Deciding to file for bankruptcy is an enormous decision. Bankruptcy can be a powerful tool for overcoming financial hardships that have gotten out of control, but it does have an impact on your future finances. It can also be a stressful experience, especially if you’re navigating the process alone. Our clients have many questions when they first arrive in our office, especially regarding what to expect moving forward. Here are answers to some of their most frequent questions.
How long will the process take?
An uncontested Chapter 7 bankruptcy takes approximately three to four months. However, if your case is complex or if creditors object to your discharge, it could take longer.
A Chapter 13 bankruptcy case is discharged when the agreed-upon repayments are completed. That can take three to five years.
Will I be able to keep my home and car?
Under Chapter 7 bankruptcy, you can keep your house and car if you’re current on your mortgage payments when you file and your state laws provide for “exempt” properties. If you’ve fallen behind on payments, Chapter 7 may not be able to save them.
Chapter 13 bankruptcy gives you time to catch up on mortgage and car payments in arrears through a court-approved repayment plan. That means, so long as you stay up-to-date on your scheduled payments, you should be able to keep both.
How long will bankruptcy affect my credit?
Both Chapter 7 and Chapter 13 bankruptcies will remain on your credit report for seven to ten years. However, it won’t necessarily affect your credit score for that long. You can begin rebuilding your credit score even while the bankruptcy remains on your report.
Learn a strategy for re-establishing your credit after a bankruptcy. // Link to 11.05 post //
Will I ever be able to get a loan again?
It may feel like bankruptcy is the end of your credit line, but that’s not necessarily the case. If you work to rebuild your credit, you’ll be able to get a loan again even before your bankruptcy is removed from your credit report.
What if I change my mind? Can I dismiss my case?
In some extreme cases, you may be able to dismiss your Chapter 7 bankruptcy case. In the majority of cases, however, once you’ve filed, there’s no going back. If you have second thoughts about losing valuable assets under Chapter 7, you may be able to convert to a Chapter 13 bankruptcy, which would give you time to repay creditors for the property you want to keep.
You can request a voluntary dismissal of a Chapter 13 case, but only the bankruptcy judge can make the final determination. However, if you choose to go this route, you should know that a future filing will be much more costly and challenging.
Trying to dismiss either a Chapter 7 or a Chapter 13 bankruptcy can create more financial trouble for you than the situation that got you into trouble, to begin with. If you realize later that getting the case dismissed was a mistake, you’ll have to wait 6 months before refiling, and you can expect that your creditors and trustee will be much more hawk-eyed in any future bankruptcy filing. In either case, the bankruptcy will remain on your credit report for the same amount of time, but without any of the benefits.
Call the Law Offices of Jeffrey Lohman to discuss whether you would benefit from filing bankruptcy.
The Law Offices of Jeffrey Lohman, P.C. is considered a debt relief agency pursuant to federal law. We are attorneys who help people file for bankruptcy relief under the Bankruptcy Code.