When you obtain a final discharge in your bankruptcy case, you could find that your financial position has improved dramatically. If you are wondering what happens if you declare bankruptcy, it is worth noting there are substantial benefits that start the moment you file.
Filing for protection under the bankruptcy code is a big decision, but it also has major benefits for individuals that are overwhelmed by their debts. The benefits of filing for bankruptcy protection can vary from one person to another, which means that it can be important to consult with an attorney before you file. Your attorney can advise you on your debts and help you understand what to expect when you file your petition.
The Automatic Stay Goes into Effect
One of the most powerful aspects of the bankruptcy process is known as the automatic bankruptcy stay. True to its name, the automatic stay goes into effect automatically the moment you file. Technically, most of the benefits of the stay will not be felt until your creditors are notified of your filing.
These benefits are substantial. The automatic stay halts all efforts from your creditors to recover their debt. This means they are barred from making collection calls for the duration of the automatic stay. The stay also prevents a creditor from filing suit, and it requires the parties to pause any ongoing litigation until the bankruptcy case is resolved.
The automatic stay can also freeze other collection efforts. It could result in the removal of any garnishments on your accounts. If you were in a foreclosure process, this will also be paused when the automatic stay goes into effect.
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You May Have to Pay Filing Fees
While bankruptcy is designed to improve your financial position, the process itself costs money to initiate. There are filing fees that could be up to several hundred dollars, depending on the type of case you file, according to the United States Bankruptcy Court.
While the fee is mandatory, the courts have the power to ease the financial burden of the filing fee. This is discretionary and not necessarily guaranteed for any filer. In some cases, a person filing for bankruptcy might be allowed to pay their fee in installments.
In limited cases, the court might allow some filers to waive their fee entirely. There is no way to know in advance if the court will agree to your request. When you file your bankruptcy case, you can also submit an application for a fee waiver.
You Will File Your Petition and Schedules
The process of filing bankruptcy technically begins when you submit your petition. Thankfully, you are not expected to create this document from scratch, as the United States Courts provide a series of forms that will meet your needs. These forms include your bankruptcy petition as well as schedule forms.
Your bankruptcy schedules outline your debts and assets. The schedules will also list any creditors you have, giving the court an opportunity to notify them of the bankruptcy case in question. While these forms are helpful, it is in your best interest to seek the assistance of an attorney when pursuing a bankruptcy discharge. A lawyer can ensure that these forms are filed correctly.
The Impact of Bankruptcy on Your Credit Score
The long-term benefits of a bankruptcy discharge can include a steady improvement in your credit score. However, your credit score is likely to fall before it rises. There are few events that have a steeper negative penalty on your credit score than filing for bankruptcy.
It may not be problematic for every filer, however. Filers with relatively healthy credit scores are likely to see their score plummet after filing their petition. However, those with low scores heading into bankruptcy may not have much room to fall. What’s more, the bankruptcy process is likely to result in a steady improvement in credit scores over the long term.
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An Attorney Can Help You File for Bankruptcy in Orlando
These are only a few of the ways a bankruptcy case could have an immediate impact on your life. While the process of filing for bankruptcy can be time-consuming, the benefits may be worth it for many individuals.
If you have questions about what happens if you declare bankruptcy, the team at Bogin, Munns & Munns has the answers. Let our attorneys review your finances and advise you on your bankruptcy options for your Orlando area case. Call a team member right away for a free consultation.