Are There Consequences for Filing for Bankruptcy in Arizona?
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Bankruptcy is a legal process that can help individuals and businesses struggling with overwhelming debt regain control of their finances. Depending on the type of bankruptcy filed, you can have all your debts discharged or restructured, providing some much-needed relief.
However, filing for bankruptcy is not without consequences. Understanding the consequences of filing for bankruptcy is important, but it is also essential to recognize that bankruptcy is there to help people and is a legal right. Let’s dive right into the consequences of filing for bankruptcy in Arizona.
Negative Impact on Your Credit Score
This depends on where you start. If you have a good score, about 700 or higher, it may drop by more than 200 points. If you have a low score, the drop can be between 130 and 150 points. While your credit score may be damaged, you can rebuild your credit with careful financial management and responsible credit use.
Loss of Property and Luxuries
Depending on the type of bankruptcy you file, you may lose some of your property and luxuries. In Chapter 7 bankruptcy, the court may liquidate some of your assets, such as your vacation house or expensive jewelry, to pay off your creditors. In Chapter 13 bankruptcy, you may be able to keep your property but will need to repay your debts over a three-to-five-year period, and if you default, your property may be at risk.
Difficulty Obtaining Credit
It may also be challenging to obtain credit after filing for bankruptcy. Many lenders view bankruptcy as a significant risk, so they may hesitate to give you credit. However, there are credit cards and loans available specifically for those who have filed for bankruptcy, which can help you rebuild your credit score. But if you can, avoiding more debt until you clear the outstanding ones is best.
Not All Debts Can Be Discharged
Some debts, such as student loans, tax debts, child support, and spousal support payments, cannot be discharged in bankruptcy. It is essential to speak with an experienced bankruptcy attorney to understand which debts can and cannot be discharged.
There Is a Stigma Associated With Bankruptcy
Some people may view bankruptcy as a sign of financial irresponsibility, which can be embarrassing. However, it is essential to remember that bankruptcy was designed to help people struggling with overwhelming debt. You shouldn’t feel ashamed of accepting the available assistance. Plus, the decision to disclose your bankruptcy filing is entirely up to you; only those who are excessively curious may find out about it.
Impact on Employment Prospects
Filing for bankruptcy in Arizona may affect your future employment prospects, particularly for jobs that require a high level of financial responsibility. Some employers may view a bankruptcy filing as a red flag, impacting your ability to get a job. However, bankruptcy is protected under federal law, and employers are not allowed to discriminate against employees or applicants who have filed for bankruptcy.
Your Cosigners May Be Held Responsible
If you have cosigners on any of your loans, they may be held responsible for repaying your unsecured debts if you file for bankruptcy in Arizona. In addition, their credit score may also take a hit. This can significantly strain your relationship with your cosigner and potentially cause financial difficulties for them.
The Impact of Bankruptcy on Your Credit Report Is Long-Lasting
A bankruptcy record can remain on your credit report for a long time, up to 10 years for Chapter 7 bankruptcy and up to 7 years for Chapter 13 bankruptcy. This means that any lender or creditor who pulls your credit report during this time can see that you have filed for bankruptcy.
However, with responsible financial behavior, you can gradually improve your credit score despite having a bankruptcy record on your credit report. All you need to do is focus on rebuilding your credit slowly and steadily and not get discouraged by any setbacks.
Contact Our Qualified Bankruptcy Attorney in Tucson, Arizona Today
While the consequences of filing for bankruptcy in Arizona may seem daunting, these are short-term challenges. Filing for bankruptcy can give you a fresh start and help you rebuild your financial future. If you are considering filing for bankruptcy in Arizona, contact the qualified Tucson bankruptcy attorney, Eric Ollason, today at (520) 791-2707 to schedule a free consultation. We can help you understand your options and navigate the process.