There are many financial questions that you may someday face. The decisions you make regarding your financial circumstances have the ability to impact your life today, tomorrow, and for many years to come. Whether or not to file for bankruptcy is without doubt one of the hardest financial questions a person might ever be faced with. Before you make the decision to file there are a few things about bankruptcy that you should know – especially about how bankruptcy will affect your bank account.
Federal law guarantees you the right to file for bankruptcy but the type of bankruptcy you file for is not always clear cut. Chapter 7 and Chapter 13 are the two types of bankruptcy that you may file and they each address particular circumstances. Brent George Law team can tell you that there are many differences between the two and the degree to which respective filing affects your bank account is just one of them.
A fresh start vs. repayment
- Filing for bankruptcy under Chapter 7 will give you a fresh start with respect to debt. The amount you owe will be discharged or canceled. This is the harder of the two types of bankruptcy to qualify for since you must pass the means test. In simple terms, eligibility for Chapter 7 depends on how much current monthly income you have after certain expenses have been deducted. The higher this amount is, the less likely it is that you will be allowed to file for Chapter 7. Though your bank account may not be directly affected by Chapter 7, you will have to give up all nonexempt property of value. You may lose many items that have financial and sentimental value.
- Filing for bankruptcy under Chapter 13 requires you to repay your debts over a period of time, usually three to five years. Your bank account will be more directly affected since you will have less money available; however, you will be able to keep the valuable items you own. Even tax returns can be claimed by the repayment process so your financial circumstances are likely to be restricted for a while.
If you wish to know more about the differences between Chapter 7 and Chapter 13, Brent George Law can answer your questions.
Bankruptcy and your credit rating
Though each type of bankruptcy will impact your bank account in different ways, filing for bankruptcy will impact your credit rating regardless of whether your file for Chapter 7 or 13. The fact of your bankruptcy will remain on your credit history for ten years and may make it harder to qualify for low interest rates on certain loans.
Brent George Law Offices have helped many people understand the bankruptcy process and they can help you, too. Call Brent George Law to find out more about how filing for bankruptcy can affect your bank account and financial future.