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Filing for bankruptcy can serve as a much-needed reset to your finances. You must understand the bankruptcy process and how it will affect you after it is all set and done. Our Tennessee bankruptcy team walks through the general bankruptcy process from start to finish and explains what happens to your assets and how bankruptcy affects your credit score.
Understanding Bankruptcy Chapters
The two most common bankruptcy chapters filed are chapters 7 and 13. Each chapter has its own sets of functions and manner assets are handled. Let’s quickly explore each one;
Chapter 7
Chapter 7 bankruptcy, also referred to as the “liquidation bankruptcy. A judge will order all non-exempt assets to be liquidated, and the proceeds will repay the creditors. If debts remain after the liquidation of valuables, those debts are discharged.
Chapter 13
Chapter 13 bankruptcy is also known as “wage earner’s bankruptcy. This form of bankruptcy allows you to pay your debts in a span of 3 to 5 years through a payment plan assigned by the court. Any debts remaining after the payment plan ends will be discharged.
Steps of The Bankruptcy Process
Though each chapter of bankruptcy takes a different approach to discharging debts, a general timeline can be followed for both chapter 7 and chapter 13. between the chapters of bankruptcy. We have simplified the bankruptcy timeline into 10-steps;
- Determining Eligibility
- Means Test
- Submission of Forms
- Assignment of Trustee
- Meeting of Creditors
- Confirmation of Eligibility
- Liquidation of Nonexempt Property
- Reaffirmation of Secured Debts
- Financial Management Course
- Debts are discharged
How Long Does Bankruptcy Take?
A Chapter 7 bankruptcy usually takes four to six months to complete, beginning from when you file to when you receive the final discharge. Due to the payment plan set with chapter 13 bankruptcy, the length of the bankruptcy process can be between 36 to 60 months total.
The Effects of Bankruptcy on Your Credit Score
It should be noted that bankruptcy does significantly affect your credit score. Chapter 7 bankruptcy will remain on your credit reports for ten years from the filing date; a Chapter 13 bankruptcy will stay for seven years. The after-effects of bankruptcy can be mitigated with the assistance of a bankruptcy attorney who can provide you with the tools you need to prepare and protect yourself.
How We Can Help
Every bankruptcy case has its particularities and factors to be considered. It is vital to seek the guidance of a bankruptcy attorney who will be able to advise you through the case.
Here at The Law Offices Of Mayer & Newton we take our experience and drive to provide our clients with the specialized assistance they need to reach financial freedom.
Talk to our qualified team of lawyers today by filling out a contact form online or giving us a call at . We are here to help you make a clear decision and timeline.