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Facts Worth Knowing When It Comes To Bankruptcy


If you are in over your head financially, you have likely considered a number of options moving forward, including filing for bankruptcy.  While in many ways bankruptcy lifts enormous pressure from people, you should go into it with your eyes wide open. Filing for bankruptcy is a big step, and there is a lot you should understand about it.

  • The underlying problems that led to bankruptcy may still be there. For individuals who find themselves in financial trouble because of unchecked spending, those habits have to change if you want to avoid the same problem in the future. On the other hand, if a job loss or medical trauma puts you into debt and those issues are resolved, bankruptcy could be just the ticket.
  • Bankruptcy comes in more than one form—and they have different challenges and benefits.
    • Chapter 7, often referred to as liquidation, lets you discharge most of your debt and start over financially. To do this, you are required to liquidate many assets through a trustee.
  • Chapter 13 is more of a debt reorganization that gives you the opportunity to make payments over a period of three to five years. You get to keep your assets, and anything owed after the payback period is generally discharged.
  • Not everyone qualifies for Chapter 7. If you make too much money, you may have to go with a Chapter 13 filing instead, requiring a restructuring instead of a fresh start.
  • Not all debt goes away with a bankruptcy filing. Bills that will stick with you include child support and alimony obligations, the majority of tax obligations, real estate liens, and some student loan debt.
  • You don’t have to give up all of your possessions in a bankruptcy, even in a Chapter 7. There are exempt items you get to keep, and, depending on your circumstances, that could even include your vehicle.
  • Your credit score is going to suffer. Bankruptcy understandably dings your score, and the blot could stay on your report for up to 10 years, making future large purchases like for a home very difficult, if not impossible, for a long while. On the other hand, if you’re being honest, your credit score may already be pretty low if your finances are in turmoil.
  • Your retirement pension, 401K, and IRA are protected from creditors, so you don’t need to worry about being penniless.

Doing it Right

If you are considering filing for bankruptcy, the experienced Miami bankruptcy attorneys at the Law Office of Julia Kefalinos can help you to determine the best way forward.  Schedule a confidential consultation in our office today.



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