How does filing bankruptcy affect credit scores?
A Chapter 7 bankruptcy generally remains on the debtor’s credit for ten years and bureaus may stop reporting a Chapter 13 after seven years. While this sounds pretty bad, usually by the time a person gets to the point of filing bankruptcy their credit is already shot. While the bankruptcy filing will negatively impact a debtor’s credit score at first, the “clean slate” offered by wiping out debts provides the opportunity to build good credit by maintaining current on payments and avoiding delinquencies. Many debtors experience an improvement in their credit rating soon after bankruptcy, because all their debts are gone.
Will bankruptcy discharge all debts?
Only certain debts are discharged in a bankruptcy. Generally, bankruptcy does not discharge domestic obligations such as child support and spousal maintenance, certain taxes, most student loans, or any liabilities arising from driving under the influence. Please read our descriptions of Chapter 7 bankruptcy and a Chapter 13 bankruptcy to get a general feel for how filing under each chapter discharges debts.
Who qualifies for filing bankruptcy under the new law?
In October of 2005, Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) in an attempt to make it more difficult for individuals to obtain a discharge on their consumer debts. The result, however, has been largely procedural; the same types of individuals are still obtaining discharges, but the ways in which these debtors and their attorneys arrive at the discharge are more complicated and bogged down with paperwork.
Must spouses file bankruptcy together?
Spouses do not have to file together, however, in most cases it makes sense to do so. If one spouse refuses to file or has separate property or a pending inheritance, it may make sense for a person to file without their spouse - although this is rare. A separate filing of a married couple still provides the benefit of a community discharge of debts, as Washington is a community property state - which means that each spouse owns a half interest in most property and debt acquired during the marriage.
