When you declare bankruptcy, you will file a petition in federal court. Once your petition for bankruptcy is filed, your creditors will be informed and must stop pursuing any debt you owe. The court will then request certain information from you, including:
- The total amount of debt you owe
- A complete list of all your creditors
- An accounting of your total income
- An accounting of your outgoing expenses
You are permitted to represent yourself in bankruptcy court. You are also allowed to hire a lawyer who can serve as your advocate and help you navigate the complicated process of what happens if you declare bankruptcy. Having your debt discharged or reorganized in bankruptcy court can take a lengthy period of time. Should you get a lawyer, your lawyer can help you understand the relevant timeline in your bankruptcy case.
The Advantages and Disadvantages of Declaring Bankruptcy
When your debt exceeds your assets and your ability to pay your creditors, bankruptcy can offer you a financial lifeline. Filing for debt relief through bankruptcy can have many advantages and disadvantages. Advantages of bankruptcy protection include:
- A new start that can help you create a healthy financial future
- The ability to retain much, if not all, of your personal property and assets
- Your creditors will be required to cease all debt collection actions
In addition to putting a stop to relentless phone calls and other debt collection efforts, filing for debt relief through bankruptcy can also have disadvantages that you should be aware of. Disadvantages of filing for bankruptcy protection include:
- Filing for bankruptcy stays on your credit profile for 7 to 10 years
- Filing for bankruptcy can lead to higher interest rates when you are eventually able to obtain financing
- You can be ordered to undergo court-approved credit counseling
- You cannot use bankruptcy to discharge overwhelming debt, again, for at least four to eight years, depending on what type of bankruptcy you had filed.
Each individual or business debt load is unique and requires close scrutiny and careful debt reduction planning. Your lawyer can take a clear, objective, and comprehensive view of your financial situation and help you create a plan to reorganize, reduce, or eliminate your debt.
For a legal consultation, call 828.286.3866
Choose the Right Bankruptcy Filing for You
We are proud to represent our clients in four primary areas of bankruptcy relief. Called Chapters, each of these forms of bankruptcy has its own advantages and disadvantages. The four Chapters used for filing for bankruptcy, where we help clients find debt relief, include:
- Chapter 7: Straight bankruptcy, where debts are fully forgiven
- Chapter 11: Complex business bankruptcies with debt reorganizations and restructures
- Chapter 12: Debt relief and repayment plans for family farmers and family fishermen
- Chapter 13: Debt relief for income earners that can help stop foreclosures and other looming debt recovery efforts
When you decide to declare bankruptcy, your lawyer will help you choose the right Bankruptcy Chapter for your financial situation. Filing for bankruptcy is a complex, time-consuming procedure. Your lawyer can help you understand and navigate the filing process from your initial petition to final discharge.
Discharging Debt Through Bankruptcy
When you file for bankruptcy protection, a discharge from the court will relieve you of your obligation to repay your creditors for certain debts. Once your debt is discharged, your creditors cannot contact you or attempt to collect the debt in any way. A discharge of your debt is also permanent and final for all unsecured debt you include in your bankruptcy filing.
The timing of your discharge will vary according to the type of bankruptcy you filed. A Chapter 7 bankruptcy discharge order can take as little as four months while a Chapter 13 bankruptcy discharge can take three to five years.
If you are represented by a lawyer in your bankruptcy filing, you and your lawyer will each receive a copy of your debt discharge order. Your lawyer will help you understand what happens if you declare bankruptcy and which debts were discharged by your bankruptcy filing as well as those you might still be obligated to pay.
Explore Your Bankruptcy Options
Get the financial relief you are entitled to by filing for bankruptcy protection. Our team represents individuals and small business owners in Chapter 7 and Chapter 13 bankruptcy cases. We can also provide help filing for Chapter 11 reorganization bankruptcy and Chapter 12 bankruptcy for family farmers and fishermen.
We can help you through the petition and filing process. We can help you retain your assets when you choose Chapter 7 bankruptcy. We can even help you restructure financial debt through other bankruptcy filings with complex financial structures or extremely large debt loads. Call Farmer & Morris Law, PLLC, at (828) 286-3866 to speak to a member of our client intake team and learn what happens if you declare bankruptcy today.