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Life After Bankruptcy

Dec. 20, 2021

While it is true that a bankruptcy filing can affect a person's finances for years to come, for many people, filing is the best option. Declaring bankruptcy gives individuals or businesses that are unable to pay their debts a way to solve their financial difficulties. It can help them start rebuilding their credit and lives in a more positive and financially stable way. Here is what you should know about life after bankruptcy.

A Chance to Start Over

Filing for bankruptcy can give you a second chance. With restructuring, you can keep running your business but on better credit terms. On the other hand, with Chapter 7, you can wind down a company that just isn't working anymore, so you can move onto something else.

Getting Your Bankruptcy Discharge

If you've never filed for bankruptcy before, pass the means test, and are honest in your dealings with the bankruptcy court and the bankruptcy trustee, you can get your bankruptcy discharge in as little as 3 months. As long as you make sure you meet all requirements before and after filing your bankruptcy case, you are eligible for the bankruptcy discharge.

Immediate Relief in The Form of A Much-Needed Breathing Spell

The moment your case is filed with the bankruptcy court, you're protected from creditors. Filing for bankruptcy triggers an automatic stay - or stop - on all collection actions. This means all phone calls, garnishments, and collection letters have to stop. It even put at least a temporary stop to repossessions, evictions, and foreclosures.

You Get Credit Education

The bankruptcy law says that anyone who files is required to get some credit education. This is an opportunity to look back at what happened and reset your financial and credit course going forward. If you take full advantage of this opportunity, you'll walk away with a much better sense of how to manage your financial life.

Bankruptcy Exemptions Might Allow You to Maintain Ownership of Your Property After Bankruptcy

If you can "exempt" an asset, this means you don't have to worry about it being seized in the bankruptcy. These exemptions play an important role in both Chapter 7 and 13 bankruptcies. Some exemptions protect up to a certain dollar amount of an asset; sometimes the exemption covers the entire value of an asset. Some exemptions apply to certain types of assets, like a motor vehicle or wedding ring, while others can be applied towards any property you own.

Wipe Out Credit Card Debt and Most Other Nonpriority Unsecured Debts

Bankruptcy is very good at wiping out unsecured credit card debt, medical bills, overdue utility payments, personal loans, gym contracts etc. In fact, it can wipe out most nonpriority unsecured debts other than school loans. The debt is unsecured if you didn't promise to give back the purchased property if you didn't pay the bill.

Bankruptcy Can Help Your Credit Scores

Even if you have high credit scores, if you find yourself in a position where you must file for bankruptcy, then your credit scores probably aren't as important as the reasons for having to file bankruptcy. Getting a new loan or credit card is not as pressing as, for instance, a pending wage garnishment or mortgage foreclosure. Nevertheless, after you get bankruptcy relief, you might find that the bankruptcy could actually help your credit, even though the bankruptcy will remain on your credit report for some years.

At A.K. Smith LLC, we help you to start your journey towards financial freedom. We present you with critical information on how you can restart your credit after filing for bankruptcy. For many, bankruptcy provides a fresh start and is the first step to rebuilding credit. Contact us to learn more and begin your journey towards financial freedom.