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Item Description – Bankruptcy is a legal process that a person can use to get rid of debt. That sounds like a simple solution, but it should not be taken lightly. If you’re considering this step, then that means you have exhausted all other options. You are facing overwhelming financial commitments with no way to meet them.One of the first things a person wants to know before beginning the process is “what happens when I file for bankruptcy?”. The average person likely doesn’t know how to answer that question. It isn’t something that comes up a lot unless you need to do it. And if you know anyone who has filed for bankruptcy, they may not want to discuss the ugly details.Before you read on, know that you can get past this setback and recover your finances. Bankruptcy will have a lasting impact on your credit report. It isn’t something that you can scrub away overnight. However, after taking the right steps, you can begin to rebuild your credit.BKDirectory.com wants to shed light on what happens and how it will affect you during and after bankruptcy.Debt and Creditors are BlockedDeclaring bankruptcy puts an automatic stay on your accounts. That means that all debt is put on hold so that creditors cannot take action to collect at this time. They cannot deduct money from bank accounts, garnish wages, or access your assets.This is the initial step that will give you, the court, and creditors time to figure out how to proceed.You don’t have to call creditors to let them know that you have filed for bankruptcy. The court will issue a notice to all creditors included on the petition. They are required to stop all collection efforts, including phone calls, letters, and lawsuit filings.Some exceptions can be granted in certain situations. For example, secured creditors like a car loan or mortgage company can file a motion to lift the stay if you fail to make regular payments that’s to their detriment. Your bankruptcy lawyer can discuss any concerns if you aren’t sure whether a creditor will be able to attempt to collect funds after an automatic stay is issued.Creditors File Proof of ClaimsIf you have some money in your bank account to pay off debts, the court will include a proof of claim notice with its bankruptcy notice to creditors. Your creditors will be given a deadline to file a proof of claim that includes the amount owed, type of debt, and any contracts or supporting evidence.A trustee reviews the claims and distributes funds based on priority bankruptcy claim rules. The rules state that attorney fees, recent taxes, and domestic support responsibilities are the first items to be paid out. Personal loans, medical bills, and credit card balances are a lower priority. These are paid until the available funds run out.Your Meeting of CreditorsBankruptcy notices will include a date, time, and location for your meeting of creditors. This is sometimes referred to as a 341 hearing. You are required to attend.The hearing is intended to allow the trustee and creditors to examine your finances under oath.Most creditors do not end up attending the hearing. The reason one might attend is if they believe that you are hiding assets or lying on documents. Creditors do not have to be at the meeting to file an objection to your discharge. If an objection is granted by the court, then you will remain responsible for paying the debt.You May Have to Sell PropertyAnother concern many debtors have is whether they will be forced to sell their property to file bankruptcy. The answer depends on whether you file Chapter 7 or 13. You can speak to your bankruptcy lawyer if you aren’t sure which applies to you. Chapter 7 is also called liquidation bankruptcy. That’s because you will most likely have to sell some assets to satisfy part of what you owe. The amount required is determined by state law. Some states exclude certain assets from the sale, like your home, car, or retirement account.If you are filing Chapter 13 bankruptcy, then you won’t have to sell your property. Your debts are reorganized to allow you to pay them in part or full over the following three to five years. You must follow through to avoid losing your assets. If you fail to make the agreed upon payments, then your creditors will be allowed to go after your property.Accounts on Your Credit ReportIf you are seeking financial help, then there are most likely multiple unpaid accounts on your credit report. These will still appear the same way after you file for bankruptcy and while working through the process. After completing the bankruptcy process, all applicable accounts will show as discharged or “included in bankruptcy” with a zero balance. Potential lenders will be able to see this when they check your credit report in the future. They may choose to deny you based on these accounts.The good news is that even though they are still present, these accounts will no longer show as past due or unpaid.Public Records and BankruptcyNobody wants their social circle to know about their financial difficulties. Bankruptcy is considered a public record. However, that doesn’t mean that everyone will automatically know about it.Bankruptcy filings appear in the PACER (Public Access to Court Electronic Records) system. This database is used primarily by creditors and attorneys. All citizens can register and search records in the system, however, there is a small fee per page for doing so. The average person may not know the system exists and fewer are willing to pay with no real need for the information.Some local newspapers may publish bankruptcy information as part of their public notices section. You should be prepared for this, so you aren’t blindsided if a friend or family member asks about it.Since bankruptcy appears on your credit, anyone checking your report will see it. That list may include landlords, employers, and creditors.Employment After BankruptcyWhether or not bankruptcy will affect future or current employment opportunities depends on the requirements of your job role. If your job or the job you are applying for doesn’t require a credit check, then the company most likely won’t know your financial history.A CareerBuilder survey found that approximately 29% of employers perform credit checks on job applicants. If you apply for a job that includes this as part of the screening process, then it may affect your chances of being chosen for the position. This issue is more likely to come up in situations where your job role requires handling money or similar responsibilities. Some may also use it to determine if you are likely to commit fraud or theft due to financial stress.Most employers run a criminal background check on applicants. Bankruptcy is not considered criminal, so it will not show up when requesting your criminal background.If you already have a job, your employment should not be affected unless your employer has a reason to perform a credit check.Bankruptcy is a complex process that should be handled by a professional. You can visit Bankruptcy Directory to find a highly-rated bankruptcy attorney in your area.

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