcy. Each option provides different advantages, but debtors must carefully consider their specific financial situation and needs before moving forward. The two most widely accessed bankruptcy options are as follows:
- Chapter 7: This form of bankruptcy is often referred to as a full liquidation meaning many of the person’s debts are forgiven, allowing the slate to be wiped clean. While this can let debtors walk away and start fresh, remember that choosing Chapter 7 means a person may need to walk away from many of their nonexempt assets. Despite this, those filing for Chapter 7 will allow for some exemptions and will be able to retain some of what they own. To file for Chapter 7, debtors must be able to qualify by attending credit counseling and passing the means test.
- Chapter 13: Chapter 13 is known as the wage earner’s plan, meaning those filing for bankruptcy receive a healthy income that allows them to continue to pay off some of their debts. Through Chapter 13, debtors can reorganize their debts and repay them over 3-5 years. There are several advantages to choosing this type of bankruptcy filing because debtors can keep their homes and some of their assets as long as they can pay them off under the developed reorganization plan.
Rebuilding Credit After Bankruptcy
Many people will have concerns over how a bankruptcy filing will impact their credit moving forward. Chances are, debtors unable to make payments on their financial obligations will already experience a significant hit to their credit score. In many cases, filing for bankruptcy will impact a person’s credit for a considerable period, up to 10 years. However, during this time, debtors need to begin the process of strategically rebuilding their credit by taking the following action steps:
- Regularly reviewing credit reports
- Making payments on time
- Building up savings
- Gaining access to a secured credit card
- Making small charges and paying them off each month
- Becoming an authorized user on another person’s card
Schedule a consultation to learn more about how our Bridgeport, CT bankruptcy lawyer from The Law Offices of Ronald l. Chorches can assist.