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What Can and Can’t Happen After Bankruptcy

Much of the information available around bankruptcy is vague to the public and people assume that it’s a one-way ticket to financial ruin. In reality, bankruptcy is a systematic way for people to work towards a better future but it comes with several repercussions. Here’s what you need to know about what can and can’t happen after you file for bankruptcy:

An Automatic Stay Is Called

When you file for bankruptcy, an automatic stay is called which prevents creditors from collecting some debts from you as long as the case is pending. Your wages won’t be garnished and many of your unsecured debts can’t be collected during this phase but any criminal cases or support payments have to be made.

It’s helpful to prevent debt collectors from harassing you while you sort things out with legal counsel.

Temporarily Stop Evictions or Foreclosure

Things get a little complicated here as generally, evictions are halted when you file for bankruptcy as long as they’re still in the litigation process. This isn’t the case if the landlord has an eviction judgment, but this rule varies from state to state. Repossession and foreclosure are also stopped when an automatic stay takes place but a Chapter 7 filing means you lose your assets after the stay is lifted.

A Chapter 13 filing on the other hand allows you to keep the assets in question after the stay is lifted, provided you’re able to make the payments on time.

Bankruptcy on Credit Report

Bankruptcies appear on your credit report, but the duration for how long it appears depends on whether you file for Chapter 7 or Chapter 13. Chapter 7 and 13 bankruptcy stay on the report for 10 years, but Chapter 13 ones can stay for 7 years if the case was completed to discharge.

Because of the bankruptcy filing, your credit score will go down a fair bit, anywhere from 100 to 200 points is a common occurrence.

Your Assets

A chapter 7 filing allows your trustee to sell off some of your non-exempt assets to pay off some of your debts accordingly to the creditors. These payments are made on the priorities that are described within bankruptcy laws. For a chapter 13 filing, you receive a repayment plan to eventually pay off all of your debts accordingly.

It’s vital to have a creditors’ rights attorney by your side for Chapter 13 bankruptcy, as it allows the creditor to challenge Chapter 13 filing. Similarly, they also take the case to get back the collateral once the automatic stay is over.

At McLeskey Law Offices, we are a creditors rights law firm based in Columbus, Ohio, experienced in litigation law, probate law, and creditors rights. We understand that bankruptcy can be a challenging time for many, therefore we offer our professional counsel to help people navigate through the legal ramifications that await them.

When it comes to cases of bankruptcy, we help our clients get their due share if they meet the required conditions. Reach out to the business today if you seek a creditor’s rights and litigation lawyer.


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