Life After Filing Personal Bankruptcy in Alabama
Personal bankruptcy is the legal option to get rid of personal debts like credit cards and personal loans. Many people agonize over whether to file for bankruptcy because it has a lot of “negatives” and myths attached to it. However, there is nothing negative about filing bankruptcy when a person can’t pay their bills, or they are facing foreclosure. One myth about bankruptcy is that people struggle after they emerge from bankruptcy.
Chapter 7 and Chapter 13 Bankruptcy in Alabama
Before discussing life after bankruptcy, it is important to explain the types of personal bankruptcy in Alabama: Chapter 7 and Chapter 13. Chapter 7 bankruptcy wipes out personal, unsecured debts. Unsecured debts are debts that were given in exchange for a promise to pay such as credit cards. Chapter 13 bankruptcy repays creditors over a three-to -five-year period. A debtor pays creditors past due bills over that period of time while continuing to pay their current bills. Chapter 13 is called a wage earners bankruptcy and is often used to avoid foreclosure. A bankruptcy law firm pelham al will explain to an individual which bankruptcy chapter they are eligible to file.
Chapter 7 Bankruptcy Improves Credit
Generally, chapter 7 bankruptcy instantly improves a person’s credit score after their case is discharged. This means after the case is complete, a person’s credit score improves. The jump in the credit score may not be huge, but it is a start. A higher credit score will allow a person to obtain small lines of credit and rebuild their credit score.
No More Worrying about Debt
The biggest improvement regarding life after bankruptcy is that a person doesn’t have to worry about creditors. Filing bankruptcy immediately stops creditors from calling. Completing the bankruptcy process also stops creditor harassment.
Saving a Home From Bankruptcy in Chapter 13
A person who files for chapter 13 bankruptcy will see an improvement in their credit score too. The improvement will take a little longer. In fact, it may take about six months before an individual who completes the bankruptcy process sees a jump in their credit score. The biggest factor in life after bankruptcy is a person who files for Chapter 13 will save their home. By paying their lender the back payments and keeping their mortgage payment current, they can keep their home. This means they have a greater peace of mind after completing the Chapter 13 process.
Talk to a Lawyer about Filing Personal Bankruptcy
Bankruptcy can be a tough choice for many people who have too much debt. However, too much debt can cause a lot of stress because a person can never work long enough to repay their bills. Contact a bankruptcy lawyer about filing for Chapter 7 or Chapter 13 bankruptcy.
A bankruptcy lawyer in Alabama will explain the requirements needed to file bankruptcy such as completing a means test and being up-to-date on tax filings. In addition, a person must complete bankruptcy credit counseling through an approved bankruptcy counselor. Contact a lawyer immediately for help.