One consequence of a Chapter 7 bankruptcy is the loss of nonexempt property (or its value in cash). For most consumers in financial trouble, this is not a problem because consumer debtors rarely have any nonexempt property.

A bankruptcy will be part of your credit history for 10 years under the Fair Credit Reporting Act. If you have substantial debts, or are in default, your credit history already is poor. Some creditors believe wiping the slate clean is an improvement.

If you complete bankruptcy, in most cases you will be unable to obtain a Chapter 7 discharge for another eight years.

In a small community, a bankruptcy filing may impact your reputation.

Filing for bankruptcy is not free. In addition to about $300 in filing fees, you must pay your attorney, and if you file for a Chapter 13 bankruptcy, the trustee who administers it is entitled to up to 10 percent of payments made through the plan. You also must pay for consumer credit counseling and a personal financial management education course, usually totaling $70 to $100, unless those costs are waived due to inability to pay.

Should I file for bankruptcy?

There’s no magic formula for deciding when bankruptcy is the right choice. It’s an option you might consider if you:

• Are paying only minimum amounts on your bills
• Can’t budget yourself out of debt within five years
• Are getting notices that your mortgage or loans are being foreclosed
• Have had a severe financial setback, such as losing your job or a major client, a divorce or a costly illness
• How do I file for bankruptcy in Broomfield?

If filing for bankruptcy is the appropriate solution to your financial problems, it is important for you to understand how your case will proceed. Chapter 7 and Chapter 13 bankruptcy follow the same steps:

We examine all of your financial documentation and decide on the type of bankruptcy that will help you solve your financial problems.
We prepare and file the bankruptcy petition and supporting documents in the appropriate federal bankruptcy court.

Once the court accepts your bankruptcy petition, your creditors are notified. A creditors’ meeting is held, and some or all of your creditors may question you about your debt, your assets and your financial condition. Attorney Gray will be at your side during this meeting.
The creditors’ meeting is likely the only court appearance you will be required to make. In a Chapter 13 bankruptcy, you are required to attend a confirmation hearing at which the judge approves your negotiated payment plan.

Generally, the greater your dischargeable debt — debts that can be wiped out in bankruptcy — in proportion to your ability to pay, the more beneficial bankruptcy would be.

Bankruptcy is often the only sure way to prevent unsecured creditors — a person or a company that loaned you money without collateral security — from pursuing a monetary judgment against you in court. Bankruptcy also can prevent any garnishment of wages or other income after the bankruptcy petition is filed.

Bankruptcy may be the only possible way to keep or regain a driver’s license subject to revocation because of an unpaid accident judgment.

• Trying to negotiate with creditors to reduce monthly payments or to skip some payments
• Getting help from a nonprofit credit counseling group

Bankruptcy cannot relieve you of all debts. The following will probably still be your responsibility:

• Alimony and child support
• Drunken driving judgments
• Criminal fines
• Criminal restitution
• Debts incurred by fraud or intentional wrongdoing
• Back taxes less than three years old
• Student loans

Once a bankruptcy petition is filed, there is an automatic stay that immediately halts creditor actions against you, including most foreclosures, repossessions, garnishments or attachments, utility shut-offs and, in many cases, evictions. Bankruptcy may provide total protection for a home, a car or other vital property.