Most people know the importance of paying bills on time and meeting their financial obligations. Unfortunately, personal and business circumstances make it difficult or impossible to keep up with a heavy burden of personal debt. Bankruptcy may become your only option.
CBG Law Group understands that our clients come to us for legal help only after careful consideration about what it will mean to file personal bankruptcy. Many people have a basic understanding of the bankruptcy process but there are many misconceptions about how their lives will be affected.
We invite you to learn more about what your immediate future will generally be like after your bankruptcy process is finished. Of course, everyone’s financial circumstances are different. It may also help to visit our other informational pages, including:
After you sign an agreement with your lawyer, you will be expected to turn over all of your financial records. The courts require full and open disclosure of your debts and income. Upon signing the legal retainer agreement, you can tell bill collectors they must deal only through your attorney’s office. This should stop the harassing collections calls and threats immediately.
Your attorney will generally handle everything. You will be required to stop adding any additional debt to your financial accounts. You can maintain a checking account or use cash. Your attorney will periodically contact you for further information and to let you know how your case is progressing. It is important to continue paying your bills on time. Chapter 7 bankruptcy generally takes about five to six months to complete. A Chapter 13 restructuring plan generally runs three to five years.
Part of the new requirements for filing include mandatory credit counseling and financial management classes. You will be required to show a certificate of completion to the courts before your debts can be discharged or restructured.
There is no denying that your credit rating will take a serious hit. Most people choose to continue paying (reaffirm) their mortgage or rent and car payment, so you will not be living on the street or lose your family transportation. Credit repair is an important part of the recovery process. You will generally be paying for everything by check or cash for about two years, while you rebuild your credit. Within two or three years of meeting your restructured or remaining financial obligations on time, you will generally qualify for credit, although you will be considered a higher risk and will face higher interest rates.
Some employers are beginning to look at credit scores as a means of evaluating personal character for executive positions. Generally speaking, most companies have not started the practice for anything other than upper-level managers.
If you are trying to buy insurance or change insurance companies, be aware that some insurance companies now look at credit reports. Many companies claim there is a correlation between credit history and risk. It is a questionable practice that has come under scrutiny in the courts.
It generally takes about five years of good financial management for your bankruptcy to have a little impact on your credit rating. In ten years, the bankruptcy will be erased completely.
Everyone’s circumstances are different. Contact our offices in Bellevue, Washington to arrange a free consultation to learn more. We represent clients throughout the Bellevue region.