People who file for bankruptcy relief usually realize different benefits at different stages of the process, but for most people the biggest benefit comes at the very end — discharge of debts. In other words, you can walk away from most unsecured debts and the undersecured portion of claims covered by collateral. That’s when you can concentrate on rebuilding your credit and moving on with your life after bankruptcy.
For most consumers who file bankruptcy, the prospect of eliminating a significant portion of debt stands as the main incentive for filing. With important exceptions, such as student loans or taxes, you can look forward to a discharge of unsecured claims on credit cards, personal loans, medical bills, utility bills and other consumer debts.
In Chapter 7, you get your discharge after your trustee and creditors have had a chance to object, and don’t do so — four to six months after you file your Chapter 7 petition.
In Chapter 13, you get your discharge after you have completed performance of your repayment plan, which usually returns 5 to 20 percent of the total value of general unsecured claims to creditors over a period of three to five years.
One of your bankruptcy lawyer’s main jobs is to give you an accurate idea of what your discharge will mean for you. At Law Offices of Daniel G. Shay in San Diego, we carefully review your financial circumstances to identify the debts eligible for discharge and make sure you understand that you’re probably stuck with such debts as student loans and recent taxes.
We work closely with all of our clients to make sure that you’re in a position to get the maximum possible benefit from your bankruptcy discharge. We also advise people about the best ways to rebuild credit. Although a bankruptcy case will stay on the public records part of your credit report for 10 years, your credit score can improve rapidly if you carefully manage your credit.
About 90 percent of our clients’ credit scores actually go up by filing bankruptcy. This is because about 30 percent of a credit score is based on one’s debt-to-credit ratio. By filing bankruptcy, a person discharges most of his or her debt, which drastically improves the debt-to-credit ratio. Furthermore, the debtor usually has some income and will be prevented from filing bankruptcy again for a number of years. Thus, the debtor appears as a better risk to credit companies after bankruptcy, and his or her credit score usually improves. Many of our clients’ scores increase by 100 points or more after bankruptcy discharge.
One should obtain a free credit report about a month after bankruptcy discharge to make sure everything is accurate. If creditors are reporting inaccurately, they may be liable for debt discharge violations. At Dan Shay Law we will be there to help you after yourbankruptcy discharge. We may even be able to sue your former creditors for discharge violations and recover damages for you.
To learn more about the discharge of indebtedness and life after bankruptcy, contact Law Offices of Daniel G. Shay in San Diego for a free consultation today.
We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.