Bankruptcy is an effective option for many people facing financial crises, but the process can also generate a lot of questions. Even though many diverse and unique scenarios can lead to a filing, a few bankruptcy questions arise over and over. Let’s look at five of the most common concerns individuals ask when considering this solution for their debt.
- Will creditor harassment stop? According to bankruptcy law, creditors must cease and desist from any harassing behaviors. Once a personal bankruptcy has been filed, all harassment to provoke the debtor to make payments – such as phone calls, lawsuits, and wage garnishment – must stop. Creditors cannot initiate or continue any of these actions, including demands for payment. An important caveat to this rule is that secured debt (cars, homes) can have court-ordered holds removed if payments are not made in time.
- Will my spouse be adversely affected? An individual’s spouse will not be personally affected by bankruptcy unless they have agreed to be responsible for any debt via legal agreement or contract.
- Will anyone know that I filed for bankruptcy? Bankruptcy records are considered public documents, but they are not posted anyplace that most people would see them. Typically no one will hear about your bankruptcy unless you decide to tell them yourself. Credit agencies and bureaus will be informed of the bankruptcy, and this information affects your credit for up to 10 years – depending on whether Chapter 13 or Chapter 7 is filed.
- Is it possible to build my credit after the bankruptcy process? One of the most encouraging aspects of personal bankruptcy is that rebuilding credit is absolutely possible. There are several ways to restore and rebuild your credit, one of the most popular being a secured credit card. Secured credit cards work in this way – the debtor deposits a few hundred dollars into a bank account. The lending institution subsequently utilizes that deposit to guarantee payment on the credit card, whose limit is equal to the deposited amount. As the debtor builds trust and proves their ability to pay, the credit limit will be increased.After a period of 10 years, bankruptcy becomes less influential and significant in the credit process. Many lenders consider people a safer credit risk after a bankruptcy, as they have a fresh start, less debt, and more knowledge about financial issues.
- What does it cost to file for personal bankruptcy? The cost of filing for personal bankruptcy typically falls between $300 – $500. Geographic location and other case details may shift that number, including the filing, administrative and trustee fees. Depending on how complicated and involved the case may be, those who hire a professional bankruptcy attorney will also have expenses related to their services.
In conclusion, these five questions cover the topics most people are concerned about when filing for bankruptcy. This process can be overwhelming and even a little frightening, but you shouldn’t feel alone – or allow trepidation to stop you from taking action to solve your financial problems. Many resources are available to help consumers understand the bankruptcy process, but the best resource may be a professional bankruptcy attorney.
Richard V. Ellis is a bankruptcy lawyer with offices in Sarasota. We are here to answer the above questions – and any others you may have. Call today to set up a consultation and learn more about your options.