What Happens When You File For Bankruptcy

February 14, 2020

If you’re facing overwhelming debt, filing bankruptcy can give you the relief you need to get a fresh start. It stops many of the most challenging things that come with debt problems, including creditor phone calls and wage garnishments. But filing for bankruptcy isn’t a cure all for debt problems. Bankruptcy law, like all law, is complex, and there are multiple chapters of bankruptcy that you can file for. If you are considering filing for bankruptcy, our Bangor bankruptcy attorneys can help you understand your options. 

We enjoy sharing helpful information regarding bankruptcy law here on our McCue Law Firm blog. In today’s post we will be outlining what happens when you file for bankruptcy, the differences between Chapter 7 and Chapter 13 bankruptcy, and how bankruptcy affects your credit. Continue reading to learn more, and if you’re ready to take the first step towards a debt-free future, schedule a consultation with one of our bankruptcy attorneys today. 


When You File

When you file for bankruptcy, you receive an automatic stay — an injunction that stops creditors and debt collectors from continuing their attempts to collect payments from you. Automatic stays protect you, the debtor, from the following:

  • Actions by the creditor to obtain the debtor’s property
  • Actions to enforce a lien against a debtor’s property
  • Beginning or continuing legal proceedings against the debtor
  • Actions to garnish your wages or deduct money from your bank account

If you are seeking relief from actions like this, filing for bankruptcy may be for you. Our bankruptcy attorneys can help you understand your options. We’ll listen closely to your situation and explain your legal options. Contact us today to schedule a consultation.

Chapter 7 

When you file for Chapter 7 bankruptcy, you are able to discharge debt quickly. It is a good option for people looking for fast relief from overwhelming debts like medical bills, credit card debt, and personal loans. When filing for Chapter 7 bankruptcy, you may have to give up some assets, but unlike chapter 13 bankruptcy, you do not need to create a repayment plan. Chapter 7 bankruptcy is a liquidation bankruptcy, meaning certain property will be sold (or liquidated) and used to repay your creditors. The type of property that needs to be sold varies from state to state, and our Maine bankruptcy attorneys will let you know how the laws for our state affect you.

Chapter 13

Filing for Chapter 13 bankruptcy protects debtors who have a regular source of income. This type of bankruptcy allows you to propose a payment plan to the court and keep a valuable asset (like a home) as collateral while repaying  the creditors. The plan you create and that the court eventually approves should be one that you can follow through on. In chapter 13 bankruptcy, a significant portion of your debt is discharged after you complete the necessary payments. If you are still uncertain which type of bankruptcy you fall under, give McCue Law Office in Bangor a call. Our Bangor bankruptcy attorneys can help you decide whether Chapter 7 or Chapter 13 bankruptcy is right for you.

Your Credit

Bankruptcy allows you to discharge debt and can be incredibly helpful if you’re overwhelmed by financial commitments and are falling further and further behind on payments. However, discharging that debt comes with a big hit to your credit. Generally, bankruptcy stays on your reports for up to 10 years from the date that you file. The good news, though, is that it’s possible to rebuild your credit after bankruptcy. Read our “Rebuilding After Bankruptcy” post to learn more about how to move forward after filing for bankruptcy.

What Bankruptcy Can Do 

Bankruptcy helps people get a fresh start. Filing for bankruptcy can stop a foreclosure, repossession, or eviction (at least temporarily). It can also release you from unsecured credit card debt, medical bills, and personal loans. If you can’t afford a payment on a secured debt — such as a mortgage or car loan — you can also discharge that debt by filing for bankruptcy, but you will most likely need to give up whatever assets are securing the loan.

What Bankruptcy Cannot Do

Most debts can be discharged with bankruptcy, and our bankruptcy attorneys are more than happy to talk with you about the differences between Chapter 7 and Chapter 13 bankruptcy and which option may be best for your situation. Bankruptcy doesn’t fix all debt problems, and there are non-dischargeable debts. These debts vary based on the type of bankruptcy you file for, and our bankruptcy attorneys can help you understand your options. 

McCue Law Office Bankruptcy Attorneys Bangor

McCue Law Office in Bangor is committed to helping our Maine clients find relief from overwhelming debt. If you need a fresh start, contact one of our bankruptcy attorneys today. We have more than 35 years of experience serving clients in the state of Maine. Along with bankruptcy, our law firm also specializes in personal injury, social security disability, workers’ compensation, and real estate. Contact us today for a free consultation.

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