It’s a question we hear from many clients: Will I be completely debt free after filing bankruptcy?
The answer is a bit tricky, which you’re probably not surprised to hear. It all depends on the type of bankruptcy you file – Chapter 7 or Chapter 13 – and the debts you have to discharge. What we can say is that most of your debt will be discharged, though you may have to give up some personal property.
It’s important to prepare for what happens after bankruptcy just as much as what happens during bankruptcy! Let’s look closer at the factors that will determine how debt-free you will be after filing bankruptcy in Rockland County NY.
Debts Discharged in Chapter 7 Bankruptcy
Chapter 7 bankruptcy is generally best for people who have few assets and a somewhat unstable income. This type of bankruptcy will forgive you for credit card debt, medical bills and unsecured personal loans. There are certain debts that Chapter 7 will not discharge such as:
- Child support
- Income taxes
- Government penalties
- Student loans
- Restitution for criminal acts
- Damages related to a DUI incident
When your Chapter 7 bankruptcy case is complete, most of your debts will be wiped away. But, if you have nondischargeable debts like the ones listed above, you will still have to continue making payments on them. Fortunately, it will be easier to pay these debts, along with your monthly bills, when you’re not having to pay all your other unsecured debts.
Debts Discharged in Chapter 13 Bankruptcy
Chapter 13 bankruptcy works a little differently from Chapter 7 bankruptcy. With this type of bankruptcy, your debts are restructured through a payment plan. Typically, this plan is laid out for the next three to five years, and once this time is complete, most of your remaining debts will be discharged.
The most common types of unsecured debts that you can discharge in Chapter 13 are:
- Credit card debt
- Medical bills
- Personal loans
- Utility bills
- Most lawsuit judgments
Again, keep in mind that you will pay a portion of these debts through your Chapter 13 repayment plan. At the end of your repayment period, the rest of the debts are discharged.
How Long Does Bankruptcy Take in Rockland County NY?
Bankruptcy is a complex process that usually takes several months to complete. Working with a qualified bankruptcy attorney will help, as they’ll be able to prepare you for the process and tell you which steps are coming next.
In Rockland County, you can often get a Chapter 7 bankruptcy discharge in as little as 120 days, or about four months. A Chapter 13 bankruptcy discharge takes about the same time, but because you have to pay down some of your debts over time, the payment plan lasts three to five years.
Once your bankruptcy filing is complete, it’s important to start building back your credit. Some of this will happen naturally as you pay your bills on time, but you can also speed up the process by keeping up with your payments, checking your credit report regularly for errors and getting a secured credit card.
Why Bankruptcy is a ‘Financial Fresh Start’
Bankruptcy provides people going through financial hardship a fresh start. Some people are afraid to file bankruptcy because of the stigma, but this can actually work against you. Debt piles up quickly, and if you can’t afford to pay your debts, you may eventually be dealing with bigger problems like wage garnishment and harassment by collection agencies.
When you file bankruptcy, an automatic stay goes into effect, which means that debt collectors can no longer contact you. Rather than being harassed all day, every day, you can put this energy into rebuilding your life. And, believe it or not, bankruptcy helps the creditors by liquidating assets to pay down the debt.
All in all, bankruptcy is not a ‘bad’ thing. It does have its consequences, and it’s not right for everyone, but it also helps many individuals, couples and families get back on their feet.
Schedule Your Free Bankruptcy Consultation in Rockland County
The Law Office of William Walder is one of the most trusted bankruptcy attorneys in Rockland County. We’ll be happy to look over your debts and determine if bankruptcy is the best option for you. If it is, we can start the process right away so that the automatic stay goes into effect, and you stop getting bothered by the creditors!
To schedule your free bankruptcy consultation, contact The Law Office of William Waldner today.