Bankruptcy is a legal process created to help people discharge their debts or repay a portion of them. There are two types of bankruptcies people can file: Chapter 7 and Chapter 13. Chapter 7 eliminates your unsecured debts while Chapter 13 bankruptcy requires you to repay some of your debts under a new plan.
Can I Discharge Student Loan Debt?
There’s no denying that there is a major student loan debt crisis in the U.S. Unfortunately, however, you likely won’t be able to discharge your student loans in bankruptcy, unless you can prove extreme hardship.
Will My Spouse Also Have to File for Bankruptcy?
If the debts are only in your name, there is no reason for your spouse to file bankruptcy. On the other hand, if you have joint debts, it’s recommended for both of you to file for bankruptcy.
Do I Have to Hire a Lawyer?
No, you aren’t required by law to hire a lawyer to file for bankruptcy. However, it’s highly recommended to work with a skilled lawyer. Bankruptcy is a complicated process and making one small error could get your case rejected. A lawyer from a reputable bankruptcy law firm in Memphis, TN can guide you through the process and improve your chances of a successful bankruptcy.
Will Bankruptcy Lower My Credit Score?
Yes, bankruptcy will initially lower your credit rating. However, that doesn’t mean it should stop you from filing. If you’re struggling to pay your bills, your credit score has already dropped. After your bankruptcy is finalized, you will have the opportunity to start rebuilding your credit right away. If you can’t get approved for traditional credit cards initially, you can apply for a secured credit card and build your credit that way.
Will Creditors Continue to Contact Me?
If you’re behind on your bills, you likely have creditors calling you on a daily basis, which can cause you more stress. Once you declare bankruptcy, however, the court will issue an automatic stay, which will forbid your creditors from contacting you again.