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Four Things You Didn’t Know About Bankruptcy

June 8, 2022

You’re likely familiar with the concept of bankruptcy, but you may be unaware of what it can mean for you and your financial situation. If you’re considering filing for bankruptcy, continue reading to learn four things you didn’t know about bankruptcy. 

When you’re ready to take the next step, contact AKS Law.

Bankruptcy Gives You a Fresh Start

A fresh financial start is a major motivator when choosing to file for bankruptcy.

The type of fresh start you get and how quickly you achieve it will depend on the type of bankruptcy you file. For example, if you file a Chapter 7 bankruptcy, you can have some debts discharged right away. When you file a Chapter 13 bankruptcy, the court can grant a repayment plan, giving you more time to pay off part or all of your debts. After you’ve completed your repayment plan, your debts are discharged.

You Can Get Credit

One of the biggest misconceptions about bankruptcy is that it will ruin your credit entirely, or you cannot rebuild your credit afterward. Filing for bankruptcy does reflect in your credit report and will continue to do so for some years afterward. However, this does not mean you cannot get credit or rebuild your credit after a bankruptcy.

After bankruptcy, it can take some time to rebuild your credit, typically a year to 18 months. In that time, you can take steps to improve your credit little by little, including:

  • Reviewing your credit report and disputing any inconsistencies

  • Applying for a secured credit card

  • Becoming an authorized user on another person’s credit card

  • Paying your monthly payments on time every time

Making wise financial decisions after bankruptcy can benefit your credit greatly. Eventually, after working on your credit and allowing enough time, you’ll do more with a better credit score, like securing a loan.

You Don’t Need to Be Broke

Many assume you go broke after filing for bankruptcy, but that’s not the case. Bankruptcy provides you the opportunity to get rid of those expensive monthly payments of debts.  This will help provide more financial stability. Also, the means test makes a determination of how much you can earn to qualify for a bankruptcy.  This is based on the number of people in your household.  As of today, here is what you can earn based on the means test and still qualify:

1 in Household- $53,547

2 in Household- $69,614

3 in Household- $80,022

4 in Household- $94,774

As is shown above- the income you can earn to qualify goes up depending on dependents in the household.

Most People Keep All of Their Assets

Finally, the thought of losing assets in a bankruptcy case is a significant deterrent for most people. However, bankruptcy can actually help you keep your property and assets.

When you file for bankruptcy, it stops creditors entirely, taking away their ability to foreclose or repossess. Additionally, certain exemptions exist, allowing you to keep your assets.

If you’re unsure of what bankruptcy will mean for your property and assets, it’s best to discuss your situation with a bankruptcy lawyer.

Consult With a Knowledgeable St. Louis Bankruptcy Attorney

AKS Law has over a decade of experience helping clients with their bankruptcy cases. We handle every client and case differently, as we know no two cases are the same. We understand the feelings of fear and stress bankruptcy can produce, but we’re here to put your mind at ease and help get you on the road to financial freedom. Call us at (314) 866-3955 or contact us online to schedule your consultation today.