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Bankruptcy can wipe out many types of debt and offer relief from relentless creditor collection actions. It can also leave a mark on your credit report that could make it harder to get future loans at reasonable rates.

But bankruptcy is not a solution for everyone. Before you file, get a free copy of your credit report and consider your other options.

What happens to my assets?

Many people fear that when they file bankruptcy, they will lose all of their belongings and never be able to secure credit again. However, that is rarely the case. In fact, most of a person’s assets are protected by state and federal exemption laws in bankruptcy cases, and most individuals who file for Chapter 7 get approved to secure credit again after a period of time of making timely payments.

Bankruptcy cannot clear all debts, however. Certain types of debt, such as secured debts (i.e. mortgages, car loans and some domestic support obligations), cannot be cleared through bankruptcy. In addition, if you file for bankruptcy and are found to have committed fraud in the course of your bankruptcy, the debts will not be discharged.

Aside from that, most debts are cleared through the process. The most common forms of debt that bankruptcy cannot clear are child support and alimony obligations, some tax debts and most student loans.

What happens to my income?

Generally, bankruptcy is a last resort for those who are struggling to pay their debt. It can affect your credit score for seven to ten years, but it also provides relief from insurmountable debt and gives you a fresh start financially. It’s important to discuss

your financial situation and goals with an attorney to understand which debts can be discharged, what impact filing for bankruptcy may have on you and other options that are available.

Whether you choose Chapter 7 or Chapter 13 bankruptcy, you will likely be required to sell non-essential assets and pay creditors in exchange for the discharge of some or all of your debt. A trustee will be appointed to manage these processes, and your attorney will help you create a budget and repayment plan that fits within your


Depending on the language in your specific bankruptcy plan, you may be required to disclose any new sources of income, such as a raise at work, as soon as they occur. This information will be used to determine whether you are still eligible for a discharge under your current filing.

What happens to my credit score?

A credit score is a major factor in determining whether you are granted credit and, if so, at what interest rate. Although filing bankruptcy may have a negative impact on your credit rating, it is possible to rebuild your score afterward. However, it will take

time and a lot of responsibility on your part. First, don’t fall for any credit repair companies that promise to restore your credit score after bankruptcy for a fee. This cannot be done and anyone that tells you otherwise is a scam artist.

Once the bankruptcy is removed from your credit report, it’s important to monitor your score regularly and make sure all of the accounts that were included in bankruptcy are marked as “included in bankruptcy” or “discharged.” It also helps to keep an older credit card active and only use it when you can pay off the balance quickly. These actions will help improve your debt-to-credit ratio, which accounts for 30% of your FICO score.

What happens to my debts?

The moment you file bankruptcy, an order called the automatic stay stops creditors from trying to collect any debts owed by you until the court discharges them or a repayment plan is finalized. However, it can take a while for your credit score to rebound after a bankruptcy.

Debts you incurred through fraud may not get eliminated even if you qualify for a Chapter 7 bankruptcy. For example, if you lied on your loan application or misrepresented assets as your own to secure a mortgage or car loan, that might not be discharged.

In Chapter 13 cases, you might be able to keep your property by agreeing to pay back some or all of the debt over a period of time, which can be as little as 36 months or as long as 60 months, depending on the specifics of your case. This can include nondischargeable debts like some tax debts and domestic support obligations.

For actual and credible information and advice, consult a bankruptcy attorney in Harrisburg, PA for assistance if you need to file bankruptcy.