Will I Lose Everything That I Own in a Bankruptcy?
No. This is a popular bankruptcy myth. In most cases, you can keep major secured items like your home and car pursuant to federal or state bankruptcy exemption (or asset protection) laws as long as you meet certain equity requirements and continue to pay the mortgage and car loan.
Generally, you can also keep all personal property that you own like clothing, household goods, furnishings, jewelry, bank accounts, pensions, 401(k) plans, etc., pursuant to these same exemption laws. At William W. Fischer, P.C., we can answer your questions about Chapter 7 bankruptcy and Michigan's exemptions laws.
What Does a Chapter 7 Bankruptcy Do?
A Chapter 7 bankruptcy will get rid of most types of unsecured debt like credit cards, hospital bills, deficiency balances owed on repossessed cars, general consumer bills, lawsuits, garnishments, old utility bills and much more. Conversely , Chapter 7 generally will not eliminate student loans, child support payments, recent income taxes and certain other special types of debt.
Will a Bankruptcy Permanently Damage My Credit?
No. Immediately after filing bankruptcy, you can start to take steps to rebuild good credit. Although most of your debts will have been eliminated, if you make timely payments on any remaining debts such as your mortgage, rent, auto loan, day care services, utilities, etc., you will rebuild your credit rather quickly. Furthermore, your credit score is based largely upon your income-to-debt ratio. If you eliminate all or a large portion of your debt through Chapter 7, your income-to-debt ratio will improve.
A bankruptcy could remain on your credit report for 10 years. However, poor credit and old debt can linger forever. You can file a bankruptcy now and start rebuilding your credit right away, or you can continue to struggle to make minimum monthly payments on debts that you may never be able to completely repay.
What Can I Expect With Regard to Future Credit?
Assuming you maintain consistent employment and make timely payments on any continuing debts (e.g., mortgage payment, rent, car payment, utilities) you could probably qualify for an auto loan within months of a Chapter 7 discharge, and a mortgage in a year to two years. You will probably receive new credit card solicitations shortly after your bankruptcy case is completed, but beware, until you earn a decent credit rating score, you will have to pay a higher interest rate for most financing. If you are really curious, you can call a mortgage or auto finance company now and find out how long you would have to wait before they would consider doing business with you after a bankruptcy discharge. Lenders in larger cities tend to be more liberal than very small towns, so call them first.
How Long Will My Chapter 7 Case Last?
Approximately 30-45 days after your case is filed, you are required to appear with your attorney for a hearing in front of the Chapter 7 Bankruptcy Trustee. This hearing typically lasts five to ten minutes. The final order discharging your debt is granted about two months later and your case is then closed. The whole procedure usually takes about three to four months from start to finish.
Contact Our Oakland, Wayne, Macomb and Livingston County, Michigan, Attorneys
Contact our Chapter 7 bankruptcy lawyers to discuss eliminating your debt. We handle bankruptcy cases throughout southeastern Michigan and will arrange an appointment at one of our convenient office locations in Walled Lake, Royal Oak or Wyandotte.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.