Life After Bankruptcy


Courthouse in Auburn, California
Courthouse in Auburn, California

1) Will my credit be ruined for 10 years after I file a chapter 7 also sometimes called a consumer bankruptcy?

After a chapter 7 bankruptcy discharge it's relatively simple to reestablish your credit and within a short period of time (Even with the new bankruptcy laws). Bankruptcy filings are at an all-time high. The best thing to remember is when a company extends credit is bankruptcy is only one of a number of factors they consider. In addition to this:

  1. There are credit cards offered immediately to you at slightly higher rates.
  2. You will find numerous adds and mailers to finance vehicles regardless of past credit problems or bankruptcy.
  3. Your bankruptcy is noted on your credit report just like any other entry. It's not highlighted or in red letters.

2) Can I keep my car?

A chapter 7 bankruptcy offers debt relief. You are entitled to keep your car under the same terms and conditions as when you purchased the vehicle. Your personal bankruptcy, chapter 7 only discharges your obligation to the loan. You simply keep making the original payments on time or you may choose to reaffirm the debt (please see the section on reaffirmation agreements, on the bankruptcy info center's Chapter 7 Bankruptcy Overview page).

Under the bankruptcy law, if you decided to surrender the car you can arrange to do so at a convenient time soon after your bankruptcy. Please remember if you choose to surrender the car the debt or loan was discharged and the chapter 7 bankruptcy rules state that the lender has no recourse, no matter what the car might sell for.

3) Do they take my house?

Bankruptcy does not force a foreclosure or bankrupt your house. After a chapter 7 bankruptcy discharge you can keep your home under the same terms and conditions. It also might be a good idea to look into a loan modification after filing for bankruptcy because the house payment is usually the largest single expense a family or individual may have. Free advice and paperwork can be found at the governments website, www.makinghomeaffordable.gov . Contrary to what you may have heard banks are doing loan modification for qualified home owners and bankruptcy can actually help by eliminating the debt that could be counted against you as a household expense.

4) Will I lose my furniture and Personal Property?

Bankruptcy trustees don't care about individually valued items under $550.00 (Garage sale value). However any single piece of property over $550.00 would have been listed on your bankruptcy petition and protected. We would have used the bankruptcy exemptions, according to California bankruptcy laws (learn more about the Chapter 7 Bankruptcy Code at our Chapter 7 Bankruptcy Info Center). There are some debts secured by personal property ie, a laptop computer purchased from the maker, a purchase of a washer and dryer or a car. These debts, like your car or your house, need to be paid for or the property surrendered. It's always best to check with the office on secured debts of this kind.

Considering Bankruptcy?

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