Are you overwhelmed by debt with no clear path to paying those obligations down? If so, filing for personal bankruptcy might be the best way to move forward and rebuild your financial future. Lexington, Kentucky-based bankruptcy attorneys of Bunch & Brock have helped many individuals and families move beyond the chokehold of debt through personal bankruptcy. They are always available to speak with you about any questions or concerns you have about your own financial circumstances, as well as how bankruptcy might offer a solution.
What is the purpose of a bankruptcy?
Bankruptcy laws were put into place to give individuals a chance to reshape their future after a period of overwhelming debt. It is essentially the path toward a “fresh start” for Americans who have been burdened by high levels of debt with little chance of alternative relief.
There are several types of bankruptcy available to individuals, and other types that apply for businesses. Choosing the right type of bankruptcy is important, as there are significant differences in the ways that debts are handled in each approach.
What is a bankruptcy discharge?
In personal bankruptcy, a discharge is a relief from personal liability for specific types of debt. It essentially means that the debtor (the individual filing for bankruptcy) is no longer expected or required to pay the debts listed within the discharge.
Once the court has reviewed all of the paperwork filed for your bankruptcy case, the court issues a bankruptcy discharge. This notice is sent to all creditors of debts being discharged and advises them that the debt in question is no longer enforceable, and that efforts to enforce those debts can leave the creditor subject to punishment.
Are there downsides to a bankruptcy discharge?
While bankruptcy can offer individuals a chance at a fresh start, there are definite downsides to a bankruptcy discharge. To begin, not all debts are eligible for discharge through bankruptcy.
Some of the types of debt that will remain in place following your bankruptcy procedure include:
- Certain tax debts
- Child support
- Spousal support
- Debts arising through malicious intent and injury to people or property
- Government issued student loan debt
- Debt from personal injuries caused by the debtor driving under the influence
Another downside to personal bankruptcy discharge is the damage done to your credit record. The bankruptcy will remain on your credit reports for seven to 10 years, depending on which type of bankruptcy was filed. This can negatively impact your ability to open new lines of credit during that time. Of course, taking steps to demonstrate that you understand how to use credit responsibly can help you rebuild your credit after bankruptcy, but that process takes time.
Does a bankruptcy discharge officially end my bankruptcy?
Many people think that once they receive their bankruptcy discharge, their case is officially over. In reality, while a discharge is one of the last things that happens in most bankruptcy cases, your case will remain open for a period of time after the discharge is issued.
Bankruptcy courts keep cases open to ensure that all of the details have been properly addressed. If you have little or no assets at the time of filing, your case may be closed relatively quickly after discharge. If you have assets that need to be sold to cover a portion of your debts, the case could remain open for months or even years after your discharge.
Even after your case closes you will have the chance to reopen the bankruptcy if you discover a debt you forgot to include in the filing. This works both ways, however, and if it turns out you have assets that were not included in the filing, the case can be reopened so those assets can be liquidated to repay creditors. It’s important to cover all the bases when you file for bankruptcy, as errors and omissions can cause the entire case to be revoked, prompting a cascade of negative effects that can worsen your financial standing.
How do I learn more about personal bankruptcy?
If you’re swimming in a sea of personal debt and can’t catch your breath, personal bankruptcy can act as a lifesaver. While bankruptcy certainly isn’t the right choice for everyone, this powerful legal tool can do wonders for many individuals and families. Lexington, Kentucky-based bankruptcy attorneys of Bunch & Brock is happy to meet with you to discuss the specifics of your case and can advise you on the best path forward for you and your loved ones.