What Are My Options for Bankruptcy?

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The two common options for bankruptcy are either Chapter 13 or Chapter 7. Both have their own strengths and weaknesses, making them more or less appealing depending on your situation.

Chapter 7 is essentially the liquidation of your assets to pay back the debt that you owe. You can gather your information, place a value on the assets that you own, remove your name from the title of those things (homes, other real estate, vehicles), and use their value to pay back what is owed. Things like past income tax debts, any spousal support, or child support owed are paid first. Secured debt is paid back second, with unsecured non-priority debt paid back last if there are sufficient funds to do so. Things like medical bills, credit cards, and other debts may be forgiven or discharged during this process as a result of them having the least priority to be paid back.

Chapter 13 consists of putting together a list of what is owed and reconfiguring or consolidating debt to be paid back over a term of three to five years. The appealing fact to many consumers with Chapter 13 is that you can keep your assets in most cases rather than liquidating them. This can mean you can avoid foreclosure on your home or repossession of your vehicle in most cases.

How Do I Know if I’m Eligible?

There are a couple of eligibility requirements for bankruptcy. The main one is that you haven’t filed for bankruptcy in the recent past. If you filed for chapter 7, you need to wait for eight years, and you will need to wait for six years after filing chapter 13 to become eligible to file again.

All applicants must attend credit counseling either by themselves or in a group setting prior to filing. If they have not completed the course within six months of filing, they will be required to take it again so that it is current.

To qualify for chapter 7, your family’s gross income must be lower than the median income for the same-size family in West Virginia. If you make above the median, there are other ways in which to qualify for chapter 7, or you may consider chapter 13.

How Long Does Bankruptcy Affect My Credit Report?

Generally speaking, chapter 7 remains on your credit report for ten years, and chapter 13 remains on your report for seven years. There are some exceptions to both, but that is the common timeline.

You can use this time to begin to build back your credit by doing things like applying for secured credit cards, making sure that all of the payments you regularly make are being reported to credit bureaus, and never allowing a late payment to be made. It is also imperative to monitor your report for any inaccuracies or things that are showing up that were handled in the bankruptcy case and should no longer be on your report.

You will see a positive change in your debt-to-income ratio with chapter 7 (and in some cases, chapter 13) as some of your debt will likely be discharged, removing that amount in proportion to your income and thereby increasing your credit score.

Why Do I Need An Attorney?

Filing for bankruptcy requires extreme attention to detail and timelines. There is a large room for error when you consider all of the information that you are required to present, the strict timelines that are involved (that if not adhered to your case may be dismissed entirely), and the legal issues that can arise if you misinterpret or don’t follow the rules. Relying on an experienced bankruptcy attorney can allow you peace of mind and get back to living your life and rebuilding your credit.

Contact our office today at (304) 592-4609 to answer your specific questions.

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