If you are in a difficult financial situation, you may consider filing for Chapter 7 bankruptcy in the state of Ohio. If this is a decision you have made, you will want to know what happens after chapter 7 and what you can expect in the next ten years.
Are you wondering how Chapter 7 bankruptcy will impact your credit score in the years after you file? Check out this article, where we will be discussing everything you need to know about what happens after Chapter 7 and why you need to hire a Chapter 7 lawyer to assist you.
Understanding Chapter 7 Bankruptcy
If you are considering bankruptcy as an option if you are in a tight financial situation, you will need to know what exactly this entails. Chapter 7 bankruptcy is one of the most common solutions in Ohio that allows for basic liquidation of your property to repay creditors and pay off debt.
One of the most significant benefits of filing Chapter 7 is that you are not going to lose all of your assets as long as you keep up on the most important payments. However, filing Chapter 7 will come with long-term repercussions that you need to be aware of before you take this step. Because of this, it is highly recommended that you hire a Chapter 7 attorney to help you navigate this process and ensure it is the right fit for your financial situation.
What Happens After Filing Chapter 7?
After you have filed Chapter 7, your case will usually be discharged after about four months, which is much faster than if you chose Chapter 13. What happens after Chapter 7 discharge is that your creditors will no longer be able to initiate or continue any legal action with the purpose of collecting debt. This protects you from harassment or having your debt go to collections.
The most important thing to understand about what happens after bankruptcy is that your credit score will be severely impacted. In fact, this is usually the top concern when an individual is considering Chapter 7 bankruptcy.
Chapter 7 bankruptcy will usually remain on your credit report for ten years after the date that you file your case. However, bankruptcy is often removed after seven years, as is the case with most bad credit information. So, it is very likely that bankruptcy will be removed after seven years, even though the general rule is that credit reporting agencies cannot report bankruptcy after ten years.
These regulations go hand-in-hand with the Fair Credit Reporting Act which governs the level of access to consumer credit report records. It ensures that filing Chapter 7 bankruptcy will not continue to be used against you by credit reporting agencies after ten years.
Rebuilding Credit After Chapter 7
What happens after Chapter 7 bankruptcy is usually the biggest concern people have since this will have a severe impact on their credit score. In fact, most individuals’ credit scores may drop 200 points or more directly after having their bankruptcy case filed. However, it is not impossible to repair your credit score and financially recover after making this decision so that you can have better financial options in the future.
Rebuilding your credit after Chapter 7 isn’t any different than trying to build up your credit in any other situation. You just need to be aware that this will take quite a bit of time, and you aren’t going to see results overnight. In fact, many credit-building tactics may even lower your credit score initially before you start to see positive results.
Stay on Top of Bills
One of the most important things you need to do after Chapter 7 bankruptcy is to ensure you stay on top of all of your bills. Although this may seem like common sense, it is more important than ever to pay your bills on time after you have filed for bankruptcy. Failing to pay your bills on time can make you look like you are an untrustworthy borrower, especially if you have bankruptcy on your credit record.
Apply For Credit
Although it may seem as though you are going backward after bankruptcy by applying for more credit, this is one of the most common ways of building your credit score. The only way to truly build your credit is by having a line of credit or some type of loan that you are regularly paying off. This builds up your trustworthiness by showing that you are capable of paying off debt on time.
The most important thing is that you choose a line of credit or a loan that is sustainable with your income so that you are guaranteed to be able to make the monthly payments on time.
Stick to a Budget and Save
Depending on your financial situation, you may have had to file for Chapter 7 for a variety of reasons. The most common cause is overspending, not sticking to a budget, and not planning for unforeseen expenses. That is why it is essential to create a realistic budget and stick to it after you have filed for bankruptcy.
Create a budget that allows you to live below your means so that you are able to put money aside in a savings account or an emergency fund. This will guarantee that no matter what your income looks like, you will be able to make your monthly payments on time since you aren’t living paycheck to paycheck. It also guarantees that you will be able to cover any unexpected expenses that may come up, such as a medical bill or a car repair.
Contact a Chapter 7 Attorney in Ohio
Are you ready to take the step and file for Chapter 7 bankruptcy in Ohio? Richard P. Arthur, Attorney at Law, can help you navigate this complex process, ensuring it is the best solution for your situation. Richard P. Arthur has handled hundreds of bankruptcy cases and can help you plan for what comes next after filing. Contact us today at 937-254-3738 for a consultation.