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The truth about filing for bankruptcy

On Behalf of | Mar 30, 2021 | Consumer Bankruptcy |

Filing for bankruptcy can be an ideal way for Illinois residents to reduce their debts and begin building a stronger financial future. However, it isn’t uncommon for people to hesitate to do so because of myths that they may have heard online, on television or while talking to friends.

Bankruptcy won’t necessarily force you to lose your property

In some cases, you may be able to file for Chapter 7 bankruptcy without having any of your assets liquidated by the trustees overseeing your case. This is because federal law allows individuals to retain a portion of any positive equity that they have accrued in their homes, car or other assets.

Furthermore, individuals are generally allowed to keep personal belongings such as clothing, furniture or tools. Those who file for Chapter 13 protection generally get to keep their property as long as they remain current on their plan payments. An experienced bankruptcy law attorney can provide more information as to what a person can keep in a given proceeding and what to expect.

You can take steps to rebuild your credit after bankruptcy

It isn’t uncommon for individuals to avoid filing for bankruptcy because they think that it will make it harder to obtain credit or repair their credit scores in the future. However, bankruptcy won’t remain on your credit report forever. A Chapter 7 bankruptcy will remain on your report for 10 years, while a Chapter 13 bankruptcy will typically remain on your report for up to seven years.

Additionally, you may be able to take steps to improve your credit soon after bankruptcy. Small steps like budgeting and making on-time payments can help. You may also consider applying for a secured credit card. For some, this can be a great way to rebuild credit with less risk than a traditional credit card, as unsecured cards require an upfront deposit.

Don’t believe the myths you hear

There are a lot of misconceptions surrounding bankruptcy. The truth is that whether bankruptcy is right for you will depend completely upon your unique financial circumstances. Consulting with a legal professional can help you sort fact from fiction and determine your next steps.