Five Common Questions People Ask During Bankruptcy
Bankruptcy | August 28, 2017
People end up buried in debt for many reasons. Yes, poor money management is the reason for some people’s plights, but debt issues are frequently caused by job losses, illnesses, divorces, or other personal life problems that affect their ability to pay their bills.
If you are thinking about filing bankruptcy, consulting the debt relief attorneys at Morgan and Morgan is a smart first step. We can explain the process and address your questions. Here are five common questions people ask during bankruptcy, along with the answers.
Can I keep my house and/or car?
The answer varies depending on whether you file Chapter 7 or Chapter 13. With Chapter 7, the answer is usually no. However, Chapter 13 allows you to keep some property in certain cases. If you can show your income and a plan of how you will use it to repay your debts, it’s possible to keep your home and car while having your other debts erased.
How much will bankruptcy affect my credit score?
If your creditors have reported multiple late payments and collections to the credit bureaus, your credit score may not decrease much, but you do need to expect to deal with a lower-than-preferred credit score for a year or more. Once your bankruptcy clears, open a secured credit card and diligently pay off the balance every month. This helps rebuild your credit rating faster than avoiding credit altogether.
What will happen to my 401(k)?
If you’re fortunate enough to have money in a 401(k) retirement savings, it’s safe from being used to repay your debts. Hang on to it and avoid the temptation of withdrawing any of it until you are ready to retire. Don’t gamble with your future financial security!
How much will I need to pay?
A person wouldn’t be considering bankruptcy unless he or she was drowning in debt, so coming up with the fees is intimidating. Depending on the bankruptcy, you will probably be required to pay a few hundred to a few thousand dollars between attorney fees and court fees. Our debt relief attorneys will work with you.
Any debts that can’t be discharged?
Yes, debts like student loans, child support and alimony, some settlements,and some tax debts are not dischargeable. You will still be liable for these and may face wage garnishment if unable to pay.
Make sure to decide wisely about filing for bankruptcy. Consult professional debt relief attorneys and understand the benefits and limitations of filing. Knowing your options will help you make the best decision for you and your family.