Bankruptcy allows individuals who cannot repay debts or those with excessive debt to wipe away the debt from their name. Bankruptcy can be voluntary or involuntary and can result in matters such as denial of credit and an inability to file for bankruptcy in the future. The goal of bankruptcy is to relieve an individual from their debt so they can move on and start fresh. Here we will discuss whether or not bankruptcies go away.
1. How Bankruptcy Affects Me
Bankruptcy stops titles to properties from becoming over-burdensome. Individuals filing for bankruptcy will have their debts to a creditor wiped out, so they do not carry those debts in their name and credit report. Once the bankruptcy proceedings are concluded, the individual’s debt is erased. When someone files for bankruptcy, specific requirements must be met. The creditor must give written notice of the bankruptcy request to all creditors, who then have a certain number of days to file objections. The debtor must also complete credit counseling and provide certain information to the court to move forward with the procedure. If a creditor ignores the notices or fails to file an objection within 30 days, the debt is wiped out.
2. How Does Bankruptcy Go Away?
The length of time will vary depending on state law, but most states allow 2 years to file and 5 years after that to discharge all debts. This means after 5 years all debts are erased, whether it is debt from a Chapter 7 or a Chapter 13 bankruptcy. In some states, a person entering an unsecured debt reduction settlement agreement with their creditors will stop the bankruptcy proceedings. In this agreement, the creditor agrees not to file for bankruptcy, and the debtor agrees to pay back the debt with interest over time. The deal is not binding, so the debtor can still file for bankruptcy in 5 years.
3. Do Bankruptcies Go Away
The state in which a person files for bankruptcy will determine whether or not the individual can file for bankruptcy again. The most common way to discharge defaults from the record is by waiting the appropriate number of years. Once bankruptcy is discharged, it does not come back. If it did, that would contradict the purpose of bankruptcy; to relieve an individual from their crippling debt. There are certain situations where bankruptcy can be re-opened, but these are rare and very specific. Federal law prohibits a person from filing bankruptcy again for 6 years after they file the first time. It is possible to file bankruptcy several times if an additional debt is acquired, but there are no restrictions on how many times a person can file as long as it is not within 6 years of filing before.
4. How Can You Rebuild Credit After Bankruptcy?
Whether or not you file for bankruptcy, it is essential to understand that bankruptcies stay on your record for 10 years. Suppose you plan to do any financing in the future, whether a bank loan or credit card loan, you will have no option but to jump through hoops to get approved. One thing that can help with the rebuilding of credit is the use of a secured credit card. A secured credit card is backed by money in a bank account. If you apply for a secured card and are approved, you will have to pay for the item with the secured card immediately. This will show you can manage credit and pay your bills on time.
5. How Long Will Bankruptcy Affect Me?
According to the US Trustees Report of 2012, over half of all bankruptcy filings are for debt-driven reasons. In other words, people file for bankruptcy because they can’t afford to make payments. Additionally, over 52% of all bankruptcies were done by individuals over age 50, and individuals did another 26% under age 50. So many people file for bankruptcy because they cannot afford their monthly payments or can’t afford their monthly payments in the amount they are required to pay them. Often, this is because of a job loss, reduction of wages, or a combination of the two. Due to the stress and time required to file for bankruptcy, it is best to seek guidance from a legal professional to determine whether or not it is an option that is right for you.
Filing for bankruptcy relieves debtors from their burdensome debt and allows them to move on with their lives without excessive financial burden. It does this by wiping away the debt so debtors can start fresh. Bankruptcies stay on your record for 10 years, and you can only file for bankruptcy once every 7 years depending on your state laws. The primary way to avoid adverse reports is by avoiding excessive debt accumulation and filing for bankruptcy when necessary.