Your Guide To Surviving Bankruptcy

Deciding to file for bankruptcy can be one of the most serious, terrifying decisions you make in your life. You may feel like a failure for not being able to pay off your debts, or you might be unaware of what to expect next. No matter what you’re feeling, we’re here to help you.

In the year 2016, there were 794,960 bankruptcy filings in the United States. Not only is bankruptcy common, it’s survivable. The stigma surrounding bankruptcy has made it difficult to talk about, so you may even know someone who has declared bankruptcy. It also makes it hard to understand what happens when you file for bankruptcy. Today, we’re going to dispel some of your common bankruptcy fears and let you know when it’s time to start considering filing.

The truth about bankruptcy

Before you file, you may have some misconceptions surrounding bankruptcy. Let’s go over some of the most common myths:

My credit is never going to recover.

While it is true that your credit will take an initial hit, over time, you’ll be able to grow your credit much more than if you hadn’t filed for bankruptcy. Many will use a secured credit card to start building up credit after their bankruptcy, helping them to start working toward a better score. After you’ve proven yourself to be a trustworthy person who repays your debts, your score will improve, even after a bankruptcy.

This happened because I was careless.

This could be the case, but it’s more likely that there were a number of factors that contributed to you filing for bankruptcy. For many, it may be due to medical bills that you are unable to pay. For others, you may file after a divorce or losing a job. No matter what the case is, you’re making a difficult decision to improve your finances, and there’s nothing shameful in that.

It’s nearly impossible to file for bankruptcy.

If you’ve never looked into bankruptcy, the process may seem very complex and difficult. In reality, if you have a trained lawyer on your side, the process can be easy and painless. Your lawyer will be able to help you gather all of the necessary documents and prepare your information so you can focus on repairing your finances instead of the minutiae of your case.

I’m going to lose everything I own.

Not necessarily. If you file for Chapter 7 bankruptcy, there are certain assets you own that are typically exempt from being taken away from you, like the home you live in, your furniture, clothing and your main vehicle. In Chapter 13 bankruptcy, you won’t risk losing assets at all. Instead, you make partial payments on your debt over a 3-5 year time period.  

All of my debts will be wiped out.

Though many of your debts, such as credit cards and medical bills, will be wiped out with a Chapter 7 bankruptcy, some forms of debt may not be eligible to be removed. This can include student loans, alimony, child support and fines for breaking the law.

If you choose Chapter 13 bankruptcy, your debts won’t be “wiped out” immediately. Instead, you will pay back a certain portion of your debt and then the remaining amount will be forgiven. The majority of people in the United States file Chapter 7 bankruptcy.

When is it time to file for bankruptcy?

Once you understand what bankruptcy is, you may not be sure whether or not it’s time to file. If any of these apply to you, it may be in your best interests to file for bankruptcy:

  • Can you only make the minimum payments on your credit cards? If you find yourself accruing more debt from credit card interest, this can be a huge warning sign for your future financial situation. You should always be paying above the minimum payment for your card, if not paying it off entirely.
  • Are you in danger of foreclosure? Those who may become homeless due to their debt need to start thinking about their next steps. Consider staying with friends or family until you can save up the money needed to file for bankruptcy.  
  • Do you put everything on your credit card? When your bank account is too low to pay for most of your monthly expenses without accruing debt, you run the risk of gaining more debt than you can handle. Either find a way to pay off your credit card or look into filing for bankruptcy.
  • Are you unsure how much you owe? If your debt is so spread out that you don’t even know how much you owe anymore, you could be in a world of trouble. Do your best to track down your sources of debt before making any major decisions. Getting a free credit report at is a good start.

Do you need assistance to get out of debt?

Contact Reynolds & Gold. We can help you through the process of filing for bankruptcy, guiding you along every step of the way.