What are the benefits of filing bankruptcy?

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The most immediate benefit of filing is that it instantly halts all creditor collection actions, including lawsuits, foreclosure, repossession, and wage garnishment, through a bankruptcy law provision known as an automatic stay. Bankruptcy can also offer a structured solution to manage debt, whether you choose liquidation under Chapter 7 or a repayment plan under Chapter 13. Moreover, it provides the opportunity to discharge eligible debts, allowing you to reclaim your financial freedom.

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What is a Chapter 7 bankruptcy, and how does it work?

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Chapter 7 bankruptcy is a powerful tool that involves liquidating non-exempt assets to repay creditors. Fortunately, many essential assets are protected by exemptions, allowing you to retain what matters most. Most unsecured debts, including credit card debt and medical bills, can be discharged within just a few months.

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Will I lose my property if I file for bankruptcy?

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This question depends on which chapter of bankruptcy you are filing. Under a Chapter 13 bankruptcy, you may be able to keep your property without the need to sell it. This process involves reorganizing your debts into a manageable and approved repayment plan tailored to your income and expenses, which you will pay over three to five years. This plan empowers you to catch up on missed payments for secured debts, such as mortgages or car loans, all while retaining your valuable assets. In a Chapter 7, you may be able to save your property if you are able to exempt the property.

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What should I expect during the bankruptcy process?

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The bankruptcy process is not always straightforward and efficient, and retaining a knowledgeable and experienced bankruptcy attorney is always recommended. The bankruptcy process involves completing a credit counseling and financial education course, gathering all necessary documents to prepare a complete bankruptcy petition, preparing a bankruptcy petition along with accompanying schedules and support, and attending a meeting of creditors. Depending on the Chapter bankruptcy chosen to be filed, your attorney will either navigate you through the asset protection and/or asset liquidation process or set up a solid repayment plan. Upon successful completion, most of your remaining eligible debts will be discharged.

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How long will my credit score be affected if I file bankruptcy?

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The duration of the impact bankruptcy has on your credit report depends on the Chapter of bankruptcy you are filing. A Chapter 7 bankruptcy can remain on your credit report for 10 years from date of filing while a Chapter 13 is typically 7 years. Your credit score will typically drop immediately and significantly shortly after filing but over time, you can do things to improve and rebuild your score.

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Will I no longer be able to get a home loan or vehicle loan if I file for bankruptcy?

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No, however, it will take some time. Clients can typically qualify for a high interest rate loan within 1 to 2 years. For car loans or FHA mortgages, you are likely to qualify within 2 to 4 years if you are able to improve your credit score.

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How much does it cost to file for bankruptcy in Connecticut?

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Attorney fees can vary depending on the complexity and specifics of your case, as well as your location within Connecticut. Chapter 7 bankruptcies typically range from $1,400 to $3,500, while Chapter 13 bankruptcies typically start around $3,500.

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Are all debts eliminated in bankruptcy?

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Not all debts are eliminated (“discharged”) in bankruptcy. Debts that can be discharged are credit card debts, medical bills, personal loans, utility bills, old lease obligations, some lawsuit judgments, and certain income taxes if they meet certain conditions.

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Are there any debts that cannot be discharged in bankruptcy?

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Typical debts that may not be dischargeable are student loans, child support, alimony, recent income taxes, debts for personal injuries caused by DUI, court fines, criminal restitution, and debts from fraud or willful misconduct. Note, however, that exceptions may apply to certain debts that would allow them to be discharged.

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How long does a bankruptcy take?

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Typical duration of a Chapter 7 bankruptcy is 3 to 6 months from filing the bankruptcy petition to the discharge of debt. Typical duration of a Chapter 13 bankruptcy is 3 to 5 years from completing a repayment plan.

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Are bankruptcy filings public records?

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Bankruptcy filings are public records, and although anyone can technically see them, it is very difficult to find. Individuals filing bankruptcy are not searchable on Google, social media, advertised in a newspaper or other journals, or through typical databases. In other words, individual bankruptcy filings are not something people are likely to stumble across. What information becomes public (but still difficult to find) is your name, type of bankruptcy, filing date, case number, Court location, and other basic information.