Though bankruptcy may seem like the end of the road, it can actually be the start of a new beginning. Bankruptcy can help you get out from under-crushing debt, and give you a fresh start. So if you’re feeling overwhelmed by your debt, don’t hesitate to file for bankruptcy-it may be the best decision you ever make!
What is Bankruptcy and How Does it Work
Bankruptcy is a legal status of a person or organization that cannot repay the debts it owes to creditors. In most cases, bankruptcy is initiated by the debtor. Chapter 7 bankruptcy discharges most unsecured debt, such as credit card debt and medical bills. Chapter 13 bankruptcy allows the debtor to keep property and repay debts over time.
How does it work? Bankruptcy law allows people who can’t pay their debts to rid themselves of these obligations by filing for bankruptcy protection. This protection comes in two forms: Chapter 7 and Chapter 13. Each has its own specific requirements and benefits, but they both achieve the same goal: Cancelling your debt so you don’t have to worry about it anymore.
When most people think of bankruptcy, they think of Chapter 7. This type of bankruptcy is designed to help people who are overwhelmed by debt. Under Chapter 7, the debtor’s assets are liquidated (sold off) to repay creditors. The goal is to completely discharge all unsecured debt, such as credit card debt and medical bills.
There are a few things you should know about Chapter 7 bankruptcy:
- It’s not for everyone. In order to qualify, you must pass a means test, which examines your income and expenses.
- You may have to sell some of your assets. If you have valuable property, it may be sold to repay your creditors.
- You will get a fresh start. After filing for Chapter 7 bankruptcy, you will be released from all of your debt obligations. This means you can start over with a clean slate!
Chapter 13 bankruptcy is a type of bankruptcy designed for people who want to keep their property. Under Chapter 13, the debtor makes a plan to repay their debts over time. This plan can be tailored to fit the debtor’s specific situation and income level.
There are a few things you should know about Chapter 13 bankruptcy:
- It’s not for everyone. In order to qualify, you must have a regular income and unsecured debt below a certain limit.
- You may have to repay your debt in full. Unlike Chapter 7 bankruptcy, Chapter 13 does not discharge all unsecured debt.
- You will get a fresh start. After filing for Chapter 13 bankruptcy, you will be released from all of your debt obligations. This means you can start over with a clean slate!
The Benefits of Filing for Bankruptcy
Though bankruptcy may seem like the end of the road, it can actually be the start of a new beginning. Bankruptcy can help you get out from under-crushing debt, and give you a fresh start. So if you’re feeling overwhelmed by your debt, don’t hesitate to file for bankruptcy-it may be the best decision you ever make!
The benefits of filing for bankruptcy are numerous:
- You can get rid of your unsecured debt.
- You can stop creditor harassment.
- You can rebuild your credit score.
- You can keep your property.
How to rebuild your credit after bankruptcy
Rebuilding your credit after bankruptcy can seem like a daunting task, but with a little hard work and determination, it can be done. Here are a few tips to help get you started:
- Start by creating a budget and sticking to it.
- Pay your bills on time, every time.
- Get a secured credit card and use it responsibly.
- Try to get a loan or line of credit from a bank or credit union.
- Monitor your credit score and credit report regularly.
Now that you know a little more about bankruptcy and its benefits, let’s talk about how to rebuild your credit after you’ve filed. The most important thing is to start building good credit habits as soon as possible. This means paying your bills on time, every time- even if it means making some tough sacrifices. You should also try to keep your balances low and avoid opening too many new accounts at once. These may seem like difficult tasks, but with patience and perseverance, you can definitely achieve them! And when it comes time to apply for a car loan or mortgage, you’ll be glad you took the time to rebuild your credit score.
By following these tips, you’ll be on your way to rebuilding your credit after bankruptcy!
Pelican Law is ready to help you get out of crushing debt. Contact us today to set up a consultation so we can start a plan for you!
