A Waterbury, CT bankruptcy lawyer understands that the topic of bankruptcy can be a sensitive and complex one, as many people worry about being judged by others and aren’t sure how to even begin the process of obtaining a bankruptcy status. Due to how serious and complicated applying for bankruptcy is, it is important to have an attorney that you trust to walk you through the process. Knowing what happens after filing for bankruptcy can make the entire experience seem less scary. There should also be no shame in realizing that bankruptcy may be the one resource that sets you on a path to financial stability.
The Automatic Stay
After filing for bankruptcy, you are provided with a case number that is overseen by a bankruptcy trustee. This trustee will handle your bankruptcy filing, review paperwork, and request more documents if needed, along with other related duties. Your bankruptcy lawyer in Waterbury, CT will be able to oversee all communications with the trustee. Once your filing has been processed, an automatic stay takes effect. This means that your creditors are not permitted to take any action against you or try to contact you for payments.
Your Credit Score
Your credit score is likely to go down after a bankruptcy filing pops up on a credit report. How long it remains on your report is based on the kind of bankruptcy chapter you filed for. For example, if you applied for Chapter 7, then a bankruptcy status will stay on your report for ten years after the date it was filed. If you filed for Chapter 13, then it won’t come off your report until seven years later.
But rest assured that you can rebuild your credit immediately after the filing appears on the report. While most people’s credit scores do take a significant hit, you can get a higher score within the first couple of years. And for some, their credit scores may improve overall because their debts were discharged, and there are no more records of missed payments.
Secured Credit Cards
If you receive secured credit card offers through your mail after filing for bankruptcy, you may not want to disregard them right away. Secured credit cards, or otherwise called “prepaid cards”, allow the person to put in a cash deposit and then use their own funds wisely to raise their credit score. This is a great way for people to build up their credit again while reducing the risk that they will get carried away into debt again (since they have to put down their own money in order to have a usable balance on the card).
Meeting With Creditors
Perhaps one of the least favored tasks associated with a bankruptcy filing is meeting with your creditors. In preparation for the meeting, you may have to provide information such as copies of pay stubs, tax returns, earnings, and assets to your bankruptcy trustee. It is important that you fulfill these requests within the deadline, to prevent road bumps from arising in your bankruptcy case. You will have to show a form of identification and proof of a social security number. Your Waterbury, CT bankruptcy lawyer will attend this meeting with you and will be able to advise you on what to expect at the meeting.
Getting Into A Car Accident After Filing For Bankruptcy
If you get into a car accident after filing Chapter 7 bankruptcy, you may feel that you have lost all options. While filing bankruptcy and being in a car accident can seem like one bad thing after another, a bankruptcy lawyer in Waterbury knows that this is not necessarily a worst-case scenario. In fact, because the car accident happened after you filed for bankruptcy, the bankruptcy trustee (the person who helps to handle your bankruptcy case), cannot legally take any of the settlement money you receive from your car accident case. If the car accident were to happen before your bankruptcy case was filed, on the other hand, they would be entitled to take from your settlement. To see how we can help with your car accident case after filing for bankruptcy, call our office now.
What Information Should I Know?
Things can get complicated when you own property, receive a settlement, and have filed for bankruptcy, but we are here to help. The first thing you do after getting into a car accident is to file a claim with your car insurance company. Although the accident may have happened after you filed for bankruptcy, you likely still owned the car (property) before you filed for Chapter 7 bankruptcy. If this is the case, you need to have your bankruptcy case information handy as well as the bankruptcy trustee’s name when you speak with your insurance agent.
If you claimed an exemption with your car, it is important that you speak with your attorney as soon as possible.
I Still Owe Money On The Car After The Accident. Now What?
If you took a loan out on your car, you need to speak with the lender as soon as possible to let them know about the accident. When this is the case, they likely already know that you have filed Chapter 7 bankruptcy, but it can be valuable and more efficient to make sure they have all of the information. If you receive a property settlement after the accident, it is likely that it will go to paying off the car loan. Although unlikely that you would get more settlement than the car is valued at if this does happen, it is possible for you to keep the remaining settlement amount.
If you are considering filing for bankruptcy, call The Law Offices of Ronald I. Chorches to schedule an appointment with a bankruptcy lawyer Waterbury, CT clients recommend to find out how we can help you start a financial fresh start.
Pros and Cons of Filing For Bankruptcy
Many people who qualify for chapter 7 or chapter 13 bankruptcy will not be aware of it’s benefits; thus won’t even think to proceed. While it is certainly true that bankruptcy can affect a person’s finances for several years, most people in a serious situation of debt will find that filing for bankruptcy is indeed the best option. Knowing if, or when, to file for bankruptcy is a complex decision. The consequences of filing at a time when you shouldn’t be, could be devastating. It is important to talk with a Waterbury, CT bankruptcy lawyer to help you explore your options, and whether filing for chapter 7 or 13 is a good idea.
Pros of Filing For Bankruptcy
Automatic Stay – As soon as you file for bankruptcy, the court will tell creditors they must cease all collection activity. This doesn’t cancel your debt, but suspends all collection proceedings. This means:
- Creditors cannot call you
- You cannot be sued
- Your home cannot be foreclosed
- Your property cannot be repossessed
If a creditor attempts to collect debt after this time, a bankruptcy lawyer in Waterbury, CT can file a contempt of court action. Should they continue, they could be fined or have to pay you damages.
The automatic stay DOES NOT mean:
- Criminal proceedings are stopped
- You cannot be audited by the IRS
- You don’t have to pay child support
- You don’t have to establish paternity
- Your cosigners won’t have to pay the debt
Discharge of Debt – Depending on the circumstances of your financial situation, you may be able to have some or all of your debt discharged. This debt may include utility bills, medical bills, credit card debt, and personal loans.
Your Credit Score – Although you might have concerns about a low credit score after filing for bankruptcy, many people will improve their credit scores shortly after they file.
Cons of Filing for Bankruptcy
As a bankruptcy lawyer in Waterbury, CT might explain, there are potential disadvantages of filing for bankruptcy. These include:
- Loss of Credit Cards – When you file for bankruptcy, most credit card companies will cancel any cards immediately.
- Credit Score Will Be Impacted – Chapter 7 stays on a credit report for 10 years, and chapter 13 for 7 years. This can affect your credit report and score.
- Getting a Mortgage – It may be difficult to get a loan or mortgage for several years after filing for bankruptcy. A bankruptcy lawyer in Waterbury, CT can explain whether or not your current mortgage may be affected.
- Loss of Property – Sometimes personal property will not be exempted. This means that the court could seize some of your assets and sell it to pay your creditors.
- Denial of Tax Refunds – It is possible for both state and federal tax refunds to be denied; in other words, you may not receive them.
- Non Dischargeable Debt – Some debt cannot be discharged. This may include child support, student loans, alimony, criminal restitution, and debt that may have been acquired through fraud.
What Are Assets and What Happens to Them in Bankruptcy?
If you are thinking about filing for bankruptcy, you may wonder what will happen to your assets. To begin with, it may help to know what your assets are. They include everything that you own and everything in which you have an interest. This includes things like stocks, retirement savings, personal property, and real estate.
Now that you know what your assets are, the question of what happens to them during bankruptcy depends on the chapter under which you file. As an individual, you usually file under either Chapter 13 or Chapter 7.
Chapter 13 Reorganization
Chapter 13 bankruptcy allows you to reorganize your debt. It works similarly to debt consolidation in that you formulate a plan by which you can pay off what you owe gradually over a period of three to five years. You make one payment per month for a predetermined amount to your bankruptcy trustee, who distributes it among your creditors. Any balances remaining at the end of the repayment period are discharged, meaning that you no longer need to worry about paying them back. Chapter 13 reorganization protects your assets and allows you to keep them.
Chapter 7 Liquidation
Liquidation means selling off assets in exchange for money. In a Chapter 7 bankruptcy, some of your assets may be liquidated and the money used to pay back a portion of what you owe to creditors. After the money is gone, the remaining balances are discharged, just as they would be in a Chapter 13 bankruptcy.
Chapter 7 liquidation may sound potentially devastating, but bankruptcy laws do not require you to surrender all of your assets. That would leave you with nothing with which to start over financially, which is counter to the goal of bankruptcy. Some of your assets will be exempt, meaning that they cannot be liquidated.
Exempt property usually includes basic essentials:
- Your car
- Your primary residence
- Your appliances
- Your clothing
It also includes items that you use to make a living, e.g., a computer used for work. Property that would not bring in much money if sold, even if it has sentimental value, may also be exempt.
As an example of how exempt property works, say you have a fishing boat that you use to make a living by selling the fish that you catch. Because it is important to your livelihood, it would likely be exempt. However, if your fishing boat is used purely for recreation, it would probably have to be liquidated.
Bankruptcy exemptions sometimes cover all your assets so that you lose nothing as a result. One of our attorneys can discuss your bankruptcy options when you contact our office.
As you might see there are pros and cons to filing for bankruptcy. If you would like to know whether or not you are a candidate, or if it is the right time to get started, call a bankruptcy lawyer in Waterbury, CT from The Law Offices of Ronald I. Chorches.