Answer from a Pro: Will Bankruptcy Ruin My Life?

Multiple government studies released over the past decade share a common theme—the loss of family income, home foreclosures, increased debt, and pandemic-related economic anxiety all have had a negative impact on the overall mental health of the US population. Now, that may seem like a highly generalized observation. However, those facing financial uncertainty are more likely to start searching for ways to bring relief to their current money situation. If you are in such a position, you may be wondering—will filing for bankruptcy ruin my life?

Today, you are going to learn more about the different types of personal bankruptcies and why the thought of filing for bankruptcy doesn’t have to be a cause for distress.

What Are the Different Types of Personal Bankruptcy?

The most common types of personal bankruptcies are Chapter 13 and Chapter 7.

According to the Federal Trade Commission (FTC), Chapter 13 allows those with a steady income to:

• Keep their mortgaged house.
• Keep their vehicle.
• Restructure and consolidate their current debt for repayment.
• Using future income to discharge personal debts through regular payments over a three-to-five-year period via a court approved repayment plan.

Conversely, a Chapter 7 bankruptcy let’s a person discharge high amounts of debt through the sale of “non-exempt” assets, such as cash, stocks, collectibles, a second home or vehicle, etc. In turn, they may be able to keep “exempt” assets proven to be necessary for everyday living and working.

Exempt assets may include:

• Motor vehicles up to a certain value
• Basic household goods and furnishings
• Work-related tools up to a certain value
• Clothing and accessories up to a certain value
• Household appliances
• Pensions
• Damages awarded for personal injury
• Public assistance benefits

Key takeaway: Filing for bankruptcy may help stop or delay home foreclosures, repossession of certain assets, wage garnishments, loss of utilities, and harassing debt collectors.

How Long Does Bankruptcy Last?

Depending on the type of bankruptcy you file for, it could take up to 10 years for your bankruptcy history to be wiped off of your credit score.

Here are few specifics to keep in mind:

• Chapter 13 - Bankruptcy falls off your credit report seven years after filing date.
• Chapter 7 - Bankruptcy can take up to 10 years to fall off your credit report from the filing date.

Just know that ultimately, filing for personal bankruptcy protection can be a useful tool to lessen debt and rebuild your credit history. It is, however, not a quick fix.

Considering Filing Bankruptcy in Arizona?

According to the United States Bankruptcy Court, District of Arizona, new Chapter 7 (-26.8%) and Chapter 13 (-31.1%) bankruptcy case filings were down for 2021 in comparison to 2020. Despite this downward trend, over 8,000 total individuals still decided that filing a Chapter 7 or Chapter 13 bankruptcy was the best option for them.

If you are thinking of filing for bankruptcy protection too, finding a trusted attorney that specializes in Arizona bankruptcy law and code can be a helpful first step. They’ll be able to break down the often complicated bankruptcy process and provide answers so that you’ll know what to expect, such as:

• Does filing for bankruptcy make you ineligible for certain jobs?
• Will filing for bankruptcy make it impossible to find decent housing?
• How does bankruptcy impact your credit history?
• Do you have to take credit counseling?
• What does it cost to file for bankruptcy?

They can also discuss other debt relief options that might be a better match for your individual circumstances. As most bankruptcy law firms offer free consultations, you don’t have to worry about incurring more debt to learn about your options and you may take back control of your debt.

Affordable Arizona Bankruptcy Attorneys

Contact an experienced and affordable Arizona bankruptcy attorney at Lerner and Rowe Law Group for a free consultation and evaluation of your debts. You may find that bankruptcy can help you reach your debt relief goals.