Photo by Nicola Barts

What happens after bankruptcy and trying to get out of debt in San Diego can often differ greatly from person to person, but the presence of a good lawyer can change that.

First off, before we start anything, let’s learn about what bankruptcy is.

What Is Bankruptcy?

When people can no longer properly pay their debts, bankruptcy is a good method for them to receive a restart. This is done either by having lawyers help with liquidating and managing assets to pay off the debts or through the development of a repayment plan that the individual can better handle. 

Bankruptcy cases usually begin when a debtor, the individual with debt, formally files a petition with a bankruptcy court, with assistance from a trusted attorney or dedicated legal team. 

All cases that fall under bankruptcy, at least here in the United States of America, are covered under the rules of the US Bankruptcy Code

The Different Types of Bankruptcy

There are several types of bankruptcy, which are usually referred to by their chapter in the US Bankruptcy Code:

  • Chapter 7 or 13 bankruptcy is where individuals can learn more about their own specific cases;
  • Chapter 9 bankruptcy is more for municipalities and government entities: cities, towns, villages, etc.;
  • Chapter 7 or 11 bankruptcy is for businesses to, respectively, liquidate or reorganize;
  • Chapter 12 bankruptcy helps provide debt relief to farmers and fishermen; and
  • Chapter 15 bankruptcy is for cases where the parties involved are from more than one nation-state.

What Happens After Bankruptcy?

While filing for bankruptcy is a legitimate and beneficial way to be relieved of back-breaking debt, it is a rare decision among the general populace. That is because bankruptcy is often associated with financial ruin and disaster. We have heard multiple stories about people so desperate filing for bankruptcy, but we rarely, if ever, hear stories about what happens to them after their cases. Do they recover from their decisions? Or are they forever tarnished and left destitute?

While the latter does happen, it’s not the majority. Becoming destitute after filing for bankruptcy is actually quite a rare occurrence.

And that’s why I’m here to dispel some fears about bankruptcy.

A Story About Filing for Bankruptcy

This is not my story but from a close friend of mine. I’ve received their blessing to tell their experiences with filing for bankruptcy.

Our story begins with Billy (not their real name). Now, Billy was a very conscientious individual. They were always saving up, always on the up and up with their finances and such–but something eventful happened in their life, mainly that one of their parents had to undergo life-changing surgery. I don’t need to remind you how much those kinds of surgeries usually cost, but safe to say that it was devastating to their finances.

Needless to say, they had a mountain of debt on their hands, and the last thing that they wanted to do was file for bankruptcy–but under the advice of a trusted lawyer and the testimony of a friend who also underwent the same, Billy was forced to go through with it: filing for bankruptcy.

There’re many ways to get out of debt if you’re in San Diego, but filing for bankruptcy is perhaps one of the quickest and least painful ways. 

Like everyone that had gone through it, Billy had heard the stories of what would happen when someone filed for bankruptcy. There were plenty, and they shared some with me. They ran the gamut of being denied credit cards, rent, car loans, a mortgage, and everything in between. While some of them were undoubtedly true, the certainty of financial ruin seemed too odd for Billy, so they researched and asked their lawyers for advice. Turns out, most of the rumors were wrong.

You see, while it’s true that bankruptcy of any kind will be written on your credit report–it’s not permanent and will eventually be removed in a decade. Of course, this does not automatically mean that you won’t get credit for ten years. What a bankruptcy mark on your credit report just means is that you will have a negative mark, which is not any more important or significant than having tons of debt or a history of delayed payments. This is not any different from having not filed for bankruptcy at all when you already have mountains of debt. 

After Billy filed for bankruptcy, it was largely an unexciting affair, far from what’s depicted in the media. This is because Billy had very dedicated and helpful legal advice and counsel.

When their case was over, their lawyers did not simply go away; they worked with them to brainstorm ideas on how to improve their credit or, at the very least, maintain it. With their help, it was only a few months later that Billy would be filing for a loan to get a new car.

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