Filing for bankruptcy can be an intimidating idea. According to the Administrative Office of the United States Court, more than 500,000 Americans file bankruptcy every year. As daunting as the process may seem, filing for bankruptcy can be a significant step towards financial stability. So you are ready to submit the paperwork, what’s next? Our Colorado bankruptcy team outlines what happens after you file for bankruptcy.
Understanding Bankruptcy
What is bankruptcy? Bankruptcy is the legal process where a judge evaluates the assets of an individual who believes they cannot pay their debt. Two of the most common forms of bankruptcies are chapter 7 and chapter 13. Each form has its timeline, and it is beneficial to understand the differences.
Chapter 7
Chapter 7 bankruptcy is also known as “liquidation bankruptcy. A judge will order all non-exempt assets to be liquidated, and the proceeds will repay the creditors. If debts remain after the liquidation of valuables, those debts are discharged.
Chapter 13
Chapter 13 bankruptcy is also known as “wage earner’s bankruptcy. This form of bankruptcy allows you to pay your debts in a span of 3 to 5 years through a payment plan assigned by the court. Any debts remaining after the payment plan ends will be discharged.
What About My Credit Score?
You should note that filing for bankruptcy will impact your credit score. The exact effects vary, but it will generally lower your score. That said, a lower credit score should not deter you from filing for bankruptcy. With the guidance of an attorney, you can repair and rebuild your credit score. Here are some tips to improve your credit score after bankruptcy;
- Avoid job hopping
- Get a secure credit card
- Consider a cosigner when applying for new lines of credit
- Monitor your credit score
- Keep credit usage under 30%
You may have some reservations when considering bankruptcy, Justifiably so, but do not let these become a hindrance to your long-term financial stability. You do not have to go at it alone. Having a knowledgeable bankruptcy attorney by your side will provide you with the confidence and guidance you need to reach your financial goals.
Get in Touch With Today
When considering filing for bankruptcy, the first thing you should do is secure seasoned legal representation. At Wagner Law Office, P.C., we are committed to advocating for your best interests and finding the best path to your financial freedom.
If you would like to learn more about how we can help you through filing for bankruptcy, don’t hesitate to call our award-winning team today at to schedule your free consultation.