1. Many people file for non-business related bankruptcy. They are everyday people from all walks of life. Sometimes bad things happen to good people, but they still feel a responsibility to pay their bills. Most people try hard to work out repayment of their debts and wind up exhausting tax exempt properties, such as retirement 401ks, and IRA savings, causing additional tax problems for themselves. Singled, married, widowed, or divorced, bankruptcy can fall on anyone.
  2. Your credit will be ruined by bankruptcy. Most people who file for bankruptcy have already blown their credit, and already have a poor credit score. Filing for bankruptcy isn't going to make it any worse. In most case once your debt is discharged your credit score will slightly increase. In terms of your Credit Report, however, a Chapter 7 bankruptcy will show for 10 years. Anyone pulling your credit report will form an opinion: good, bad, or indifferent. Although your ability to borrow money will be more challenging that in no way means we can't help you buy a car. In the bigger picture, most people need affordable and reliable transportation to earn an income, thereby staying out of accruing more debt.
  3. You are not going to lose everything you own. Most property, such your home and vehicle will be protected. Most Chapter 7 fillings are considered "no-asset" cases whereby your personal property will not be sold. Every state can vary in exemption rules so it's important to know what law will apply to your circumstance.
  4. Not all property that is owned is protected, such as owning luxury goods, whether it be an expensive collection of artwork, an expensive boat, a rental property, all can be applied toward debt. However if something is leased, rented, or owned more by a loaning institution than the debtor, it isn't truly owned.
  5. Even if the debtor has a high monthly income there may be legitimate debt such as medical bills, and child support. The "means test" must be passed to qualify for Chapter 7 bankruptcy. A statement of current monthly income will be used along, with information from the Census Bureau, and the IRS to fill out forms  determining eligibility to file Chapter 7.  For additional information on the "means test" and the necessary 122A and 122C forms email  ust.mt.help@usdoj.gov.
At the end of the day you need to know how Bankruptcy will affect your credit score :
  • Although creditors don't like to see bankruptcy on a credit report, the damage it will evoke depends mostly upon what your credit score was before you filed.
  • Credit scores are like your driving record since they take into account years of past behavior.

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