by Crowcombe Al
Life After Chapter 7 Bankruptcy: What Can You Expect
Article by Chris Harmen
Life After Chapter 7 Bankruptcy: What Can You Expect by Chris Harmen
in Finance (submitted 2012-05-21)
If you’re working with a bankruptcy attorney to help discharge your debts, you’re probably curious about how your life will be affected after filing a Chapter 7 bankruptcy. Although it’s important to receive information directly from a bankruptcy attorney and do your research regarding your specific situation, here are some things you can expect after filing for Chapter 7.
Debts That Will Not Go Away Under Chapter 7
There are some debts that you’ll continue to be responsible for, even after filing for Chapter 7. Some of these debts include government funded student loans, child support, alimony, personal injury payments and fines associated with tickets or lawbreaking. Private student loans, such as those obtained directly from a bank that are not federally funded, may be discharged, but they aren’t typically included in the filing.
In some cases, tax debt can be forgiven, but only if it’s income tax. If you’re a business, payroll taxes can never be discharged. Tax debt is discharged on a case by case basis, so while a bankruptcy attorney can help you file to have it discharged, he or she may never truly know which way the judge will rule.
Debts That Will Go Away Under Chapter 7
Debts that will go away under a Chapter 7 filing include credit card debt, medical bills and other types of unsecured debt. In many cases, people who are working with a bankruptcy attorney to file are able to keep their homes and cars. This is because a home and a vehicle are both considered secured debts, that is, a bank could come and take physical possession of the property in order to repay the debt. However, if they want to return the property back to the bank that holds the lien, it’s possible to include homes and vehicles in with the filing done by your bankruptcy lawyer.
Repairing Your Credit
It will probably take two months or more to complete the bankruptcy. A judge will issue the order and any money owed will be forgiven. Afterwards, you’ll need to start repairing your credit. If you needed to file because of overuse of credit cards, consider working with a financial counselor to help you create a budget and stick with it. You may start to receive applications soon after you file, but avoid the temptation to use them! Oftentimes these cards have very high interest rates, which could lead you right back where you started! However, don’t let too much time pass without adding something positive to your credit rating. If you go too long without using credit — even if you just charge something each month and instantly pay it off — you aren’t showing creditors that you can use credit responsibly. It’s a fine line and one that takes a great deal of restraint so make sure you can handle a line of credit before opening one.
If you’re struggling under massive credit card debt, medical debt or others, consider working with a bankruptcy lawyer to see whether filing is right for you.
About the Author
If you’re facing bankruptcy, Honolulu bankruptcy attorney Blake Goodman can help. Goodman is a CPA and a Honolulu bankruptcy lawyer with the experience to help clients in a number of financial situations, including filing for Chapter 7 in Hawaii. To see the services Goodman offers, please visit his site.
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