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Bankruptcy FAQs
What is Secured Versus Unsecured Debt?
Secured debt is debt that is tied to your property with the creditor possessing a “lien” on such property. Conversely, unsecured debt is not tied to any property. The most common examples of secured debt include mortgages and car loans, whereas the most common examples of unsecured debt include credit cards, medical bills, and personal loans.
In general, bankruptcy might slightly affect your credit score. Most of the time, it will not substantially impair your score and if you are filing for bankruptcy chances are you already have a low credit score. Typically, within six months to a year after filing, your credit score will start to increase. For quicker credit repair, it is best to get a secured credit card and make sure to pay the full amount owed each month.
It is against the law for an employer to fire or discriminate against an employee because the employee filed for bankruptcy. This includes being demoted, removed from any responsibilities, or receiving a reduced salary due to the bankruptcy filing. If an employer violates this law and discriminates or fires you, they will suffer the consequences of such action(s).
After your meeting of creditors occurs (about a month after the case is filed), you can start looking for a new car if a lender is willing to lend to you. There are many car finance companies that lend to people right out of bankruptcy or after the meeting of creditors and will sometimes need court approval. The same goes for purchasing a house and finding a lender willing to give you a mortgage.
A bankruptcy discharge relieves you of personal liability on certain types of debt. This means, once your case is over and you receive a discharge, you no longer owe any creditors money for debt that was discharged. Discharge orders are permanent, and they prohibit creditors from taking any action to collect on discharged debts, including reporting a balance owed on your credit report.
Research shows you will be more likely to get credit after you have filed bankruptcy than if you do not file at all. This is because bankruptcy removes the debts you cannot afford to pay allowing you to be in a better position to take on more credit and pay off your obligations on time. Having less debt to pay makes you look more appealing to lenders.
If you previously filed a bankruptcy and received a discharge, you may be prohibited from filing a subsequent one. For instance, if you filed a Chapter 7 bankruptcy and received a discharge, you cannot file another Chapter 7 bankruptcy 8 years from filing the previous one. However, you can file a subsequent Chapter 13 bankruptcy, but may not be eligible for a discharge.
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