You’ve come to the point where your debt is overwhelming and you feel like you just don’t have any other choice but to file for bankruptcy. But, before you take that drastic step, you need to ask what does bankruptcy do? Is filing bankruptcy free? And most importantly…what are the long-term impacts when you file for bankruptcy?

What Does Bankruptcy Do?

When you’re drowning in debt, bankruptcy is an option often touted as a way to ‘wipe the slate clean,’ and give you a fresh start. You’ve found yourself feeling like there isn’t any better option, and so you turn to bankruptcy to break those chains of debt. Whether it’s Chapter 7 or Chapter 13, clearing debt off your plate sounds like a gift.

But really, what does Bankruptcy do? When you file for Chapter 7 (as most individuals and/or couples do) bankruptcy, you are filing for the liquidation of all your debt, on the premise that you don’t have enough money based on income to pay the debt back. You essentially have more debt than your income can feasibly cover without continuing to compound and put you further into debt and you look for absolution of that debt. In Chapter 7 bankruptcy, individuals will liquidate their assets (often resulting in the sales of cars/homes/draining of savings accounts) and whatever debt isn’t covered is typically forgiven by the bankruptcy judge.

A Chapter 13 Bankruptcy may be for those who are ineligible for Chapter 7 bankruptcy because they may make too much money to be absolved from debt. Those filing for Chapter 13 bankruptcy are deemed capable of paying their debt back over time without having to liquidate assets (unless they want to pay the debt back faster), and are given a payment plan that will typically have debt paid back in three to five years.

So, yes, your debts are gone with either Chapter 7 or Chapter 13, but at what cost?

Is Bankruptcy Free?

Filing for bankruptcy is not free! It seems ironic that a plan to reduce debt because you are drowning in it often can mean that you’ll quite possibly need to take more on simply to file. In 2019, the initial filing fee for Chapter 7 bankruptcy is $335 ($310 for Chapter 13) and that doesn’t even come close to what you’ll need to pay your bankruptcy attorney.

Even if you are eligible for the filing fee to be waived or broken into smaller payments (which is rare unless your income is at least 150% below federal poverty guidelines), a bankruptcy attorney/trustee can cost anywhere from $500 to $5,000 depending on the complexity of your debt situation and the area in which you live.

What Is The Bankruptcy Process Like?

In short? It’s complicated.

First, you’ll submit a formal petition to your bankruptcy court and then to your bankruptcy trustee. You’ll submit your filing fee and several additional forms. The forms will show you submitted your petition and your trustee will help gather what’s needed for the rest of the process.

You’ll undergo a ‘means test’ that will show whether or not you have enough disposable income that would allow you to pay your debts off without filing.

You’ll then meet with creditors and your trustee, and you’ll decide what may be sold or kept in the process of liquidating assets.

A judge will give final plans for the completion of the bankruptcy and eventually a discharge, but there’s extensive work in the process.

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What Does Bankruptcy Do? Is Filing Bankruptcy Free?

What Are The Pros And Cons Of Bankruptcy?

Obviously, the main reason people file for bankruptcy is that they are overwhelmed with debt and want to get out of that enslaving situation. A Chapter 7 bankruptcy process can take that debt off your plate in three to six months, typically, and once you’ve filed, you’ll still maintain your income and wages.

Many states will allow you to keep your car and home and not include in the liquidation process, and there’s no debt limit to qualify or restrict you. In essence, it might look appealing because it erases debt and provides you a ‘fresh start.’

But the cons and cost of bankruptcy are significant. Most obvious is the fact that in bankruptcy, you are often asked to give up and liquidate assets. This can be a painful process, as many things may have sentimental value as well as monetary value.

However, many people don’t understand the cost that bankruptcy incurs at the expense of your credit report. For up to ten years, a bankruptcy filing can stay on your credit report, and this can affect not just future credit but loans for mortgages, car loan terms, and even job applications. Yes, poor credit can also affect whether you get that job or not because employers may look at you as a risky employee.

And bankruptcy will not necessarily absolve you of debt like child support, alimony, student loans and/or mortgages—debts that tend to weigh high as obligations to many Americans.

What does bankruptcy do? It often does more harm than good, as short term relief occurs, but significant long-term cost.

What Alternatives to Bankruptcy Do You Have?

While overwhelming debt may make you feel like bankruptcy is the only answer, it most certainly is not! The advantages of turning to professional debt counselors who want to help you consolidate or settle your debts are numerous, and especially if from Christian Debt Counselors.

The professional debt counseling from Christian Debt Counselors will allow you to breathe easier, take control of your financial life back and do so without the repercussions and cost that come from filing for bankruptcy. Contacting Christian Debt Counselors is the first step to learning how to stop the collection calls and not affect your credit score provided you remain current in a structured Debt Management Plan through a licensed 3rd party service provider.

Debt consolidation and/or debt settlement can give you your financial freedom back while allowing you to work with concerned providers who want to keep you from incurring the steep costs that are associated with a bankruptcy filing.

If you’re tired of the collection calls and anxiety of the looming debt you’re under, the time to call Christian Debt Counselors is now. You can’t afford to wait any longer.


Debt Management with a Christian Perspective

Christian Debt Counselors understands that not every situation is the same, which is why we are here to help you choose the right program for you. We pride ourselves on being a faith based organization where confidentiality is key. Call now and find out how we can help.

Christian Debt Counselors (888) 906-3328
200 W. Palmetto Park Road Suite 200 Boca Raton FL 33432