The Phoenix bankruptcy lawyers at Want A Fresh Start understand that filing for bankruptcy in Arizona is a choice few take lightly, and for good reason. The impact and consequences of bankruptcy can be very real and extend to multiple areas of your life. So if you are filing for bankruptcy, what should you expect? What will some of the most significant consequences be, and how can you best deal with those?
Total or Partial Elimination of Debt
The reason you are looking into bankruptcy to begin with is likely also its greatest consequence. By filing for bankruptcy, your debt will be completely eliminated, and creditors will no longer have the ability to contact you regarding payment. The elimination of debt and creditor harassment can be huge incentives and extremely helpful in many situations. If your debt is high, your income unable to cover it, or your home or car are in danger of being repossessed, the feeling of freedom from debt may be a positive enough consequence to more than justify any other negative impact bankruptcy may have.
Impact on Your Credit
When you initially complete your bankruptcy proceedings in Arizona, your credit will be weakened. This is a temporary situation, as bankruptcy itself is only legally on your financial record for ten years maximum, but it can be a consideration when deciding whether to file. Most credit card companies will cancel your account when bankruptcy proceedings begin, but if credit card debt is your reason for filing, this is typically acceptable. Moreover, many who undergo bankruptcy experience stronger credit in the long run. Bankruptcy offers a fresh start, meaning you will have to rebuild your credit but you will get to do so without debt hindering your ability.
Effect on Financial Privacy
Every piece of information filed with the court goes into the public record. That means that much of your financial information may be findable and could theoretically affect future rental or financial application attempts. This alone does not necessarily outweigh the benefits bankruptcy brings, however. While it may have an impact, you will by no means be financially blacklisted, and many can explain a recent bankruptcy to the satisfaction of those he or she is petitioning for a rental or loan.
Potential Loss of Possessions
If you file for Chapter 13 bankruptcy, this will not apply to you. Chapter 7 bankruptcy, however, is known as “liquidation” bankruptcy for a reason. It is the most efficient and quickest way to deal with your outstanding debt, but it allows your property to pass into the possession of the courts to be distributed as restitution for your debts. That said, many people are pleasantly surprised to find that though bankruptcy has been filed, they have no problem keeping most or all of their most valued belongings. A knowledgeable Phoenix bankruptcy attorney can help you better understand the intricacies of liquidation bankruptcy and how they impact your individual financial situation.
There are exemption laws that can be enacted to protect certain types of property from being seized or sold during the process of bankruptcy, and many of those are most generous to homes and vehicles. Therefore, it is common for those filing to keep their homes and means of transportation without issue or concern.
Possible Trouble Getting Loans
Your credit upon filing for bankruptcy in Arizona is weakened at the outset. This corrects over time, completely resolving by the 10-year mark, but initially, it can cause some issues. For this reason, qualifying for a loan is generally quite difficult immediately following filing for bankruptcy. That is not to say every loan will be off limits. Low dollar amount or high-interest loans typically remain within reach in the months and years directly following bankruptcy.
Performing a cost-benefit analysis on bankruptcy can be difficult on your own. If you have questions or would like help determining if bankruptcy is right for you, contact us today to speak with a bankruptcy lawyer in Phoenix, AZ.