26
Feb2023
Frequently Asked Bankruptcy Questions - bankruptcy documents and legal gavel

Frequently Asked Bankruptcy Questions

  • By Arcadier, Biggie & Wood, PLLC
  • 140

Bankruptcy Lawyer

One of the most tenuous experiences that a person may have is to have difficulty in covering their expenses and effectively paying off their debts; in some cases, debts may be so high that a person may not be able to make the minimum payments or pay their debts at all and because of this, considering bankruptcy with a bankruptcy lawyer people depend on may be the best possible solution. However, as Pioletti Pioletti & Nichols will share, filing for bankruptcy is not something that should be taken lightly. Because of this, it’s essential to carefully weigh the available options before moving forward with a plan for next steps. The bankruptcy process can be cumbersome and often complex, and there are several types of filings to choose from based on the specifics of a person’s situation. Because of this, considering the process will mean that many questions will arise for a person considering whether bankruptcy is the right option, which a lawyer can help answer. 

What types of bankruptcy chapters are most common?

When a person is no longer able to pay their debts, they may consider the variety of options that are available to finally begin to settle them. Among ways to reach a resolution, bankruptcy can be a potential solution. Bankruptcy is the legal process where a person may seek relief from their creditors and their debts. While the bankruptcy process can vary depending on the specifics of a person’s financial situation, it is a legal process that involves evaluating debts, liquidating assets, and ultimately resolving debts. Some of the most common bankruptcy chapters a person may choose include:

  • Chapter 7
  • Chapter 13
  • Chapter 11
  • +More

What is the best way to keep my home if bankruptcy is chosen?

One of the most common questions is whether they will be able to keep their home should they choose bankruptcy. The answer is it depends on several factors. Here’s the reality: if you cannot make mortgage payments, the debtor will likely lose their home regardless of the chapter they file for. However, a person who can file for Chapter 11 may be able to remain in their home by reorganizing their debts, which allows them to catch up on their mortgage payments and stay in their home, in some cases. 

What are common signs that bankruptcy should be considered?

One of the most challenging decisions a person can make is to file for bankruptcy. While some may realize that bankruptcy is the most viable option, others may be in denial and struggle to realize that bankruptcy is the most appropriate way to move forward. Common signs that bankruptcy should be considered may include the following:

  • Creditors are calling to settle debts
  • You are at risk of a foreclosure on your property
  • You do not qualify for debt consolidation
  • Not having enough money for living expenses

What debts can be eliminated through bankruptcy?

While bankruptcy can eliminate many of a person’s debts, it does not completely wipe the slate clean. Unsecured debts include medical bills, credit card debts, some loans, utility payments, and more. Debts that may not be eliminated through bankruptcy proceedings include taxes, spousal support, child support payments, and student loans. 

What impact does filing for bankruptcy have on a person’s credit?

When choosing bankruptcy, it’s essential to know that a person’s credit score will likely be impacted. While typically, a credit score will be impacted for up to 10 years after a person files for bankruptcy, it’s possible to begin rebuilding credit after filing by making savvy financial decisions. 

There is a rollercoaster of emotions that people stand to experience when managing the bankruptcy process, and there can be a significant amount of shame that a person may feel when unable to pay their debts. While these are real feelings, it’s still possible to move forward and feel hopeful about the future. To fully understand the possibilities and how to move forward, Pioletti Pioletti & Nichols suggests that those facing financial challenges speak with a Peoria, IL bankruptcy lawyer to get started. 

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