Here are 5 important things you should know about bankruptcy - many fighting common misconceptions about the bankruptcy process and how it will affect your life.
5 Basic Things You Should Know About an Arvada Bankruptcy
1. There are multiple types of bankruptcy
You do not just file for bankruptcy in Wheat Ridge, Arvada, or Golden. You must file for a specific type of bankruptcy. Usually, an individual or married couple will file for a Chapter 7 or Chapter 13 bankruptcy. Chapter 7 is a liquidation bankruptcy, whereas Chapter 13 is a reorganization bankruptcy involving a commitment to a repayment plan.
2. Bankruptcy is not free
The courts charge filing fees for filing a bankruptcy petition in Colorado. Your bankruptcy attorney will be able to advise you on the current fees associated with the type of bankruptcy you are interested in filing. If you are using a bankruptcy lawyer, you will need to consider their fees as well.
3. You will need to have access to your financial details
When filling out the bankruptcy petition, the court wants as much information as possible about your financial status. You will need to list your current financial situation, any assets, any bank accounts, and other debts that you owe. The court requires a complete picture of your finances. In fact, if they feel you haven't provided all the information, they can deny your bankruptcy or even charge you with the crime of bankruptcy fraud.
4. Bankruptcy does not eliminate all debts
While bankruptcy does give you a financial clean slate, you may still have debt after the process is complete. This is because certain loans are not dischargeable. Unsecured loans are dischargeable, but secured loans like a car loan or home mortgage are not. Student loans are also usually not discharged through a Colorado bankruptcy.
5. You will be able to rebuild your credit after bankruptcy
Most people are surprised to hear that it is not that hard to rebuild your credit after bankruptcy. Once your debt is discharged, your debt to income ratio significantly improves. This, combined with steady payments on utilities, rent/mortgage, and other necessary monthly bills will help repair your credit. It will even bring down your interest rate over time as long as you keep yourself out of significant debt.