The new year means different things to different people. Depending on your family’s traditions, your culture, your beliefs, and your experiences, it might be a time for reflection and resolutions or a time of religious significance. No matter who you are or where you’re from, most people associate this time of year with renewal and fresh starts. If you’re facing crushing financial challenges, the new year may be the perfect time for you to wipe the slate clean and file for bankruptcy.

Filing for bankruptcy, whether a Chapter 7 discharge of all your debts or a Chapter 13 reorganization, allows you to leave the past behind. For some, bankruptcy may be part of a resolution to do better with your finances and avoid profligate spending. For others, a bankruptcy filing can free you of the burdens associated with a job loss or significant illness or injury and hospitalization. Either way, even if your filing means you have to rebuild your credit history, it is still a chance to embrace new possibilities and start over with renewed hope.

If you’re uncertain about the impact of filing for bankruptcy, here are a few things for you to know:

• When you apply for bankruptcy you will need to submit a comprehensive list of your income, assets, and liabilities. Using this, the bankruptcy court will conduct a means test to determine whether your income qualifies you to file for a Chapter 7 bankruptcy which will discharge your debts, or a Chapter 13 bankruptcy which will reorganize your debts into more manageable payments, usually with more attractive terms.
• When you file for bankruptcy, it activates an automatic stay that will stop your creditors from attempting to collect the money that you owe. It will also temporarily stop any foreclosure actions.
• Filing for bankruptcy will also stop wage garnishments other than those for child or spousal support, tax payments, or debts associated with personal injury claims.
• Filing for bankruptcy does not automatically mean that you will lose all your assets.
• Though filing for bankruptcy will negatively impact your credit score, it was probably low as a result of your debt, and once you’ve gone through the process you can begin rebuilding.

Bankruptcy is a chance for a fresh start, but it’s also a big decision. For assistance in understanding how a bankruptcy filing will impact you, contact us today.