What Impact Does Bankruptcy Have on my Credit?

Filing for bankruptcy under either chapter 7 or chapter 13 will be listed on your credit report for 10 years following your initial filing. While it will be listed for 10 years there is no clear outcome for what this listing will ultimately do to your credit as a whole. Some creditors may think that seeing a bankruptcy on your credit report means that you’ve at least improved your current credit, while others still may think that your bankruptcy is a good thing as it allows you to open new lines of credit while not having to worry about previous financial obligations that would have been discharged during your bankruptcy. Ultimately, the impact of filing for bankruptcy is creditor specific--some creditors will think that filing for bankruptcy is a positive mark on your credit, others will be ambivalent, and others will think it’s a negative mark on your credit.

To better understand if filing for bankruptcy is the right action for you to take, it is recommended that you set up a consultation with a local bankruptcy attorney.

Can I file for Bankruptcy if I own my home?

Yes--but the consequences of bankruptcy will have different effects on what happens to your home based on which chapter you file under and the equity you hold in the home. When filing for bankruptcy a certain amount of your property will be exempted from the bankruptcy estate. You may have the option to choose between two sets of exemptions: either the standard federal exemptions or state-specific exemptions. Michigan is one of the states which has its own exemption list, which differs slightly from the federal concerning how much value is exempt in the home. Michigan exempts up to $40,475 in equity when it comes to real property, $60,725 if you are over 65 years old, and completely exempts the property if you and your spouse both outright own your home. The federal exemptions go up to $25,150, so if you’re specifically worried about protecting your home in bankruptcy it would be advantageous to use the Michigan exemptions. Even if the Michigan exemptions doesn’t quite cover the equity you have in the home, filing under chapter 13 will give you the chance to restructure your debt and catch up on mortgage payments so that you can make some headway in paying back your mortgage.

To better understand if filing for bankruptcy is the right action for you, it is recommended that you set up a consultation with a local bankruptcy attorney.