Many people are facing insurmountable debt. While a less than ideal choice, sometimes filing bankruptcy is the right decision to set you and your family or business back on the path to financial security. Bankruptcy may excuse you or your business from paying certain debts, or may allow for a reduced repayment of debts.
For individuals, there are three bankruptcy options: Chapter 7, Chapter 13 and Chapter 11. A Chapter 7 bankruptcy is generally more appropriate for individuals with little or no disposable income and large amounts of unsecured debt, such as credit cards. In Chapter 7, most unsecured debt can be discharged, meaning that the creditor is prohibited from taking any further collection action. In addition, there are certain allowable exemptions under Chapter 7 meaning you may be able to retain most, if not all, of your assets, including your home. Chapter 13 is a debt restructure plan and provides a solution for people with regular disposable income, but who have simply fallen behind on their bills. Chapter 13 allows you to keep your assets, including your home, and provides for repayment of a portion of your debts over a period of time — usually three to five years — allowing you to get caught up. Chapter 11 is also available to higher-income individuals who may not be eligible for a Chapter 13, and for reorganization of a debtor's business affairs and assets.
Upon filing a bankruptcy petition a temporary automatic stay of all collection actions goes into effect. Filing bankruptcy may stop, or will at least delay, the foreclosure process or automobile repossession. There are some debts, such as student loans and certain court-ordered restitution, which are not dischargeable. An experienced lawyer, such as those at Donovan O'Connor & Dodig, LLP, can evaluate your debt and provide advice as to whether bankruptcy is right for you.
Depending on how complex your case is, a Chapter 7 bankruptcy can be completed in as few as four to five months after filing. Chapter 13 bankruptcies are a longer process because they require a repayment plan over three to five years, but are often completed very shortly after the final payment is made under the plan. Chapter 7, Chapter 13 and Chapter 11 bankruptcies require completion of a financial education course.
Bankruptcy does affect your credit and may remain on your credit report for up to 10 years. At least in the short term, it may be more difficult to obtain credit or you may be charged a higher interest rate. However, if you are considering bankruptcy, your credit score is likely already poor and bankruptcy may be the first step toward improving your credit — giving you a fresh start and allowing you to rebuild your credit score over time. Responsible financial management post-bankruptcy will allow you to begin rebuilding your credit such that you could qualify for a home loan approximately two years post-bankruptcy.
The bankruptcy process can be complex. There are strict filing requirements. If you live in Berkshire County and are facing foreclosure or insurmountable debts, a lawyer from Donovan O'Connor & Dodig, LLP, can help you determine whether bankruptcy is an option for you. For a consultation regarding personal bankruptcy at Donovan O'Connor & Dodig, LLP, contact our firm. We have offices in North Adams, Springfield and Pittsfield, Massachusetts, to serve you.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.